HomeMy WebLinkAbout2016 Continuing Disclosure - Sewage WorksCity of South Bend, Indiana
$9,345,000 Sewage Works Revenue Bonds of 2010
CUSIP Base 836615
(Dated December 21, 2010)
$21,500,00 Sewage Works Revenue Bonds of 2011
CUSIP Base 836615
(Dated October 25, 2011)
$25,000,000 Sewage Works Revenue Bonds of 2012
CUSIP Base 836615
(Dated December 13, 2012)
Annual Information
for Compliance with
SEC Rule 15(c)2-12
ANNUAL WASTEWATER FLOW DATA
2012 2013 2014 2015 2016
Capacity (MGD) 48 48 48 48 77
Average Daily Flow (MGD) 31.77 30.69 32.00 30.20 35.00
Peak Flow (MGD) 63.70 62.50 68.50 57.70 83.80
Annual Flow (MGD) 11,596 11,203 11,677 11,023 13,014
Note: Peak Capacity is 77 MGD.
Source: City of South Bend Municipal Sewage Works
NUMBER OF SEWAGE WORKS CUSTOMERS
Year
2012 39,068
2013 39,322
2014 39,461
2015 39,763
2016 40,073
Source: City of South Bend Municipal Sewage Works
LARGEST SEWAGE WORKS CUSTOMERS
As of December 31, 2016 the ten largest customers of the Utility were as follows:
% of Total
Annual Annual Operating
Customer Consumption Billings Revenue
(in CCF)
I/NTEK Plant 799,248 $2,281,926 6.10
University of Notre Dame 711,576 1,760,269 4.71
Noble Americas SB Ethanol 251,551 782,598 2.09
Memorial Hospital 97,734 359,863 0.96
Honeywell Aerospace Co 63,455 291,165 0.78
Laurenz Place LLC 47,760 184,609 0.49
South Bend Community School Corp 37,780 171,507 0.46
Castle Point Apts 42,810 170,864 0.46
Aramark Uniform Services 50,154 169,295 0.45
St. Joseph County Maintenance Department 45,152 168,015 0.45
Total for Ten Largest Customers 2,147,220 $6,340,111
Total Consumption for Utility 5,745,831
Total Operating Revenues of the Utility $37,383,406
Largest Customers Percent of Total 37.37% 16.96%
Source: City of South Bend Municipal Sewage Works
1
CITY OF SOUTH BEND
of Customers
Total Number
SCHEDULE OF INDEBTEDNESS
Original Final Outstanding
Direct Debt Par Amount Maturity Amount
Self-Supporting Revenue Debt (1)
Waterworks Refunding Revenue Bonds of 2016 $3,300,000 01/01/27 $3,300,000
Waterworks Revenue Bonds of 2012 8,300,000 01/01/33 6,925,000
Waterworks Refunding Revenue Bonds of 2012B 3,785,000 01/01/23 2,380,000
Waterworks Revenue Bonds of 2009, Series A (SRF) 427,332 01/01/30 332,562
Waterworks Revenue Bonds of 2009, Series B 5,380,000 01/01/30 4,325,000
Sewage Works Refunding Revenue Bonds of 2015 27,440,000 12/01/25 24,965,000
Sewage Works Refunding Revenue Bonds, Series 2013A 14,765,000 12/01/24 8,050,000
Sewage Works Revenue Bonds of 2012 25,000,000 12/01/32 20,890,000
Sewage Works Revenue Bonds of 2011 21,500,000 12/01/31 17,295,000
Sewage Works Revenue Bonds of 2010 9,345,000 12/01/30 7,145,000
Sewage Works Revenue Bonds of 2009 (SRF) 3,297,000 12/01/28 2,249,643
Waterworks and Sewage Works Leases 3,325,737
Subtotal 101,182,942
Tax Supported Debt
Economic Development Income Tax Bonds of 2015 $5,605,000 08/01/35 $5,295,000
Century Center Energy Conservation Bonds of 2015 (QECB) 4,167,897 05/01/31 4,145,311
Redevelopment Authority
Lease Rental Revenue Bonds, Series 2015 25,000,000 02/01/37 25,000,000
Lease Rental Revenue Refunding Bonds of 2015 31,450,000 02/15/33 29,420,000
Lease Rental Revenue Refunding Bonds, Series 2013 3,990,000 05/01/26 3,175,000
Taxable Lease Rental Revenue Refunding Bonds, Series 2011A 7,580,000 02/01/18 1,230,000
Lease Rental Revenue Refunding Bonds, Series 2011B 2,980,000 02/01/18 485,000
Special Program Refunding Bonds, Series 2011A
(Downtown Central Development Area) 18,030,000 08/01/24 11,850,000
Special Program Refunding Bonds, Series 2011A
(Airport Development Area) 10,435,000 08/01/24 6,755,000
(Continued on next page)
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The following schedule shows the outstanding indebtedness of the City and the taxing units within and overlapping its
jurisdiction as of February 15, 2017, as reported by the respective taxing units.
