04-28-08 Council Meeting Agenda & Packet

Home Browse Search

South Bend Common Council RE: Tax Abatement for River Rock, Incorporated April 15, 2008 Page 2 PLEASE NOTE: The applicant, River Rock, is respectfully requesting a special exception because the project does not meet the general standards for real property tax abatement as set forth in Chapter 2, Article 6, Sections 2 -77 through 2 -83.3 of the Municipal Code of the City of South Bend. Indiana State's legislation on tax abatement has a provision for the granting of tax abatements on properties that have been vacant for at least one year (IC 6 -1.1- 12.1 -4.8). However, because this is a relatively new provision the City's code does not provide for it. The state legislation provides up to two years of tax abatement on the property subject to certain limitations on the amount of the property's assessed valuation that can be considered in calculating the abatement. The petitioner is respectfully requesting a two year abatement. In this particular case the property was first listed for sale in March 2006, for $340,000. Despite two price reductions bringing the cost down to $225,000 the property still did not sell. The Boy Scouts vacated the building on March 31, 2007, and River Rock finally purchased it on April 14, 2008. As noted this abatement only applies to a limited portion of the property's total assessed valuation. This portion is equivalent to the estimate annual rent that the property could generate. The Building Owners and Managers (BOMA) Report prepared by the Department of Community and Economic Development was consulted to estimate the property's potential annual rent at $70,616 (equivalent to $13 /sq.ft.). Total taxes to be abated during the two -year (2) abatement period on the affected assessed valuation are estimated at $4,274. Total taxes to be paid during the two -year (2) abatement period on the affected assessed valuation are estimated at $1,425. During the abatement period River Rock will pay property taxes on the remainder of the assessed valuation at normal rates. The taxes on the remainder are estimated at $5,724 per year. All of the above are new taxes to the City because the Boy Scouts as a non - profit organization, paid no property taxes. EMPLOYMENT IMPACT Per the petition, it is estimated that the total project will create two (2) new, permanent, full -time jobs representing a new annual payroll of $80,000. The project will also retain eight (8) existing, permanent, full -time jobs representing an annual payroll of $400,000. ABATEMENT QUALIFICATION A review of the tax abatements previously granted finds that the petitioner has not been granted or associated with any previous tax abatements: 2. The Building Commissioner has reviewed the petition and finds the property to be properly zoned for the proposed project.