News From Terre Haute, Indiana

Local & Bistate

May 21, 2014

Redevelopment Commission: City took TIF money

Mayor Bennett contends city is following new law, blending Redevelopment dollars into Terre Haute budget

TERRE HAUTE — A fight over money and authority seemed to be at the root of a inter-City Hall dispute aired before the public at Wednesday’s meeting of the Terre Haute Redevelopment Commission.

Cliff Lambert, executive director of the city’s Department of Redevelopment, opened the 4 p.m. meeting by reading a nine-minute statement to the five-member commission, which manages the city’s tax increment finance (TIF) districts.

In his statement, Lambert said the Mayor Duke Bennett Administration has withdrawn approximately $3.4 million from Redevelopment Commission bank accounts in the past few weeks.

By withdrawing funds from those accounts without consulting with the Redevelopment Commissioners, the administration has “violated your trust, the public’s trust and mostly likely state of Indiana statutes,” he stated.

Lambert, who sat at the head of the commissioner’s table and before a room of about 27 people, said the “story goes back to” 2010 when the city attempted to “borrow” TIF money for cash flow reasons. Lambert said he angrily rejected that attempt at that time.

Now, the city is doing the same thing, Lambert said. This time, however, the Redevelopment Department has turned over its check books to Leslie Ellis, city controller, in accordance with a new state law widely seen as weakening the autonomy of Redevelopment Departments around the state. Soon after getting the books, Ellis began withdrawing TIF and other Redevelopment funds, he said.

In all, there have been at least three withdrawals, Lambert said. Two of them coincided with “employees pay periods,” implying the money was needed to make payroll.

TIF money cannot, by law, be used for city operating expenses, Lambert insisted.

After Lambert’s statement, Commissioner Brian Conley made a motion that the commissioners ask Ellis to return all of the money to the Redevelopment Department’s checking accounts. Ellis agreed to begin the process. Speaking after the meeting, she said she would do her best to return the funds to those accounts.

“That’s our goal,” she said. “It may take a little longer than 48 hours.”

When asked in the meeting why the money was transferred from the Redevelopment Commission accounts, Ellis said it was to take advantage of better interest rates available in other accounts. When asked later to specify the rates involved, she said she would have to supply that information later. She also said the main reason to move the money was not to take advantage of better interest rates. The main reason was to begin moving Redevelopment Department financing to the City of Terre Haute.

“The main reason we did it was the transition,” she said.

The “transition” refers to making Redevelopment Commissions less independent under a new Indiana law known as State Enrolled Act 118. The new law seems to give controllers broad authority over Redevelopment Department budgets.

“The fiscal officer of the unit establishing a redevelopment commission is the treasurer of the redevelopment commission,” the law states. As treasurer, the “fiscal officer” is responsible for the administration, investment and disbursement of all funds and accounts of the redevelopment commission in accordance with state laws that apply to other funds and accounts administered by that officer, it further states.

Mayor Duke Bennett, reached later Wednesday evening, said the city is trying to fold the Redevelopment Department into the rest of the city government where it can operate like any other department, such as the Parks Department, which also has a governing board. The city wants to operate with fewer checking accounts and pool as much money as possible into a single account, something permitted by that state, he said. That does not mean the Redevelopment Department’s funds are being misused or the Redevelopment Commission obligations cannot be met, Bennett said.

“We pooled money and when they need their money… their expenses will be paid. That’s all based on state statute,” Bennett said.

So the dispute seems to be over the new state law. If not for passage of that law, the city would not have made withdrawals from the Redevelopment Accounts, Bennett said. Lambert, on the other hand, said he disagrees with the city’s interpretation of the law.

Tammy White, an official with the Indiana State Board of Accounts, told the Tribune-Star on Wednesday that state law prohibits Redevelopment Commissions from paying for anything except those things that directly assist a particular TIF district. The only exception is when the commission declares it has more money than it needs and allows other taxing units to obtain some of its funds, she said.

Bennett said he has not heard Lambert’s complaints until Wednesday and urged the Commission, if it believes the City is in the wrong, to file a complaint with the State Board of Accounts to do an investigation.

“I believe we’re on solid ground,” Bennett said.

Bennett also questioned whether the Redevelopment Commission has the legal authority to require the return of the money into its accounts in 48 hours. Chou-il Lee, city attorney, speaking shortly after Wednesday’s meeting, said he believes the commission may have that authority until July 1 when the new law is to be completely in effect.

In any case, Lambert said he does not expect the money to be returned to the accounts by Friday. Nevertheless, he intends to press on with Redevelopment projects, such as a roadway for the Meijer project in the east-side TIF district, he said after the meeting.

The Redevelopment Commission, at Lambert’s suggestion, also passed a resolution Wednesday asking the Redevelopment Department to hire outside legal council to help interpret the new state law.

Reporter Arthur Foulkes can be reached at 812-231-4232 or arthur.foulkes@tribstar.com

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