County attorney says FabLab invoices likely ineligible for direct TIF reimbursement
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Summary
Kosciusko County legal counsel told the redevelopment commission that many invoices tied to a FabLab project are likely not allowable as direct grants of TIF dollars, and advised alternative mechanisms such as forgivable loans be explored to avoid State Board of Accounts findings.
The Kosciusko County redevelopment commission heard on Wednesday that many of the expenses submitted for reimbursement by FabLab are likely not allowable as direct uses of tax increment financing dollars.
Adam (county legal counsel) told the commission that, after reviewing invoices and consulting outside counsel, the redevelopment commission’s earlier endorsement of the FabLab request must be revisited. "The RDAC cannot grant TIF money for use by a developer, for private property improvements," he said, and warned that reimbursements made without public bidding or other required safeguards could prompt an adverse State Board of Accounts determination.
Alyssa, the county’s chief fiscal officer, had earlier summarized Reedy’s initial review that suggested the project was a suitable use of TIF funds, but she also said subsequent scrutiny revealed line items that raised questions. She read guidance from the State Board of Accounts on allowable flows of funds, noting the accounting concern that "one unit of government should not hold funds that belong to another unit of government." That caution factored into the commission’s discussion of how Claypool’s approved sewer expansion funds might be held and disbursed.
Adam said the legal problem rests on two elements: whether an expense is public infrastructure that benefits the TIF district and whether the payment pathway complied with public-bid and procurement requirements. He noted some invoices appear to be private improvements or post-facto payments that lack the required bidding record. "If the work has already been done and paid for, and it hasn't necessarily gone through public bidding, we can't necessarily let our money go," he said.
The attorney offered alternatives the county could evaluate, including using an economic development commission to issue a forgivable loan that the commission could later repay with TIF dollars where state statute permits. He also referenced guidance in a widely used handbook by Barnes & Thornburg that outlines permitted TIF mechanisms and cautioned against copying practices from other states that do not match Indiana law.
Commission members said they valued the FabLab project and its community benefits — job creation, reuse of a vacant building and addressing food-access concerns were cited — but agreed the payment mechanism must meet state law and accounting rules. The commission directed staff to continue exploring lawful pathways and to involve the county commissioners and outside counsel where necessary. No final recommendation to the county council was made at this meeting.
The commission plans to revisit the matter with more detailed proposals that comply with state statute and the State Board of Accounts guidance.
