Utilizing TIF to support education in your community

Tax Increment Financing (TIF) is traditionally viewed as a resource for funding infrastructure, downtown redevelopment or incentives to promote economic development in a community. TIF funds are not generally viewed as a possible source for funding educational programs or projects, but that is changing.  Communities across Indiana are finding opportunities to partner with their local school corporations and educational institutions to allocate TIF funds in support of educational programs and capital projects.

Some redevelopment commissions have begun to utilize a state law that allows for up to 15% of TIF revenues generated in an allocation area to be used for programs that provide job training and re-training for residents of the community. Eligible organizations include local school corporations, nonprofit organizations whose primary purpose includes job training and re-training, and institutions of higher education that offer these types of programs, such as Ivy Tech Community College of Indiana.

Many redevelopment commissions also are exploring opportunities to collaborate with local school corporations on capital projects. Such projects may be eligible for TIF funding as long as they are (1) located in or directly benefit the area and (2) included in the area’s economic development plan.

Examples of successful TIF-Education partnerships in Indiana include:

• The Whitley County Redevelopment Commission is contributing $7.5 million to the Whitley Consolidated School Corporation over a three-year period to a new high school project.
• The Gibson County Redevelopment Commission contributed $600,000 to Ivy Tech to fund a local welding program.
• The Town of Plainfield is utilizing TIF funds to make debt payments on the school transportation center bonds.
• The City of Lebanon used TIF to fund a multi-use training room at Lebanon High School.

Another tool available to redevelopment commissions is the pass-through of incremental assessed value for the benefit of overlapping taxing districts, including school corporations. Redevelopment commissions typically use the time leading up to the June 15th TIF excess incremental assessed value notification deadline to evaluate opportunities for such pass-through determinations.

Along with monitoring and carrying out the economic development plan(s) for your community, exploring partnership opportunities with local education providers and other taxing units should be part of your annual analysis of your community’s TIF areas. Engagement with these units can be a part of a larger economic development strategy in your community.

Baker Tilly can assist you with evaluating potential opportunities to utilize your TIF dollars to support local education efforts or collaborate with other taxing units.

For more information on this topic, or to learn how Baker Tilly municipal specialists can help, contact our team.

Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax advice, if any, contained in this communication was not intended or written to be used by any taxpayer for the purpose of avoiding penalties.