Tax zone money belongs only to the Gary airport
By Michelle L. Quinn Post-Tribune correspondent June 30, 2012 4:52PM
Indiana attorney general Karen Freeman-Wilson. Post-Tribune Photo by Jeffrey D. Nicholls Freeman_Wilson-Karen-01-C
Updated: August 2, 2012 10:33AM
GARY — Black Oak residents’ concern over Gary/Chicago International Airport’s vote to tap into its tax-increment finance district to cover expenses while waiting for a Regional Development Authority grant to pay out is understandable but ultimately for naught.
The $12 million the Airport Authority voted last week to use is in fact its money, thanks to the way the TIF, or airport development zone as it is correctly termed, was written, according to Dan Botich, an executive with public-sector tax consulting firm Cender & Co.
Established in 1993 but completed in 2005, the ADZ acts like a redevelopment commission to generate tax increment that takes place of the personal property inventory tax that was eliminated in 2006.
Residents aren’t taxed any differently than anyone else in an ADZ, Botich said. The difference is that that any incremental assessed valuation captured in the ADZ from an individual component — that is, a property’s worth — is used to calculate and generate tax increment, which then goes to the ADZ. Any assessed valuation that the ADZ would release would not affect a homeowner’s taxes, however, because of the 1 percent tax cap, he said.
That money, in turn, is used to pay for capital improvement projects and job training for the airport.
“More certified assessed valuation, when applied to the tax levy required by each taxing unit to run government, will reduce the tax rate of levy-sensitive funds — for example, a general fund — and will increase cumulative fund levies of a taxing unit since more cumulative funds are rate sensitive,” Botich said. “More assessed valuation means more levy since the rate is fixed or set.”
Botich couldn’t speak to the reason why the city set up the ADZ the way it did or why it included the Black Oak area since he wasn’t involved in the process and no records to which he had access definitively say who made the decision.
But Mayor Karen Freeman-Wilson said there’s been no attempt by her administration to hide that the money isn’t allocated to Black Oak’s infrastructure problems.
“We’re using that money to build the airport,” she said. “I do understand the residents’ frustration because they’ve been neglected for so long. But in the course of 60 days, we’ve gone to extraordinary lengths to start getting things done there; the Black Oak Tavern, for example, was finally torn down.”
Freeman-Wilson said sewer work on 25th Avenue should help alleviate more of the road issues the area has, though she does not know how much more and realizes it will not be as much as needed.