Resolution No. 3623 (Confirming TIF Expansion REDA) - Signed

Home Browse Search

SOUTH BEND (INDIANA) REDEVELOPMENT COMMISSION STATEMENT DISCLOSING THE IMPACT OF AMENDING THE RIVER EAST DEVELOPMENT AREA AND RIVER EAST ALLOCATION AREA NO. 1 3 ESTIMATED TAX INCREMENT (Cont’d) The calculation of Tax Increment may not include a tax rate that is imposed as a result of a referendum passed after 2009, nor may it include a tax rate associated with a fire territory if the fire territory is established after December 31, 2022. Currently, a post-2009 referendum tax rate is in place in the South Bend - Portage Township and the South Bend - Clay Township taxing districts. Assuming no change in law, any future referendum- approved tax rates will not be included in the calculation of Tax Increment in the Expansion Allocation Area. The incremental assessed value that will result from the Future Development or any additional development will be included in the tax base of the applicable taxing unit for the purposes of calculating the property tax levy associated with a referendum-approved tax rate. Circuit Breaker Tax Credits (Property Tax Caps) Article 10, Section 1 of the Constitution of the State of Indiana (the “Constitutional Provision”) provides that, for property taxes first due and payable in 2012 and thereafter, the Indiana General Assembly shall, by law, limit a taxpayer’s property tax liability to a specified percentage of the gross assessed value of the taxpayer’s real and personal property. Indiana Code 6-1.1-20.6 (the “Statute”) authorizes such limits in the form of a tax credit for all property taxes in an amount that exceeds the gross assessed value of real and personal property eligible for the credit (the “Circuit Breaker Tax Credit”). For property assessed as a homestead (as defined in Indiana Code 6-1.1-12-37), the Circuit Breaker Tax Credit is equal to the amount by which the property taxes attributable to the homestead exceed 1% of the gross assessed value of the homestead. Property taxes attributable to the gross assessed value of other residential property, agricultural property, and long-term care facilities are limited to 2% of the gross assessed value, property taxes attributable to other non-residential real property and personal property are limited to 3% of the gross assessed value. The Statute provides additional property tax limits for property taxes paid by certain senior citizens. If applicable, the Circuit Breaker Tax Credit will result in a reduction of property tax collections for each political subdivision in which the Circuit Breaker Tax Credit is applied. Political subdivisions may not increase their property tax levy or borrow money to make up for any property tax revenue shortfall due to the application of the Circuit Breaker Tax Credit. The Constitutional Provision excludes from the application of the Circuit Breaker Tax Credit property taxes first due and payable in 2012, and thereafter, that are imposed after being approved by the voters in a referendum. The Statute codifies this exception, providing that, with respect to property taxes first due and payable in 2012 and thereafter, property taxes imposed after being approved by the voters in a referendum will not be considered for purposes of calculating the limits to property tax liability under the provisions of the Statute. In this analysis, the Circuit Breaker Tax Credit is estimated to reduce the total Tax Increment for the Allocation Area No. 1, due to the fact that the estimated Tax Increment, based on certified pay 2024 tax rate for the South Bend-Portage Township and South Bend Clay-Township taxing district, is above the maximum threshold of 3% for commercial properties. There can be no assurance that the levies and tax rates of the South Bend - Portage Township and the South Bend - Clay Township and the overlapping taxing units will not increase in some future year to the point of causing the Circuit Breaker Tax Credit to be further applied to taxpayers’ tax bills. ESTIMATED IMPACT OF AMENDING THE AREA, THE ALLOCATION AREA NO. 1, AND THE PLAN The schedules entitled “Estimated Impact of Amending the River East Development Area and River East Allocation Area No. 1 on the Overlapping Taxing Units” provide an estimate of the effects of amending the Area, Allocation Area No. 1, and the Plan on the tax rates and tax levies of the overlapping taxing units (holding all other factors constant). Scenario I: Present Situation (Prior to Amending the Area, the Allocation Area No. 1, and the Plan) Scenario I represents the current situation prior to amending the Area, the Allocation Area No. 1, and the Plan. Scenario I presents the payable 2024 assessed values, property tax levies, and tax rates for the overlapping taxing units. The incremental assessed value of the South Bend – Portage Township taxing district portion of the