The City anticipates making substantial improvements to the Sewage Worksover thenext 20 years as part of its
Long Term Control Plan and a Consent Decree entered into between the City and the U.S. Department of Justice
and USEPA. The cost estimate for the Consent Decree is approximately $600 million. The exact costs and
timing of these improvements are still to be determined.
(1)
CITY OF SOUTH BEND
Original Final Outstanding
Par Amount Maturity Amount
Tax Supported Debt (Cont'd.)
Redevelopment District
Special Taxing District Refunding Bonds of 2014 3,440,000 01/01/22 2,210,000
Taxable Revenue Bonds, Series 2010 4,980,000 01/15/19 1,340,000
City of South Bend Building Corporation
First Mortgage Revenue Bonds, Series 2013 5,580,000 02/01/33 4,920,000
First Mortgage Revenue Refunding Bonds, Series 2012 13,595,000 02/01/23 8,265,000
County Option Income Tax Lease Rental Revenue
Refunding Bonds of 2010 6,075,000 02/01/21 2,470,000
Leases and Loans 13,048,082
Subtotal 119,608,393
Total Direct Debt $220,791,335
Percent Amount
Allocable to Allocable to
Overlapping Debt Total Debt City (2)City
Tax Supported Debt
$30,465,000 28.17% $8,581,991
114,089,291 52.85% 60,296,190
36,675,073 2.68% 982,892
Mishawaka-Penn-Harris Public Library 2,475,000 2.19% 54,203
St. Joseph County Public Library 4,015,000 49.51% 1,987,827
12,080,000 28.17% 3,402,936
Tax Supported Debt 75,306,039
Self-Supporting Revenue Debt
875,000 62.41% 546,088
Self-Supporting Revenue Debt 546,088
Total Overlapping Debt $75,852,127
3
Based upon the 2016 payable 2017 net assessed valuation of the respective taxing units.(2)
St. Joseph County (3)
(3)
The schedule presented above is based on information furnished by the obligors or other sources and is deemed reliable.
The City makes no representation or warranty as to its accuracy or completeness.
On December 30, 2014, the City of South Bend's Mayor, as the executive of the City, designated a portion of the
City's distributive share of County Economic Development Income Tax to St. Joseph County (the "County"),
pursuant to IC 6-3.5-7-15, in such amount as necessary to pay the annual debt service of 29.03% of the County's
Economic Development Income Tax Revenue Bonds of 2014 ("County Bonds"), as long as these County Bonds
remain outstanding. The principal balance outstanding attributable to the City was $2,386,508 as of December 31,
2016, as the City prepaid some of the outstanding principal amount.
CITY OF SOUTH BEND
South Bend Public Transportation
South Bend Community School Corporation
SCHEDULE OF INDEBTEDNESS
(Cont'd)
Penn-Harris-Madison School Corporation
St. Joseph County Airport Authority
DIRECT DEBT ISSUANCE LIMITATION (CITY OF SOUTH BEND)
Certified Net Assessed Valuation - 2016 Payable 2017 $2,317,096,240
2% of One-Third Thereof 15,447,308
Less Bonds subject to limitation:
Economic Development Income Tax Bonds of 2015 (5,295,000)
Issuance Margin $10,152,308
Population - 2010 101,168
Certified Net Assessed Valuation - 2016 Payable 2017 $2,317,096,240
Ratio of
Debt Per Debt/Assessed
Description Amount Capita Valuation
Total Direct Debt and Lease Obligations $220,791,335 $2,182.42 9.53%
Total Overlapping and Underlying Direct Debt and Lease Obligations 75,852,127 749.76 3.27%
Totals $296,643,462 $2,932.18 12.80%
ESTIMATED DEBT SERVICE COVERAGE CALCULATION
Adjusted Operating Revenues $38,393,530
Less: Operation and Maintenance ("O&M") Expenses (14,920,525)
Net Revenues Available for Debt Service 23,473,005
Estimated Combined Annual Debt Service 9,165,416
Coverage - $$14,307,589
Coverage - %256.10%
CITY OF SOUTH BEND
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The District is limited to the issuance of direct general obligation debt in an amount not to exceed 2% of one-third of the
assessed valuation.
