Mayoral foes: City must draw residents to bolster tax revenue

The importance of developing and supporting downtown and other city neighborhoods has become a rallying cry for Indianapolis mayoral candidates Joe Hogsett and Chuck Brewer.

That’s because recent population growth in Center Township—if it continues—could signal a turnaround in the central city’s long-term population decline that has put a very real strain on the Indianapolis budget.

But Hogsett, a Democrat, and Brewer, a Republican, want to focus on more than just Center Township. They see opportunities across Marion County for growth.

Both have the right idea, said Michael Hicks, director of the Center for Business and Economic Research at Ball State University, because increasing the city’s population is one of the most effective long-term strategies for boosting its revenue.

“Voters want a quick fix,” Hicks said. “But that is not going to be the saving grace for Indianapolis.

“You can have the headquarters of Eli Lilly and Co., you can have big manufacturers and all kinds of recreational businesses, but unless the people that work there live there, most of the economic impact is ephemeral.”

Revenue from property and income taxes, which pays for most of the city’s operations, declined $67 million in Marion County from 2008 to 2014. And as a result of property-tax caps, the city has become more reliant on income-tax revenue, which benefits a taxpayer’s county of residence.

So, the more high-wage earners living in Marion County, the better for the county’s tax rolls.

The problem is that high-wage earners are living in suburban counties—and the suburbs are growing faster than Marion County. Hamilton County ranked No. 1 in the state in 2013 for median household income, at $84,022. Its population grew 9.5 percent in the last four years. Marion County ranked 79th, with a median household income of $41,478. Its population grew 3.3 percent during that time.

Mayor Greg Ballard, who put a big focus in his second term on increasing downtown housing development to draw high-wage earners, said a mayor’s primary job in a post-property-tax-cap world is “attracting talent.”

“People got the revenue structure they wanted,” Ballard said. “You just have to be creative. You have to build a place they want to live.”

To that end, Hogsett, a former U.S. attorney and secretary of state, said he would “continue the Ballard administration’s encouragement for downtown residential development, which certainly ads income tax revenue and property tax revenue.”

“I would seek to be the kind of mayor that focuses on beyond just the Mile Square but out into neighborhoods … where someone can come to Indy, buy a home, have a yard, hopefully send their kids to quality schools and live, work and play,” Hogsett said.

He plans to focus on capacity-building to do that. He wants to establish “neighborhood districts” to help residents come together to develop new quality-of-life plans. He said the city should seek federal grants to target development in specific neighborhoods rather than “simply reacting” to developers’ whims.

Brewer, a businessman who moved to the city about five years ago, called suburban flight “probably one of the top problems we face as a city.”

He said Indianapolis needs to “expand the pie” of revenue by creating mixed-use “micro-economies” in specific neighborhoods and recruiting people to live here.

“We have to create the kind of neighborhoods that people want to live in and send their kids to schools nearby,” Brewer said. “The way we do that is by revitalizing the economic corridors.”

His economic development proposal includes establishing tax increment financing districts to spur development “when appropriate” in areas including Lafayette Road and Michigan Road, up and down Meridian Street, College and Keystone avenues, on East and West Washington streets, and just south of downtown on Kentucky Avenue and Harding Street.

It can be done

Moving the needle on population and wage growth isn’t easy. But it’s also not entirely out of the mayor’s control, city leaders said.

Ryan Vaughn, who left his job as Ballard’s chief of staff last year to run Indiana Sports Corp., said he’s been encouraged by the “bipartisan recognition” that population growth should be a focus.

“It’s very possible,” Vaughn said. “You just have to have a very specific strategy to do that. Both candidates are talking about the right issues.”

Bill Taft, executive director of the Local Initiatives Support Corp., said the mayor could use the bully pulpit to better promote quality of life. He could also target infrastructure and urban development resources to create desirable, mixed-use neighborhoods or promote better transit options and recruit more jobs downtown.

That could turn the needle more in Indianapolis’ favor.

It seems as if that’s already starting: Center Township’s population dropped nearly 60 percent from 1960 to 2010. But U.S. Census data shows a 3 percent increase since then.

The most recent data says 147,222 people lived in Center Township in 2014. That’s about 15 percent of Marion County’s population of roughly 934,000 people.

And Center Township matters. Its population losses have dragged down the overall city economy in the past. Now, the township’s amenities—more walkable neighborhoods, sports and entertainment complexes, and upscale housing—are considered the best bet for luring high-wage earners back.

“It’s been a long slide down, but it bottomed out and it’s starting to come back,” Taft said. “It’s a matter of supporting and accelerating that trend.”

Matt Kinghorn, a demographer at the Indiana Business Research Center, warned against taking as gospel year-to-year Census estimates at the township level, but he said the upward trend is likely.

“I wouldn’t be at all surprised to see the Center Township population growing the last few years with a lot of the apartment development going on downtown and some neighborhoods with a lot of momentum,” Kinghorn said.

Sticking point: schools

Attracting millennials and retirees—two groups Ballard’s administration targeted with the downtown housing boom—is one way to spur short-term population growth, Hicks said.

But a long-term population boom will come when Indianapolis figures out how to retain young families, he said, which means improving the quality and perception of school districts.

“Far and away beyond anything else, the deepest challenge for any mayor in attracting households to Indianapolis is the dim quality of schools,” Hicks said. “You can get the 20-somethings into Indianapolis, but as soon as they start confronting the location decisions for raising a family, then almost immediately [Indianapolis Public Schools] drops to the bottom of anything you could get within an hour’s drive.”

Both candidates have said they would make improving education in the city a high priority. But Hogsett has said his role is as a cheerleader and convener. Brewer, on the other hand, would try to gain more control over IPS by seeking to appoint two school board members.

“We have to invest in the best quality of education that we can provide kids,” Hogsett said. “That’s what’s going to keep young professionals that are locating in the urban core right here in Marion County.”

Brewer said improving schools is just as important for the mayor as strengthening public safety.

“We will need safe neighborhoods,” Brewer said. “But education and making this the kind of city where [residents’] kids are going to get a great education is essential. Unless we turn around that perception, our financial situation of decreasing income tax revenues is going to continue.”

Several city leaders said the mayor shouldn’t underestimate the importance of marketing to spur population growth.

Molly Chavers, director of the IndyHub young professional network, said the next mayor has an opportunity to “accurately and authentically” tell the city’s story.

“Indianapolis has an incredible opportunity to be best in class across the board,” Chavers said. “We offer a great quality of life. That’s part of Indianapolis’ special sauce, but we all need to be talking about the things we have rather than what we don’t have.”•