$3M from general fund, with industrial dev heritage, OK’d by Bloomington city council for tech center

A 3-story 22,000-square-foot technology center in Bloomington’s Trade’s District got the final piece of its funding approved by the city council at last Wednesday’s meeting.

Approved by the city council on Wednesday, with eight of nine votes of support, was a roughly $3-million appropriation from the city’s general fund. Steve Volan abstained.

In round numbers, the $3 million approved by the city council adds to a $3.5 million grant from the federal Economic Development Administration (EDA), and about $2 million in tax increment finance (TIF) money, which was authorized by Bloomington’s redevelopment commission (RDC), to cover the roughly $8.5-million cost of the building.

The new technology center is supposed to coordinate with The Mill, a nearby coworking space, to provide support for emerging tech companies that have progressed beyond the incubation phase and have shown some commercial viability. The effort will be led by former Bloomington mayor John Fernandez, who was recently hired as senior vice president for innovation and strategic partnerships at The Mill.

The city council’s approval on Wednesday came after a postponement from its meeting a week earlier.

The postponement was related to a source of friction between some councilmembers and the administration, over the origin of the general fund money that was appropriated by the council on Wednesday.

Even though the appropriation was from the general fund, it had originated from the establishment of two different CREDs (community revitalization enhancement districts) in Bloomington, for the purpose of infrastructure investments to promote economic development with revenue overseen by Bloomington’s industrial development advisory commission (BIDAC).

[Map of Thomson CRED] [Map of Downtown CRED]

When the CREDs recently expired—and after the BIDAC terminated the districts and dissolved itself last month—the unspent CRED revenue was transferred to the general fund. That’s where it’s supposed to go under state law.

The previous week’s postponement, which had unanimous support from the council, came on a motion from Steve Volan, who wanted an answer to the question: Why was money that had originated as CRED revenue being used for the tech center project, instead of using additional TIF revenue?

Last week, controller Jeff Underwood was not in attendance to answer the question. This Wednesday, Underwood again didn’t attend the council’s meeting. Deputy controller Cheryl Gilliland was on hand to answer questions.

The answer to the basic question—Why CRED money and not TIF?—had been provided in a memo from Bloomington mayor John Hamilton sent before Wednesday’s meeting.

A reason given by Hamilton for not using additional TIF money for the tech center was to avoid putting too much demand on TIF money. Hamilton’s memo points out that Bloomington’s RDC, which oversees TIF revenue, has made a commitment for redevelopment of the Hopewell neighborhood, which is the site of the former IU Health hospital at the corner of 2nd and Rogers streets.

A reason given in Hamilton’s memo for tapping CRED revenue is that the project is consistent with the original purpose of the CRED district—even if the actual site of the technology center is a block outside the geographic boundary of the district.

Hamilton’s memo also makes the point that the CRED revenue that had accumulated in the Thomson CRED and the Downtown CRED—since 1999 and 2004, respectively—had not been generated by any additional taxes that businesses and residents of the districts had paid.

Instead, businesses and residents had paid their regular taxes, and the state of Indiana had “rebated” to the city of Bloomington part of the income taxes and sales taxes originating in those geographic areas.

That point of clarification can be seen as a reaction to the phrasing that Volan typically uses to describe the CRED funds, when he speaks as the city council District 6 representative “on behalf of all the businesses that have ever paid into [the CRED fund].”

The appropriate use of the CRED money has been a sore point for Volan and for other councilmembers—including Dave Rollo, and Isabel Piedmont-Smith—dating back at least to the time when CRED money was floated as a way to help pay for a new police station, to be constructed in the west Showers building where city hall is also located.

During the city council’s January deliberations on the purchase of the west Showers building, Hamilton promised to remove $3 million of planned CRED money from the funding equation—as a way to try to persuade the council to go along with the purchase, which it did in the end.

At one point during Wednesday’s meeting, Volan conveyed his exasperation to Bloomington’s director of economic and sustainability, Alex Crowley, about the fact that Crowley was unable to provide a breakdown of the expenditures that had been made from the CRED funds over the years. The tension was at least partly broken when councilmember Matt Flaherty pointed out that the basic information had been provided in the meeting information packet, as a part of BIDAC’s resolution dissolving itself.

Volan walked from his seat at the far north end of the dais, to Flaherty’s seat at the far south end, to have a look at Flaherty’s screen with BIDAC’s resolution

The core of Volan’s complaint is that the administration has, over the years, not used very much of the money that accumulated in the CRED funds for its intended purposes.

The amount of CRED money that was left unspent was $17.3 million, compared to the total of $22 million that the state of Indiana transferred into it. The amount unspent is nearly 80 percent of the total.

But Hamilton’s memo uses the word “residual” to describe the leftover amount, in clarifying how unspent CRED funds are supposed to be handled: “By providing that residual CRED funds go to the city’s general fund, state law contemplates that those residual funds are available for beneficial projects in the entire city.”

On Wednesday, Volan abstained on the vote to appropriate $3 million, saying he could not vote for it nor vote against it.

Since the current council term began in 2020, Volan has abstained on votes 13 times—which is the highest number of the nine councilmembers. Logging the second highest number of abstentions is Susan Sandberg, who has abstained 7 times.

Last week, Bloomington’s plan commission approved an extension of the approved site plan for the technology center, which it had first approved a year ago.  The groundbreaking had originally been expected in mid-2022.

Table: Compiled CRED fund authorizations from Resolution 23-01 of Bloomington’s Industrial Development Advisory Commission