PER CAPITA AND DEBT RATIO ANALYSIS
Issue Original Final
Title Date Amount Maturity Outstanding
Economic Development Income Tax Bonds of 2015 2015 $5,605,000 08/01/35 $5,295,000
St. Joseph County
Economic Development Income Tax Revenue Bonds of 2014 2014 2,657,697 12/31/34 2,386,508 (1)
Total $7,681,508
(1)
Issue Original Final
Title Date Amount Maturity Outstanding
County Option Income Tax Lease Rental Revenue
Refunding Bonds of 2010 2010 $6,075,000 02/01/21 $2,470,000
Taxable Revenue Bonds, Series 2010 2010 4,980,000 01/15/19 1,340,000
First Mortgage Revenue Refunding Bonds, Series 2012 2012 13,595,000 02/01/23 8,265,000
Total $12,075,000
Issue Original Final
Title Date Amount Maturity Outstanding
Lease Rental Revenue Refunding Bonds, Series 2013 2013 $3,990,000 05/01/26 $3,175,000
Century Center Energy Conservation Bonds of 2015 (QECB) 2015 4,167,897 05/01/31 4,145,311
Total $7,320,311
CITY OF SOUTH BEND
These Bonds are payable solely from the City's share of the St. Joseph County Economic Development Income Tax and do not
constitute a claim against the base property taxes collected or other income of the City.
COUNTY OPTION INCOME TAX LEASE RENTAL REVENUE BONDS
(As of February 15, 2017)
These Bonds are payable solely from the City's share of the St. Joseph County Option Income Tax and do not constitute a claim
against the base property taxes collected or other income of the City.
5
(Continued on next page)
HOTEL-MOTEL TAX REVENUE DEBT
(As of February 15, 2017)
CITY ECONOMIC DEVELOPMENT INCOME TAX REVENUE BONDS
(As of February 15, 2017)
On December 30, 2014, the City of South Bend's Mayor, as the executive of the City, designated a portion of the City's
distributive share of County Economic Development Income Tax to St. Joseph County (the "County"), pursuant to IC 6-
3.5-7-15, in such amount as necessary to pay the annual debt service of 29.03% of the County's Economic Development
Income Tax Revenue Bonds of 2014 ("County Bonds"), as long as these County Bonds remain outstanding. The
principal balance outstanding attributable to the City was $2,386,508 as of December 31, 2016, as the City prepaid some
of the outstanding principal amount.
(Cont'd)
Issue Original Final
Title Date Amount Maturity Outstanding
Lease Rental Revenue Bonds, Series 2015 2015 $25,000,000 02/01/37 $25,000,000
Lease Rental Revenue Refunding Bonds of 2015 2015 31,450,000 02/15/33 29,420,000 (1)
Special Taxing District Refunding Bonds of 2014 2014 3,440,000 01/01/22 2,210,000 (1)
Special Program Refunding Bonds, Series 2011A 2011 18,030,000 08/01/24 11,850,000
(Downtown Central Development Area)
Special Program Refunding Bonds, Series 2011A 2011 10,435,000 08/01/24 6,755,000
(Airport Development Area)
Total $75,235,000
Final
Title Maturity Outstanding
Waterworks Refunding Revenue Bonds of 2016 01/01/27 $3,300,000
Waterworks Revenue Bonds of 2012 01/01/33 6,925,000
Waterworks Refunding Revenue Bonds of 2012B 01/01/23 2,380,000
Waterworks Revenue Bonds of 2009, Series A (SRF) 01/01/30 332,562
Waterworks Revenue Bonds of 2009, Series B 01/01/30 4,325,000
Sewage Works Refunding Revenue Bonds of 2015 12/01/25 24,965,000
Sewage Works Refunding Revenue Bonds, Series 2013A 12/01/24 8,050,000
Sewage Works Revenue Bonds of 2012 12/01/32 20,890,000
Sewage Works Revenue Bonds of 2011 12/01/31 17,295,000
Sewage Works Revenue Bonds of 2010 12/01/30 7,145,000
Sewage Works Revenue Bonds of 2009 (SRF) 12/01/28 2,249,643
Waterworks and Sewage Works Leases 3,325,737
(1) The Bonds are payable from a Special Ad Valorem Tax; however, it is the intent of the City to pay from Tax Increment
Revenues.
