GOSHEN — New guidelines for certain economic incentives are meant to ensure they’re awarded to projects that best line up with the county’s values.

The Elkhart County Redevelopment Commission adopted the new policies and guidelines Thursday. They affect companies seeking tax increment finance district reimbursement, which captures the extra tax value that comes with improvements to property.

The packet includes a list of things for companies to consider before applying for TIF incentives, an application for the incentives and a scoresheet for commission members and county staff to use when considering requests.

County attorney Craig Buche described it as a way to measure a proposal, but not a guarantee that receiving a certain score means getting a certain reimbursement or that failing to meet some requirements is automatically a failure.

The documents were developed through a series of meetings held since fall, involving representatives of the RDC, county government and private developers. They also provide an update to guidelines that were adopted in 2006 but set aside when the 2008 recession took hold.

“We kind of had a framework, but it’s been updated and it’s as relevant as it’s ever been,” said Planning and Developing Director Chris Godlewski. 

Redevelopment Program Coordinator Natasha Kauffmann added that, while the policies are more detailed than in the past, they make the process of applying for incentives simpler and more uniform.

“Before it was more Wild West, ‘This is what we generally do,’ we have to figure it out each time. We have to recreate the wheel almost for each developer,” she said. “This way we have the bases down, and with the pre-application packet hopefully they understand what the bases are before they even have real conversations with us.”

‘Before you apply’

Elkhart County operates several TIF districts – areas considered in need of economic development through the help of government intervention – while many towns and cities in the county also have their own. The additional tax revenue generated by private property improvements in the district is used to pay for nearby public improvements, instead of being distributed among other taxing bodies, like schools, along with the rest of the property tax income.

A company may seek TIF reimbursement when it wants to build or expand a plant, which might require more water or sewer capacity. The company would fund the improvement at the outset and receive reimbursement over a period of years for the portion of the work done on public land.

Reimbursement is expressed in two ways: The percentage of the total project cost that would be repaid, and the percent of the annual tax increment that would be dedicated to that developer’s project.

Tax revenue collected in a TIF district can also be set aside for future municipal projects, like sidewalks, crosswalks and drainage improvements. The county RDC recently decided to enlarge a TIF district northwest of Elkhart city limits in anticipation of land improvements over the next several years, with plans to use the funds to buy land along Old U.S. 20 to prepare it for development.

The pre-application information adopted Thursday tells companies seeking TIF reimbursement from the county to first ask themselves some questions: Is their project eligible for TIF reimbursement, are they willing to work with the requirements that come with public money and is their project in line with redevelopment values. If the answer to any of those is no, then they aren’t encouraged to go through the application process.

“This kind of tells people the reason for applying for redevelopment TIF incentives is ‘cause you want to do a project that goes above and beyond or you’re doing a project that lines up with redevelopment and economic goals for the county,” said Kauffmann. “Generally what we’re trying to do right now is encourage folks who, even if they may be in a TIF, if their project is really run-of-the-mill and doesn’t really go above and beyond, to apply for a tax abatement instead.”

Public benefits

TIF-eligible projects include those that require the extension of utilities in the public right of way or the construction of a public road. Public funding requirements include the project being near an existing TIF district, having money that can be used now and reimbursed later, and making a presentation to the commission at a public meeting.

The packet includes a sample business plan for a company to present on. Points to cover include a description of the project and its goals, information about the public benefit of the project and whether the business will diversify the economy and workforce.

“One of the things that we’re focusing on is diversification rather than just raw number of jobs, so quality over quantity in some ways,” Kauffmann said.

Projects that line up with redevelopment values include those that would transform a blighted area into a community asset or that includes workforce education or re-training in the business plan. Kauffmann noted that a frustration in the past was making sure developers were thinking clearly about the public benefit of their project.

“One thing that is supposed to happen in general with TIFs is it should benefit more than just one developer,” she said. “It’s been interesting to try to get developers to understand what a public benefit is, ‘cause lots of times when we ask them what that is, it’s like, ‘We’ll create more jobs.’ That’s not what we’re talking about. It’s not 1995.”

She said they also want to make sure developers understand the difference between the public and private portions of a project, since TIF funds legally can’t be used on private property. TIF funds also aren’t meant to be used to fill the gaps in a developer’s plans, so they have to be financially feasible.

No more bartering

Kauffmann said the scoresheet was one of the parts of the packet they spent the most time on. It borrows some things from the Economic Development Corporation of Elkhart County, such as a list of industries targeted for the area.

The percentage of reimbursement that may be given to a project varies by industry. Many health care-, green energy- or information technology-related projects score higher than realty or retail in the new guidelines.

The unemployment rate at the time is also factored into the final score, and may push consideration for a request up or down depending on whether the county is starved for jobs or not.

Part of the reason for putting so many considerations in front of developers is because hammering out agreements over TIF incentives can take a lot of time and money, she explained. At six months or more, it’s a much lengthier process than giving tax abatements and the projects involved are usually more complex.

She said the hope is that setting out their expectations ahead of time makes the process more fair for developers seeking incentives. Instead of leaving it up to developers to ask how much they want, it puts it on the RDC to say how much they’re willing to help.

It should also take a lot of the back-and-forth out of negotiations, she indicated, as well as the chances of one company receiving more than another just because they asked for it.

“They were telling us the percentage they wanted,” Kauffmann said. “So instead of letting them come to us and say, ‘We want you to cover 80 percent of it,’ and we say, ‘Well that’s a little high, we’ll go lower,’ and having a bartering conversation, with the application we say, ‘OK these are your total costs, we’ll see how much you align with our values and goals, and then we will tell you the amount, about, that the RDC will probably approve.’”

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