Local tax policies do not lend themselves to sexy treatment in the media. Constitutional crises, after all, only pop up every few generations. However, two pandemics rage across the USA. One is COVID-19. The other is TIFs. We need to keep our eyes on both.
TIFs are a favorite tool of ruthless advocates of socialism: “A political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.”
Indy is owned and regulated for the benefit of those who seek more money in the name of free enterprise. TIFs are a virulent substitute for that bane of the free market: urban planning. But we need urban planning. This is why.
As of mid-2019, apartment vacancies, over the previous three years, had risen nearly 50%, driven up by the addition of new apartments. A “glut of large luxury developments are expected to add more than twice as much new inventory in 2019.” Burris, Indy Star, 6/6/19.
“Analysts expect the current roughly 6.9% vacancy rate - according to CBRE data - to fall in coming years, but right now the market has far more apartments than it can quickly fill.” Id. In case you wonder, CBRE is not a governmental agency. It’s a private real estate firm.
The “free market” functions, in part, because of risk and failure. If markets change and profits cannot be had, then markets adapt. TIFs have changed all that. As long as Indy backs the TIFs, developers will build. We have more apartment buildings going up in Broad Ripple. What are the vacancy rates?
If we have too many apartments, why do we use TIF money to build even more apartments? This is neither urban planning nor free market. COVID has wrecked our economy. If Indy floats bonds, it should not be to profit well-placed investors who will profit from the construction and shove risk onto taxpayers.
Taxpayers pay for those TIF bonds in the long run. There should be an overall plan. Our City-County Council last week voted unanimously - unanimously - to expand downtown facilities for conventions and tourism. That’s akin to a city in 1920 expanding facilities for horses and carriages. It is not prudent.
We need to ban TIFs as well as expenditures of tax money geared to pre-COVID concepts. TIFs were made illegal in California because they are too easily abused by developers who take the money and leave bond repayment to the taxpayers.
TIFs are a gimmick that replaces prudent city fiscal planning with something like magic. And, as Vernon Dursley said in “Harry Potter and the Sorcerer’s Stone”: “There is no such thing as magic!” I would add—especially when it comes to municipal fiscal planning.