Abatements and TIFs
Personal Property Abatement – a property tax deduction from the assessed valuation granted by a designating body for the installation of qualifying abatable equipment in an ERA.
Real Property Abatement – a property tax deduction from the assessed valuation granted by the designating body for the construction of a new structure or a rehabilitation of property in an ERA. (It does not include land)
Vacant Building Abatement – a property tax deduction from the assessed valuation granted by the designating body for the occupancy of an eligible vacant building used & zoned for C/I purposes in an ERA. (It must be unoccupied for one year and it does not include land)
Economic Revitalization Area (ERA) – an area that is within the corporate limits of a city, town, or county that has become undesirable for, or impossible of, normal development and occupancy. It must also have a legal description for a piece of real estate and, if ownership transfers, the designation transfers with the property.
Designating Body – also called a “governing body”. For a county without a consolidated city, the designating body is the fiscal body of the city, town, or county. For a consolidated city, the designating body is the metropolitan redevelopment commission.
Types of Abatements:
- Research & Development
- Information Technology
- Logistical Distribution
Although this information is believed to be reliable, it is not guaranteed. This overview does not substitute as a legal opinion. This information, provided by a DLGF presentation, can be found on https://www.in.gov/dlgf/
Tax Increment Financing (TIF) is a government finance mechanism for development and redevelopment that captures increases in taxable assessed value within a defined area and then uses property tax revenue derived from these increases to finance public improvements within specified area.
The statute over Redevelopment Commissions and the use of Tax Increment Financing is found in IC 36-7-14.
TIF is a powerful financing tool used to fund economic development and investment in infrastructure. The principle behind TIF is based on “capturing” future increased tax dollars that are generated due to the development. Debt using TIF is outside of the normal controls and limits on debt in Indiana.
Uses of TIF Proceeds:
- Pay expenses of Redevelopment Commission for the public improvements
- Pay principal and interest on bonds or leases
- Fund Roads, streets and sidewalks for access to new development
- Construction of water and sewer lines
- Acquisition of real estate
- Construction of parking facilities
- Implementation of street lighting
Basic TIF Model:
- “Base” represents the base assessed value of the area before the creation of the TIF.
- “Increment” is the increased assessed value of the area after the redevelopment from the improvements financed by the TIF.
- Base and Increment can also refer to the tax dollars generated in the area both before the development and afterwards. Incremental revenues are the additional taxes after the real estate development which is “captured” for the TIF.
- Ideally, base revenues are continually generated at the same level as before the development
Basic definitions: IC 36-7-14 Section 39 contains several important definitions
- Allocation area – part of a redevelopment project area to which an allocation provision of a declaratory resolution adopted under section 15 of this chapter refers for purposes of distribution and allocation of property taxes. The “allocation area” is also known as the TIF district with the boundaries specified in the declaratory resolutions.
- Base assessed value – generally means the assessed value of the allocation area at the time the allocation area is established. However, it depends when the allocation area was created and can vary with reassessment and trending.
- Incremental assessed value – increases in assessed value after the allocation area is established.
- Increases in taxes over the base are paid to the redevelopment commission. Occasionally, this has the effect of freezing the amount of levy paid to the base.
- The incremental assessed value can take assessed value from the base in cases where outstanding debt service obligations are not sufficiently funded.
- Tax increment is to be spent within the allocation area or serving the allocation area.
This is a very general overview of this complicated statute. Although this information is believed to be reliable, it is not guaranteed. This overview does not substitute as a legal opinion. This information is provided by a DLGF presentation and can be found on in.gov/dlgf
Boone County TIFs
Boone County and the various municipalities currently have 25 TIF areas to support economic growth for our communities. Please use the following link to see the TIF map on the Boone County GIS.