TIF funds can’t be used to maintain parks, COA affirms

March 16, 2015

The Indiana Court of Appeals agreed with a Lake County trial court ruling that tax increment financing funds used in the redevelopment of Munster parks could not be used to later maintain the parks.

The Munster Redevelopment Commission used TIF funds to redevelop an area in the town that included two parks. After development was completed, the commission transferred ownership of the parks to the town, which used a portion of the TIF funds to pay for ongoing maintenance of the parks.

But the Indiana State Board of Accounts does not consider maintenance of redevelopment properties to be proper use of TIF funds, which it told the town and commission in a letter. Then the commission filed a complaint against the board seeking declaratory relief. The trial court found the language of the relevant statutes shows that the Legislature did not intend for TIF funds to be used for continued maintenance of properties acquired and improved through the use of TIF funds.

In Redevelopment Commission of the Town of Munster, Indiana v. Indiana State Board of Accounts and Paul D. Joyce, State Examiner of State Board of Accounts, 45A04-1408-PL-404, the redevelopment commission challenged the lower court’s holding; the Board of Accounts argued that the commission didn’t have standing to bring the complaint.

“Because the Commission had already budgeted and utilized TIF funds to pay the maintenance expenses of the parks, and in light of the position the Board took in its letter to the Commission, the Commission has shown that it had a substantial interest in determining whether its use of the TIF funds was proper as well as the immediate danger of injury,” Judge Paul Mathias wrote in finding the commission did have standing to bring the complaint.

On appeal, the commission argued that I.C. 36-7-1-18 and 36-7-14-39 should be read to allow for the use of TIF funds to maintain the parks because the maintenance expenses to which the redevelopment commission applies TIF funds are expenses incurred because of the development.

“Our review of the relevant statutes fails to lead us to any provision that expressly permits the Commission to use TIF funds for ongoing maintenance of properties that have already been redeveloped,” Judge Paul Mathias wrote.

The language of I.C. 36-7-14-39(b)(2) indicates that TIF funds are to be spent on the construction and installation of improvements rather than continuing maintenance. In addition, based on Indiana Supreme Court caselaw and the statutory language instructing the commission to dispose of the redeveloped properties once redevelopment is complete, it shows that the Legislature’s intention is that TIF funds no longer be used once redevelopment is complete, the COA held.



Recent Articles by Jennifer Nelson