6
The City of South Bend owns and operates the municipal waterworks and municipal sewage works (the "Utilities") which have
heretofore issued and have outstanding the following revenue bonds. All such revenue bonds constitute a lien on the revenue
of the utilities and are not, pursuant to Indiana statures, direct obligations of the City. Revenue bonds issued of the Utilities
and outstanding as of February 15, 2017, were as follows:
STATEMENT OF CITY UTILITY REVENUE DEBT
TAX INCREMENT FINANCING (TIF) REVENUE DEBT
(As of February 15, 2017)
Year City of South Bend St. Joseph County
2013 $2,336,906,810 $7,671,151,787
2014 2,181,510,508 7,514,198,242
2015 2,230,375,068 7,864,008,472
2016 2,257,279,248 7,906,760,026
2017 2,317,096,240 8,201,203,024
Source: Department of Local Government Finance Certified Budget Orders.
2013 3.4%
2014 3.4%
2015 3.3%
2016 3.3%
2017 3.23%
Cigarettes: Gasoline:
Per 20 Cigarette Pack Per Gallon
2013 $0.995 $0.18
2014 0.995 0.18
2015 0.995 0.18
2016 0.995 0.18
2017 0.995 0.18
7
7% tangible personal property except food and prescription drugs.
Excise tax in lieu of personal property tax, based on initial retail price and age of
vehicle.
Additional 6% sales tax on any overnight stay in St. Joseph County.
INNKEEPERS TAX
INDIVIDUAL ADJUSTED GROSS INCOME
EXCISE TAX
AUTOMOBILE TAX
Personal Exemptions: $1,000 annual exemption allowed for taxpayer and $1,500 for
each dependent child.
0.25% of adjusted gross income of St. Joseph County resident taxpayers and certain non-
resident St. Joseph County taxpayers.
0.4% of adjusted gross income of St. Joseph County resident taxpayers and certain non-
resident St. Joseph County taxpayers.
0.4996% of adjusted gross income of St. Joseph County resident taxpayers and certain
non-resident St. Joseph County taxpayers.
COUNTY OPTION INCOME TAX
LOCAL OPTION INCOME TAX
0.6004% of adjusted gross income of St. Joseph County resident taxpayers and certain
non-resident St. Joseph County taxpayers.
LOCAL OPTION INCOME TAX PUBLIC SAFETY
CITY OF SOUTH BEND
CERTIFIED ASSESSED VALUATION
SALE & USE TAX
COUNTY ECONOMIC DEVELOPMENT INCOME TAX
St. Joseph County
Year Personal Total Total
Payable Real Estate Utilities Property Taxable Value Taxable Value
2013 $1,858,213,181 $100,832,450 $412,042,066 $2,371,087,697 $7,753,967,187
2014 1,687,672,152 90,252,180 431,802,340 2,209,726,672 7,612,534,622
2015 1,753,122,893 86,924,710 420,221,715 2,260,269,318 7,894,770,717
2016 1,737,036,616 83,786,930 456,346,197 2,277,169,743 7,993,696,892
2017 1,758,787,301 105,036,200 463,676,740 2,327,500,241 8,262,636,370
Note: See footnote (a) at the end of this report.
