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Something Stinks: TIF District Manipulation

This article is the second in a series titled “Something Stinks,” focusing on Terre Haute’s ongoing struggles with corruption. The first article in that series focused on the highly suspicious events revolving around Terre Haute’s wastewater treatment facility. If you read that article when it was first published you might want to check it out again, because a few important updates have been added recently. The title of this series comes from Terre Haute’s efforts and success in getting rid of the terrible smell that plagued our city for decades, but now we need to put forth the same effort in getting rid of the corruption that “stinks” even worse. 

Here I will focus on Terre Haute’s TIF districts and in upcoming articles I hope to cover Hatch Act infractions, campaign finance violations, widespread nepotism, and collusion in the city and county’s bidding processes. So what exactly is a TIF district? TIF districts or Tax Increment Finance districts were created in the late 80’s to help bring investment to “blighted” areas of a community. It’s important to remember that, like many other programs, TIFs were created to help the most vulnerable neighborhoods within a city but have since been used by municipalities to benefit large developers.

This can be seen in the discrepancies on Terre Haute’s own redevelopment and TIF webpage. The city outlines the areas that are in the most need of outside investment, but none of our TIFs are in those areas. Terre Haute currently has six TIF districts, the downtown corridor, HWY 46 and Margaret Ave, the Fort Harrison Business Park, the airport, and Union Hospital. There may or may not be anything illegal about the location of these districts but they certainly do not represent the initial purpose behind the establishment of TIF districts. What may be illegal is how Terre Haute is using those funds, but the details of how our districts operate differently from others around the country has already been covered here by the Sardonic Spectator.

Terre Haute’s TIF districts represent a scheme playing out across the country. Communities devote themselves to a form of “trickle down” economics, but the benefits of those policies never trickle down. This can be seen in the tremendous economic development all over the city but almost every major statistical measure of city data related to community wide improvement is either declining or static. A major purpose of TIFs were to help increase employment. According to the Bureau of Labor Statistics Terre Haute’s unemployment over the past five years is up 1.4% from 6.5% in 2015 to 7.9% in 2020, and up 1.6% over the past 15 years from 6.3% in 2005.

As I mentioned earlier Terre Haute mirrors the national trend of economic policies that primarily benefit the upper class, but never end up trickling down. Take the decades-long growth of income inequality around the country. According to the Pew Research Center, Upper Level incomes have grown from 28% to 48% as a share of US Aggregate Income, while Middle Level incomes have dropped from 62% to 43%, and Lower Level incomes have declined slightly from 10% to 9%. It is this Lower Level income bracket that is hurt most by TIFs that are not being used for the primary purpose of helping to bring investment to blighted areas.

Image from Pew Research Center: Trends in Income and Wealth Inequality

These lower income level communities have been hit hard over the past ten years. Median household income in Terre Haute has gone down 7% from $38,991 in 2011 to $36,406 in 2019 (2011 income adjusted for inflation). Add to that the fact that these lower income communities map directly onto historically redlined districts and we see that the ongoing effects of systemic racism are still plaguing our community. While some people might view bending TIF district rules to benefit special interests as a form of “soft corruption,” it is still corruption none the less.

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