Bond issue is discussed (05/16/06)

Members of a local board faced a tough choice and decided to weigh their options before moving forward.

The Portland Redevelopment Commission was asked Monday to decide whether or not it would like bonds for redevelopment projects to be backed up with property taxes.

Primary funding for redevelopment projects comes from tax increment financing (TIF) funds. This is used to pay off bonds.

Choosing to back up the bonds with property taxes “will make the bonds more marketable,” said Sue Beesley, attorney with Indianapolis law firm Bingham McHale LLP. “You’re an unknown (entity) to the bond market,” she said.

If the commission chooses to back up bonds with property taxes, the interest rates on the loans could be 0.5 to 1 percent lower, Beesley said. The property tax revenue could serve as an assurance that the loan will be paid off.

One of the redevelopment projects the commission is considering is the widening of Industrial Park Drive.

If the commission gets a bond for a project and there is not a large enough increased assessed value in the TIF district, property taxes in Portland could be used to help pay off the bond, she said. Beesley said she does not know of any instance in which property taxes have needed to be used.

Bob Quadrozzi, commission president, said he would prefer bonds without property taxes. It is not the intention of the commission to raise taxes, he said.

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Commission members decided to wait until the next meeting to vote on the matter.

After the meeting, Beesley said that bonds are necessary to do redevelopment projects. If the commission waited on TIF funds to do projects, it would take many years to generate enough money to start the work.

Infrastructure improvements within a TIF district are funded by capturing property taxes collected from rising assessed valuations on properties within the district. Without a TIF district, those taxes on rising assessed valuations would ordinarily pass on to other taxing units such as the county and the school system.

If the commission chooses to back up bonds with property taxes, the tax revenue affected would be from the entire city, rather than just inside the TIF district.

Because those funds are subject to levies, or limits, if property tax proceeds were used as payment of the TIF bonds, cuts in the city’s budget could be necessary.

In other business, a local man was asked to leave the meeting after he became disruptive.

Frederick M. Bailey, 167 West 200 South, owner of a building that housed the former Bailey’s Furniture Store, said he didn’t think the redevelopment commission cared about downtown Portland. He said the commission should be more concerned about the decay of downtown rather than the area near the Wal-Mart SuperCenter.

Bailey began arguing with Bruce Hosier, mayor of Portland, and Quadrozzi. He was then asked to leave.

Also Monday, the commission members were presented plans for a project which possibly could be funded through TIF.

Phil Metzger, manager of business development, and Craig Rogers, senior project manager, for The Schneider Corporation of Indianapolis, presented plans for the widening of Industrial Park Drive and the relocation of a lift station.

The company currently has a $93,000 contract with the city to do the engineering work for the project.

Plans call for a right turn lane to be created on Industrial Park Drive to access the Wal-Mart SuperCenter. Hosier said he has asked Wal-Mart officials to consider sharing some of the cost of the turn lane.

A center turn lane also is planned, Metzger said.

The curve in the street where the lift station currently is located will be straightened, and the station will be moved to the east side of the street, Rogers said. The lift station also will be expanded to handle a greater capacity.

In April of 2005, cost for widening of the street was estimated at $800,000. The project, not including the re-location of the lift station, now may cost $1,135,443, Rogers said. The rising cost of asphalt and fuel have made the construction price increase, he said.

Metzger said the would like to see bidding early this winter, with construction beginning in the spring of 2007. He asked the commission for permission to proceed with designing the new lift station. Permission was granted.

In other business, the commission voted to hire Bingham McHale and Beesley to act as consultants.

Beesley will be paid $275 per hour as needed. The hourly rates for services provided by other firm employees will range from $105 to $455 per hour, depending on who is providing the services and what the tasks are.[[In-content Ad]]