CITY OF SOUTH BEND
SCHEDULE OF HISTORICAL NET ASSESSED VALUATION
(As Provided by the St. Joseph County Auditor's Office)
City of South Bend
8
TOTAL CERTIFIED TAX RATES
City of South Bend - Portage Township
Per $100 of Net Assessed Valuation
Year Taxes Payable
2013 2014 2015 2016 2017
County $0.6731 $0.7058 $0.6866 $0.6974 $0.6950
Portage Township 0.0453 0.0505 0.0500 0.0512 0.0527
Schools 1.3493 1.3577 1.2940 1.2682 1.2049
Library 0.3227 0.3309 0.3207 0.3549 0.3372
Corporation
General 2.5678 2.7977 2.8313 2.8703 2.8382
Park & Recreation 0.5102 0.5608 0.5676 0.5754 0.6473
Cumulative Cap Development 0.0328 0.0328 0.0325 0.0321 0.0313
Total Corporation 3.1108 3.3913 3.4314 3.4778 3.5168
Redevelopment General 0.0599 0.0379 0.0687 0.0648 0.0376
Airport 0.0330 0.0345 0.0338 0.0423 0.0285
Transportation 0.1042 0.1125 0.1100 0.1153 0.1161
Total Tax Rate $5.6983 $6.0211 $5.9952 $6.0719 $5.9888
Total District Certified Tax Rate (1)
South Bend - Centre Twp. $5.6530 $5.9804 $5.9591 $6.0315 $5.9361
South Bend - Clay Twp. $5.6653 $6.0039 $5.9762 $6.0517 $5.9686
South Bend - German Twp. $5.6659 $5.9839 $5.9591 $6.0342 $5.9486
South Bend - Portage Twp. $5.6983 $6.0211 $5.9952 $6.0719 $5.9888
South Bend - Penn Twp. $5.3092 $5.7143 $5.5980 $5.6233 $5.5146
South Bend - Warren Twp. $5.6938 $6.0117 $5.9861 $6.0630 $5.9753
(1) Includes certified tax rates of overlapping taxing units.
Source: DLGF Certified Budget Orders for the City.
9
CITY OF SOUTH BEND
PROPERTY TAXES LEVIED AND COLLECTED
Certified
Taxes Levied
Certified Net of Collected as Collected as
Collection Taxes Circuit Breaker Circuit Breaker Taxes Percent of Percent of
Year Levied Tax Credit Tax Credit Collected Gross Levy Net Levy
(1)
2012 $70,756,844 ($23,965,911) $46,790,933 $47,728,794 67.45% 102.00%
2013 72,696,497 (27,863,156) 44,833,341 43,943,006 60.45% 98.01%
2014 73,981,565 (28,708,050) 45,273,515 44,540,371 60.20% 98.38%
2015 76,533,090 (31,636,141) 44,896,949 45,265,669 59.15% 100.82%
2016 78,503,658 (32,421,068) 46,082,590 47,766,833 60.85% 103.65%
Source: The St. Joseph County Auditor's Office and the DLGF Certified Budget Orders for the City.
CITY OF SOUTH BEND
10
(1) Circuit Breaker Tax Credits allocable to the City per the DLGF.
Note: See footnote (b) at the end of this report.
LARGE TAXPAYERS
Percent of
2016/2017 Total
Net Assessed Net Assessed
Name Type of Business Valuation Valuation (1)
Indiana Michigan Power Company (2) Electric utility $50,290,160 2.16%
University of Notre Dame (2) Higher education 43,287,836 1.86%
Edward Rose of Indiana (2) Apartment complexes 37,011,700 1.59%
Honeywell International, Inc./ Bendix Corp. (2) Mfg. auto and aircraft parts 35,957,771 1.54%
Steel Warehouse Co., Inc./ Lock Joint Tube LLC (2) Steel processing 33,327,984 1.43%
Indiana Bell Telephone Co, Inc./ AT&T Telecommunications utility 33,185,910 1.43%
Services, Inc. (2)
JVE Investments LLC/ The Tire Rack, Inc. (2) Tire sales 24,703,590 1.06%
Federal-Mogul Powertrain Systems Mfg. automotive parts 23,751,180 1.02%
Northern Indiana Public Service Company (2) Gas & electric utility 22,260,990 0.96%
Eddy Property Development, Inc./ South Bend Healthcare clinic 21,728,410 0.93%
Clinic LLP (2)
Totals $325,505,531 13.98%
(1)
(2)
11
CITY OF SOUTH BEND
The total net assessed valuation of the City is $2,327,500,241 for taxes payable in 2017, according to the St. Joseph
County Auditor's office.
