Monday, June 16, 2014

Tribune-Star Reports Indiana Official's Weighing Terre Haute's Use of TIF Funds

From the Terre Haute Tribune-Star:

State officials are meeting this week to discuss the legal uses of tax increment finance dollars in the wake of complaints and allegations of wrongdoing from Terre Haute.

Charlie Pride, office supervisor for the Indiana State Board of Accounts, which oversees local government finances in the state, told the Tribune-Star on Friday that a meeting is set for early this week, including state legal counsel, to discuss whether tax increment finance (TIF) money can be used to meet immediate city expenses, as some suspect is happening in Terre Haute.

This is the first time the question has been posed, Pride said. Officials are considering the question and “discussions are under way,” he said.

Cliff Lambert, executive director of the Terre Haute Department of Redevelopment, has been outspoken in his concern over the use of the city’s TIF money, traditionally been overseen by the Redevelopment Commission, a body appointed by the mayor and the City Council. Lambert believes Mayor Duke Bennett and Leslie Ellis, city controller, are likely using TIF money to pay immediate city expenses, such as payroll. If so, that’s against the law and threatens the city’s bond rating, Lambert has said.

On April 25, Ellis took control of Redevelopment Commission bank accounts at Bennett’s direction. Since that date, several million dollars have been withdrawn from those accounts. At least $4.9 million had been withdrawn as of June 2, according to the Redevelopment Department.   

As an example, on June 2, $1.5 million was withdrawn from a tax-exempt construction bond account for the city’s eastside TIF district, which includes Wal-Mart and other development, Lambert told the Tribune-Star on Friday.

Bennett and Ellis have said the Redevelopment Commission money has been “pooled” with other city cash in a single operating account. As long as Redevelopment funds are not billed for non-Redevelopment expenses, that is perfectly OK, Bennett has said.

(A “fund” is a name for a specific area of spending within the city’s budget, such as a “cemetery fund” or “motor vehicle highway fund.”)

“Pooled cash is nothing unique and is standard fund accounting practice within government units within the state of Indiana,” Ellis stated in a June 4 email to the Tribune-Star. “Many municipalities pool their cash including Redevelopment and TIF Funds.”

Lafayette is one of the cities Ellis cited as also pooling cash in a single account. The city’s controller, Mike Jones, confirmed Friday his city pools Redevelopment Commission money with other city funds in a single bank account. There are advantages to that, such as reconciling only one account, he said. However, Lafayette, in his experience, has not used TIF or Redevelopment money to meet other city expenses.

If you have to borrow money from any city fund to meet an immediate expense, “the only way to do that is to go before the legislative body” for approval, Jones said. Then the funds must be reimbursed before the end of the year. Lafayette has done that with some funds, such as utility funds, but not TIF funds, he said.