By KEVIN NEVERS

The Chesterton Redevelopment Commission has approved an additional appropriation of nearly $5 million dollars in TIF funds to finance the South Calumet Business District project—and a bond issue to go with it—but the commission did so over a remonstrator’s strongly worded objections.

At their meeting Tuesday night, members voted 5-0 to approve an additional appropriation not to exceed $4.89 million, then 5-0 to approve a resolution which sets the terms of a bond issue which would be serviced by the Chesterton tax increment financing district’s annual revenue stream.

Jim Shanahan of Ice Miller, the town’s contracted bond counsel, told the commission that the bonds would probably be sold some time early next year.

John Julien of H.J. Umbaugh & Associates, the town’s contracted financial consultant, said that the $4.89 million figure is based on the engineer’s estimates of the cost of the project. He called those estimates “probably pretty accurate” but noted that they will undoubtedly be fine-tuned after bids are received for Phase I.

Town Engineer Mark O’Dell indicated that the hard construction costs will probably be in the neighborhood of $3.5 million, with additional costs for engineering—many of which have already been paid, he said—and for land acquisition.

One of the features of the anticipated bond issue, Julien explained to members, will be a “property-tax backup” mechanism, under which bond holders would be paid from the town’s annual property-tax revenues in the extremely unlikely event that the commission defaulted.

That backup mechanism, Julien said, will make the issue more attractive and therefore more marketable, with a projected total savings interest of between $140,000 to $200,000.

Julien estimated annual service on the issue to be approximately $375,000, or slightly more than half of the TIF district’s annual projected revenue stream of $600,000. “There’s a pretty substantial revenue stream in place and we expect that stream to grow,” he said.

Even so, the commission has just about reached its debt limit, calculated as 2 percent of one-third of the town’s total assessed valuation. Should the commission wish to finance a future project, while still debt-servicing the South Calumet project, it can use a lease-financing arrangement of the type normally employed these days by school corporations.

Shanahan did say that the Town of Chesterton retains its own separate bonding authority in no way affected by the Redevelopment Commission’s.

Remonstration

At a public hearing prior to the vote no one spoke in support of the additional appropriation.

Chesterton attorney Terry Hiestand, however, who a number of years ago remonstrated against the creation of the town’s TIF district, objected on Tuesday to this particular expenditure of TIF funds.

“As a general rule,” Hiestand said, “I’m not in favor of TIF financing. It robs from other taxing units, like the schools. . . . So those units pay more.”

But, he observed, TIF funding has been profitably used by some municipalities as an economic development engine, notably for instance when Toyota wanted to establish a plant in southern Indiana. That plant is now up and running, thanks to the use of TIF funds, and it has had a tonic effect on the economy of that region, Hiestand told members.

Yet in this case, he said, “I don’t see how the TIF money is going to be doing anything to promote economic development.” The South Calumet Business District is “already developed” and there’s no more available property there to speak of.

TIF money could far more usefully be spent, Hiestand argued, on projects like the Dickinson Road extension or the construction of a light industrial park. But the use of TIF money on the South Calumet project is “ill conceived.”

“We’re tying up the town’s revenues to fund that project,” Hiestand said, “and the project is not going to generate any economic development where there are so many places in the community where we could generate economic development.”

Hiestand concluded with a warning to the commission, that this project could in fact be a “liability generator.” Only recently, he said, the Indiana Court of Appeals awarded $2.2 million to the owners of a shopping center after traffic patterns were changed by a state highway project.

“Keep your powder dry,” Hiestand urged members. “Look for a project that will really generate some economic development in the community.”

Posted 11/14/2007