The following is a list of the ten largest taxpayers located within the City.
Source: County Auditor's office and the DLGF. Individual parcel data is submitted by the County Auditor to the DLGF
once a year for preparation of the county abstract.
Located in a tax increment allocation area; therefore, all or a portion of the taxes are captured as TIF and not
distributed to individual taxing units.
As of
Assets 12/31/2016
Current Assets:
Cash and cash equivalents $2,964,074
Investments 10,325,798
Accounts receivable (net of allowance) 2,613,508
Accounts receivable - other 195,403
Interfund receivables 3,038
Inventories 171,415
Prepaid items 28,364
Restricted assets:
Cash and cash equivalents:
Reserve O&M fund 1,032,056
Repair fund 390,961
Bond and interest account 181,600
Debt service reserve account 4,111,633
Construction fund 654,127
Improvement fund 1,606,803
Cash with fiscal agent 248,464
Investments:
Reserve O&M fund 3,595,323
Repair fund 1,361,970
Bond and interest account 632,630
Construction fund 2,278,748
Improvement fund 5,597,539
Interest receivable 57,010
Total Current Assets 38,050,464
Noncurrent Assets:
Capital assets:
Land and construction in progress 19,623,750
Utility plant in service 222,739,478
Less: Accumulated depreciation (84,833,001)
Total Noncurrent Assets 157,530,227
Total Assets $195,580,691
Deferred Outflows of Resources:
Unamortized loss on refunding $2,161,726
Total Assets and Deferred Outflows $197,742,417
(See Accountants' Compilation Report)
SOUTH BEND (INDIANA) MUNICIPAL WASTEWATER UTILITY
STATEMENT OF NET POSITION
(Continued on next page)
12
(Cont'd)
Liabilities 12/31/2016
Current Liabilities:
Accounts payable $1,208,302
Interfund payables 4,330
Accrued payroll payable 198,966
Compensated absences payable 266,190
Current liabilities payable from restricted assets:
Accounts payable 1,224,297
Mortgage bonds payable 70,725
Revenue bonds payable 6,835,000
Capital leases payable 595,824
Notes and loans payable 162,472
Accrued interest payable 193,294
Total Current Liabilities 10,759,400
Noncurrent Liabilities:
Mortgage bonds payable (net of unamortized discount) 270,739
Revenue bonds payable (net of unamortized discounts and premiums) 71,636,002
Capital leases payable 1,254,995
Notes and loans payable 2,087,171
Total Noncurrent Liabilities 75,248,907
Total Liabilities $86,008,307
Net Position
Investment in capital assets $76,468,118
Restricted for debt service 9,359,948
Restricted for capital outlay 8,912,920
Unrestricted 16,993,124
Total Net Position $111,734,110
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SOUTH BEND (INDIANA) MUNICIPAL WASTEWATER UTILITY
STATEMENT OF NET POSITION
As of
(See Accountants' Compilation Report)
For the Calendar
Year Ended
12/31/2016
Operating Revenue:
Metered revenue:
Residential $22,745,117
Commercial 8,932,627
Industrial 5,705,662
Penalties 667,656
Other 342,468
Total Operating Revenue 38,393,530
Operating Expenses:
Collection system 5,083,825
Treatment and disposal 8,272,042
Customer accounts 254,407
Administrative and general 1,310,251
Subtotal 14,920,525
Depreciation expense 6,832,296
Total Operating Expenses 21,752,821
Operating Income (Loss) 16,640,709
Non-operating Revenue (Expenses):
Interest revenue 374,036
Insurance reimbursement 16,007
Management fee (1,261,956)
Miscellaneous (26)
Interest expense (2,667,860)
Debt issue costs (1,750)
Gain (loss) on disposition of assets (602,403)
Repair fund revenue 627,897
Repair fund expense (500,292)
Total Non-operating Revenues (Expenses) (4,016,347)
Income (Loss) Before Contributions and Transfers 12,624,362
Payment in lieu of tax (3,672,060)
Change in Net Position 8,952,302
Net Position - Beginning 102,781,808
Net Position - Ending $111,734,110
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SOUTH BEND (INDIANA) MUNICIPAL WASTEWATER UTILITY
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
(See Accountants' Compilation Report)
(a) "Net Assessed Value" or "Taxable Value" represents the "Gross Assessed Value" less certain deductions for mortgages,
veterans, the aged, the blind, economic revitalization areas, resource recovery systems, rehabilitated residential property,
solar energy systems, wind power devices, hydroelectric systems, geothermal devices and tax-exempt property. The "Net
Assessed Value" or "Taxable Value" is the assessed value used to determine tax rates.
