While some county officials are enthusiastic about the possibility of establishing a Tax Increment Financing (TIF) district around the future hospital to capture funds for economic development, Porter County Council president Dan Whitten, D-at large, voiced concerns Tuesday, saying a TIF on the hospital would be largely unfair to residents, referring to it as a "backdoor tax."

Whitten sidestepped Tuesdays County Council meeting agenda for a moment to tell council members he would like to have them "think a lot" about the new county redevelopment commission which was officially established by the board of commissioners earlier this month. The new five-member commission will have the statutory ability to propose TIF districts in the unincorporated areas of the county.

John Shepherd, who facilitated the former advisory county redevelopment commission, told the commissioners at their previous meetings that possible areas for a TIF could be the areas surrounding the hospital at U.S. 6 and Ind. 49 and the county municipal airport.

In his reaction Tuesday, Whitten said he is "adamantly opposed" to creating a TIF district at the hospital for a few reasons. One would be that the council had already awarded a 10-year tax abatement to Porter Health Systems for the new site, with certain conditions including a fee to boost redevelopment in the U.S. 6 corridor.

Another reason for his opposition is he feels the TIF would disrupt the countys tax collection process, taking away money that would otherwise go to local taxing units and that no benefit would come to county taxpayers who would have to pay the full levy. Unable to reap those benefits, all the tax advantages of having the new hospital which were promised to residents would essentially be eliminated, Whitten said.

"To the average homeowner, Im not entirely sure thats fair," he said. "Why would you grab millions from an area busting at the seams?"

Lastly, Whitten is concerned that the Duneland School Corporation would also be shortchanged in the process.

He beseeched the council to seek answers to these concerns so they can inform their constituents.

"Theyre going to understand it, because we will make them understand it," he said.

County Commissioner John Evans, R-North, gently told Whitten he will have a say in what the redevelopment commission does because the council president is one of the five members. The commissioner president, Evans, will also sit on the board along with three citizen appointments, one to be made by the council and two by the commissioners. According to state provisions, a school board member will also be appointed but will not have voting power.

The new commission will function as an economic redevelopment commission focusing on the improvement of utility needs and infrastructure. If a TIF district were proposed, it would take several steps to get it finally approved. The measure would have to be approved by the plan commission and the board of commissioners who could adjust district parameters.

Evans later told the Chesterton Tribune Whitten is right to be cautious but noted there is no proposal yet for any TIF districts since appointments for the board have not been made.

"We dont even know who will be on that board yet," Evans said. Commissioner appointments will be announced on July 17. Applications are being taken through July 12.

The redevelopment commission can explore different possibilities as to how the TIF would collect its money and see what options would bring the most benefits. Evans, as he previously stated, said that the county will make sure that no school district will be adversely affected by TIF collections.

Evans did question what point Whitten was trying to make with the tax abatements since they came a year or so after the sale was contracted.

Minutes from the county council meeting on Sept. 10, 2009, show the hospital estimated its assessed value (AV) would be $173 million including personal property and equipment. The tax bill over the ten-year period would have come to approximately $29.1 million, but it would be closer to $16 million with the abatement granted.

Shepherd said hypothetically if a TIF were to be placed on the hospital in its second year of abatement, in this case its 2013 assessment, 80 percent of that assessed value would be the basis for the TIF district. The assessment would only include the building itself, Shepherd said, not the personal property such as beds and x-ray machines. The percentage rate of assessment to be included in the baseline for the TIF district would fluctuate slightly each year, he said.

According to the Indiana Department of Local Government Finance, a baseline property value is set in the TIF district by the redevelopment commission. Any property taxes collected at or before the baseline go to the taxing unit while any tax revenue from commercial and industrial property above the baseline, known as "incremental assessed value" would be received by the redevelopment commission.

Property tax rates that are adopted and approved for the civil taxing units are applied to the total value in the allocation area, the DLGF said.

One "solution" the county can make is to choose not to include the hospital at all in the TIF district, Shepherd said, but if it does, it still would have great control over how the TIF would operate and could choose the option that would have the most benefit.

"There are a lot of nuances with this," said Shepherd, who said it is unusual for redevelopment commissions to implement multiple types of mechanisms to pass money along to the underlying tax districts.

Shepherd acknowledged the hospital has been a catalyst for starting a new redevelopment commission. The growth around it on the U.S. 6 corridor could generate funds to help expand utility services.

Evans said another reason the commissioner board favored revamping the redevelopment commission with statutory powers was that Porter was the only county in Indiana which had not yet done so.

Since the hospital is within the Duneland School district, school Superintendent Dirk Baer said he would ask county officials to give them full consideration, since any impact to the AV collected would affect certain school budgets.

"We are the largest taxing unit in the district so we want to be a player in this," Baer said.

The capital projects and the debt service funds are almost entirely serviced by property taxes, Baer said. With the passing of the referendum to raise property taxes in the school district by 22 cents for each $100 of assessed value, TIF districts could also have impact on the schools general fund budget.

Schools are also facing challenges due to other factors shrinking the local tax base like the state tax caps on personal property, Baer said, and as they move closer to the circuit breaker, schools have few options on ways to increase their budgets for school equipment and to pay debts.

The situation becomes even more troubling for taxing units when abatements are granted and TIF districts are established, Baer said. The good thing about abatements, he said, is that they are limited to a number of years but TIF districts are different in that they have no limit. Since the hospital is in the Duneland School district, school Superintendent Dirk Baer would ask county officials to give them full consideration since any impact to the AV collected would affect certain school budgets.

"We are the largest taxing unit in the district so we want to be a player in this," Baer said.

The capital projects and the debt service funds are almost entirely serviced by property taxes, Baer said. With the passing of the referendum to raise property taxes in the school district by 22 cents for each $100 of assessed value, TIF districts could also have impact on the schools general fund budget.

Schools are also facing challenges due to the other factors shrinking the local tax base like the state tax caps on personal property, Baer said, and as they move closer to the circuit breaker, schools have little options on ways to increase their budgets for school equipment and to pay debts.

The situation becomes even more troubling for taxing units when abatements are granted and TIF districts are established, Baer said. The good thing about abatements, he said, is that they are limited to a number of years, but TIF districts have no limit.

Posted 6/28/2012