From the Terre Haute Tribune Star:
The City of Terre Haute has canceled plans to help pay for construction of a new university housing facility downtown.
Terre Haute’s downtown “Tax Increment Finance,” or “TIF,” district had pledged $1.25 million to aid with construction of a multi-story building between Fifth and Sixth streets on the north side of Wabash Avenue for Indiana State University students. The building, to be constructed by Thompson Thrift, a contractor, will house students on the upper floors and offer leaseable commercial space on the ground floor.
Under an original agreement, the downtown TIF district, which is administered by the Terre Haute Department of Redevelopment, was to “incentivize” the project by paying $1.25 million to help construct the building.
To make all this happen, the City of Terre Haute was planning to sell bonds to raise the money. Those bonds were to be paid off over the next 20 years using property tax revenue collected from the new building, which was to remain privately owned by Thompson Thrift.
However, all of this changed Friday when the Indiana Budget Committee, a body made up of state lawmakers, approved a new plan for the building that wiped out much of the forthcoming property tax revenue.
Under the new plan, about 80 percent of the new building will generate no property taxes. A new state law that takes effect Jan. 1 will allow private property leased to state educational institutions to seek an exemption from property taxes if property taxes were calculated as part of the lease or rental agreement.
ISU and Thompson Thrift have agreed to work toward securing such an exemption, stated Diann McKee, an ISU official, in an email to the Tribune-Star Friday.
ISU will file for the exemption upon occupancy and Thompson Thrift has agreed to support the exemption, she stated.
The new agreement also gives ISU an option to buy the new building at any time, further undercutting any future property tax revenue. Publicly-owned facilities are exempt from property taxes.
All of this cancels plans for the city’s TIF subsidy, said Cliff Lambert, executive director of the Terre Haute Department of Redevelopment, who helped bring about the downtown project. Once it was seen 80 percent of the property taxes were to be taken off the table, “then there was no opportunity to fund” the bonds, he said in a telephone interview Friday afternoon.
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http://www.tribstar.com/local/x1186892935/City-saves-more-than-1M
