News Column

TIF money not yet returned

May 28, 2014

By Arthur Foulkes, The Tribune-Star, Terre Haute, Ind.

May 28--TERRE HAUTE -- City officials have not returned more than $3 million in tax increment finance (TIF) funds to bank accounts formerly controlled by the Terre Haute Department of Redevelopment despite a request last week that they do so made by the Redevelopment Commission.

At their monthly meeting on May 21, the commissioners, an appointed body that oversees the city's TIF districts, passed a unanimous resolution calling on Leslie Ellis, city controller, to return within 48 hours approximately $3.4 million transferred from several TIF accounts into other accounts controlled by the city. That 48-hour period ended Friday.

Spending that money on anything other than TIF-related expenses, such as bond payments, must be reported under U.S. Securities and Exchange Commission regulations, Lisa Lee, legal counsel for the Redevelopment Commission, said at the May 21 meeting. Such spending could affect the city's bond rating, she said.

Ellis, who was attending that meeting and speaking in response to commissioners' questions, said she would start the process of returning the funds but could not guarantee it would happen within the two-day period.

"We will start processing," Ellis told the commissioners. "You still have the money."

However, speaking late Tuesday afternoon, Ellis said the funds have not been transferred back to the TIF accounts. She deferred further questions to Mayor Duke Bennett.

Bennett, reached late Tuesday evening, had no immediate comment but said he would be issuing a statement sometime after noon today.

Last week, Bennett, who was not at the May 21 commission meeting, told the Tribune-Star he questioned whether the Redevelopment Commission has the legal authority to require the return of the money into its accounts.

This year, the Indiana General Assembly passed legislation seen as making Redevelopment Commissions less autonomous. City officials defend the transfer of TIF account dollars by citing that legislation.

On April 25, the Department of Redevelopment, which manages TIF districts, signed over 19 bank accounts to Ellis in her capacity as controller and "Treasurer of the Redevelopment Commission," according to a document provided to the Tribune-Star through a public records request. The document is signed by Ellis and by Cliff Lambert, executive director of the Department of Redevelopment.

Although Redevelopment gave up direct control over the accounts, Lambert believes money in those accounts must still be used only for TIF-related activities. Speaking late Tuesday, Lambert said he will continue to seek information about the TIF money from the city.

"The Redevelopment Commission charged me as their employee to go forward with engaging legal and financial counsel to determine where the money went when it left the TIF checking accounts, what it was used for and whether that was a violation of state statute," Lambert told the Tribune-Star in a telephone interview. "We're in negotiations for legal counsel and pursuing a variety of avenues for financial counsel," he said. Lambert could not specify when those people might be in place but said he was acting "with all deliberate speed."

Tammy White, an official with the Indiana State Board of Accounts, told the Tribune-Star last week that state law prohibits Redevelopment Commissions from paying for anything except those things that directly assist a particular TIF district. The only exception is when the commission declares it has more money than it needs and allows other taxing units to obtain some of its funds, she said.

Mayor Bennett, speaking last week, said the city is on solid legal ground in its actions concerning the TIF money. He further stated that, if the Redevelopment Commission believes the city has acted inappropriately, it should seek an investigation from the Indiana State Board of Accounts.

On Tuesday, Lambert said that would be a "very appropriate" future step; however, the commission may seek opinions from both the State Board of Accounts and the Indiana Department of Local Government Finance because the two agencies sometimes provide conflicting opinions, he said.

Reporter Arthur Foulkes can be reached at 812-231-4232 or arthur.foulkes

What's a TIF?

--Redevelopment Commissions in Indiana manage Tax Increment Finance (TIF) districts, which are economic development zones in which new property tax value is "captured" by the commission for use inside the district.

--In 2014, the Indiana Legislature passed Senate Enrolled Act 118, which is seen as transferring some authority from Redevelopment Commissions to city administrations.


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Source: Tribune-Star (Terre Haute, IN)

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