The proposal - which would target FCA as the designated taxpayer – will now head back to the Kokomo Redevelopment Commission for final approval. According to city attorney Beth Garrison, a public hearing date has yet to be set.
The TIF, located in parts of downtown before stretching down to Southway Boulevard and across to 200 East, would use tax revenue generated from two FCA plants as funding for future economic development in the area.
Those plants – Kokomo Transmission Plant and Kokomo Casting Plant – would make up the TIF’s allocation area, which provides the economic development funding.
The rest of the TIF, known as an economic revitalization area, would then benefit from the funding.
“It can help with economic growth, and it can be used to spur economic development in that district,” noted Kokomo Common Council President Bob Hayes. “It is a good tool for the city to use.”
In effect, any growth in assessed value, and subsequent tax revenue, developed in the allocation area after March 1, 2014, would be captured by the redevelopment commission and dispersed as economic development funding.
If a TIF declaratory resolution is passed before March 1, then the base assessment date is March 1 of the previous year. With the city passing its initial declaratory resolution through the redevelopment commission on Feb. 25, 2015, it was given a base assessment date of March 1, 2014.
If passed, and if a TIF generates solid new tax revenue, a city or redevelopment commission can create projects which are self-funded through the TIF mechanism.
But with the approval of the TIF, and the amount of revenue it could generate, still to be determined, Garrison said specific economic development projects haven’t been decided upon by the city administration.
Much of the motivation for the TIF came in December 2014, when FCA announced plans to invest $266 million in new manufacturing equipment in Kokomo, which allows the company to expand production of its 8-speed transmissions at the two plants in the allocation area.
To assist the investment, the Kokomo Common Council unanimously approved a 10-year tax abatement on personal property taxes for the equipment, which is expected to be completed by February 2017, according to Garrison.
While Garrison acknowledged the tax abatement could limit the TIF's tax revenue, she said it is likely to still be valuable for the area.
And while TIF districts are often seen as valuable economic development tools, they have at times generated controversy from county officials and schools, both of whom have said they unnecessarily limit their tax revenues.
In this case, though, Howard County Auditor Martha Lake said she is taking a wait and see approach to the situation.
“TIFs can have various impacts on the community, and we have not seen any impact study on what the TIF will do and what the growth estimate will be in that area,” she said. “I believe we will be talking with them soon and getting an idea what this does.”
In addition to Lake’s comments, Hayes said Kokomo Schools Superintendent Jeff Hauswald was consulted prior to Monday’s approval. Hauswald could not be reached for comment.
The issue of TIF districts has also been addressed on a statewide level with the introduction of Senate Bill 389 in this year’s Indiana General Assembly.
The bill, authored by Sen. Eric Bassler, R-Washington, would allow a taxing unit located wholly or partly within a proposed TIF area to elect whether to participate in the TIF area.
“This bill would give local elected officials more control over precious tax dollars,” Bassler said in a press release. “TIF areas allow cities and towns to dedicate local property tax revenues to certain economic development projects, and this bill will ensure local elected officials are engaged during this process.”