Pursuant to State law, personal property is assessed at its actual historical cost less depreciation, in accordance with 50 IAC
4.2, the DLGF's Rules for the Assessment of Tangible Personal Property. Effective January 1, 2016, state law annually
exempts from property taxation new tangible business personal property with an acquisition cost of less than $20,000.
Pursuant to State law, real property is valued for assessment purposes at its "true tax value" as defined in the Real Property
Assessment Rule, 50 IAC 2.4, the 2011 Real Property Assessment Manual ("Manual"), as incorporated into 50 IAC 2.4 and
the 2011 Real Property Assessment Guidelines, Version A ("Guidelines"), as adopted by the DLGF. P.L. 204-2016, SEC. 3,
enacted in 2016, retroactive to January 1, 2016, amends State law to provide that "true tax value" for real property does not
mean the value of the property to the user and that true tax value shall be determined under the rules of the DLGF. As a
result of P.L. 204-2016, the DLGF has begun the process of amending the Manual. In the case of agricultural land, true tax
value shall be the value determined in accordance with the Guidelines and IC 6-1.1-4, as amended by P.L. 180-2016.
P.L. 180-2016 revises the factors used to calculate the assessed value of agricultural land. This legislation is retroactive to
the January 1, 2016 assessment date and applies to each assessment date thereafter. The revised factors enacted in the
legislation may reduce the total assessed value of agricultural land, which could shift property tax liability from agricultural
property owners to other property owners. In addition, the reduction in the assessed value of agricultural land may result in a
reduction of the total assessed value. Lower assessed values may result in higher tax rates in order for a unit to receive its
approved property tax levy.
Except for agricultural land, the Manual permits assessing officials in each county to choose any acceptable mass appraisal
method to determine true tax value, taking into consideration the ease of administration and the uniformity of the
assessments produced by that method. The Guidelines were adopted to provide assessing officials with an acceptable
appraisal method, although the Manual makes it clear that assessing officials are free to select from any number of appraisal
methods, provided that they produce "accurate and uniform values throughout the jurisdiction and across all classes of
property". The Manual specifies the standards for accuracy and validation that the DLGF uses to determine the acceptability
of any alternative appraisal method.
(b) Indiana Code 6-1.1-20.6 provides taxpayers with 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 (“Circuit Breaker Tax Credit”).
Property taxes for residential homesteads are limited to 1% of the gross assessed value of the homestead; property taxes for
agricultural, other residential property and long term care facilities are limited to 2% of their gross assessed value; and
property taxes for all other real and personal property are limited to 3% of gross assessed value. Additional property tax
limits have been made available to certain senior citizens.
Since July 1, 2012, property tax revenue subject to reduction by the Circuit Breaker Tax Credit under Indiana Code 6-1.1-
20.6-9.8 is classified as either "protected taxes" or "unprotected taxes." "Protected Taxes" include taxes levied to pay debt
service or lease rental on obligations payable from ad valorem property taxes. A debt service fund containing Protected
Taxes is funded first by the taxing unit before property taxes are deposited into any other funds.
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 accordance with the Constitutional Provision, the General Assembly has, in the Statute, designated Lake County and St.
Joseph County as "eligible counties" and has provided that property taxes imposed in these eligible counties to pay debt
service and make lease rental payments for bonds or leases issued or entered into before July 1, 2008 or on bonds issued or
leases entered into after June 30, 2008 to refund those bonds or leases, will not be considered for purposes of calculating the
limits to property tax liability under the provisions of the Statute, through and including December 31, 2019.
CITY OF SOUTH BEND
FOOTNOTES
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