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HomeMy WebLinkAbout6H (1)to N (-i) Redevelopment Commission Staff Report from Don Inks Proposal from Crowe Horwath for TIF Neutralization Calculations 9/7/11 This proposal is for Crowe Horwath to prepare the City of South Bend Tax Increment Financing Neutralization Worksheets, including collecting the necessary data, preparing the worksheets for each TIF area and filing the worksheets with the Auditor's office. The total cost is not to exceed $15,000 for professional fees. In addition we are requesting a not to exceed amount of $2,500 for incidental costs related to communication, printing, travel expenses and other similar expenses. The total of $17,500 is the same as last year. These calculations are necessary every year in which there is a reassessment of all properties. Historically, these calculations were only required once every ten years when a general reassessment was done. However, now these calculations are needed every year, since every year all property values are adjusted for market trending. This calculation adjusts the base assessed value for each TIF area to "neutralize" the effect of the reassessment. To achieve this neutralization, the base assessed values are adjusted to reflect growth in the County vs. the TIF area, and to achieve the amount of tax revenue collected in prior year plus tax revenue due to new "real growth" and tax abatement roll offs. I have attached a Worksheet from the calculations done last year to further explain this process. Staff recommends favorable consideration by the Redevelopment Commission. Department of Local Government Finance County Auditor's Certificate of Adjustment to the Based Assessed Valuation of TIF Districts Identify the specific allocation area if more than one allocation area is located in the county. TIF District 101 - South Bend Central Downtown County Name St. Joseph County Contact Information: Financial Advisor: Crowe Horwath LLP Name: Peter H. Mullen, County Auditor Name: Herschel Frierson Address: 227 West Jefferson Boulevard, Address: 10 West Market Street 2nd Floor Suite 2000 South Bend, Indiana 46601 Indianapolis, Indiana 46204 -2975 Phone: (574) 235 -9668 Phone: (317) 269 -2377 1. 2010p2011 Gross Real Estate Valuation* of the allocation area $188,993,000 2. 2009p2010 Gross Real Estate Valuation* of the allocation area $192,979,100 3. Divide line 1 by line 2 and carry to 5 decimal places 0.97934 4. 2010p2011 Gross Real Estate Valuation* of the county $14,684,244,670 5. 2009p2010 Gross Real Estate Valuation* of the county $14,871,234,080 6. Divide line 4 by line 5 and carry to 5 decimal places 0.98742 Any contested amount of assessed value subject to appeal should not be included in the gross assessed value of real estate. Amounts do not include non - taxable and government exempt property. 7. 2009p2010 neutralized net base assessed valuation of the allocation $80,740,381 8. Lesser of line 3 or line 6 0.97934 9. Line 8 multiplied by line 7 = tentative new 2010p2011 neutralized base assessed value 79,072,280 Determination of Adequate Potential Captured Assessment (This calculation will be specific to each allocation area within the county.) Ia. Amount of potential captured assessment in 2009p2010. Amount of net assessed value 2009p2010 minus 2009p2010 neutralized base NAV $91,063,010 2a. Abatement reductions, if any, in pre - reassessment values, scheduled to roll off in p2011 $1,420,620 3a. Real Growth, estimated in net assessed value first assessed for 2010p2011 4a. Total of line 1 a plus line 2a = Adjusted Incremental NAV 5a. 2009p2010 net tax rate of the TIF district 5b. Estimated 2010p2011 tax rate 6a. Tax revenue without reassessment line 4a divided by 100 multiplied by line 5a 6b. Tax revenue on real growth line 3a divided by 100 multiplied by line 5b 6c. Total estimated tax revenue without reassessment line 6a plus line 6b 7a. Amount of estimated captured assessment in 2010p2011. Line 6c divided by line 5b times 100 8a. 2010p2011 total net real estate assessed value of the TIF area (no deduction for base assessed value) 9a. Less 2010p2011 contested assessed value of the TIF area (do not include appealed assessed value on real growth shown on line 3a) $92,483,630 $4.8771 $4,510,519 $4,515,666 $92,589,160 $169,496,952 $0 $105,533 $4.8771 $5,147 10a. Line 8a minus line 9a = 2010p2011 net assessed value of the TIF area $169,496,952 11a. Less estimated captured assessment from line 7a $92,589,160 12a. Line 10a minus line 11 a= tentative new base net assessed value $76,907,792 13a. Lesser of line 9 or 12a= 2010p2011 base assessed value, but not less than $0 $76,907,792 The amount on Line 13a is the base amount to be used In the certification of the assessed valuation in those taxing districts containing the speck TIF district. This amount CANNOT be a negative number. If it does calculate to be a negative number, k must be adjusted to zero in order to continue the calculation. 14a. Line 13a divided by line 7 = final neutralization factor (factor multiplied by old parcel base = new base assessed value) The amount of potential captured assessed valuation of the specific TIF district will depend on whether Line 9 or Line 12a is used in determining Line 13a. (A) if line 9 is used, the potential captured assessment is line 10a minus line 13a. (B) Kline 12a is used, the potential captured assessment is the amount on Line 11A. (C) If line 13a is a negative number that must be adjusted to zero, the potential captured assessment is line 10a. What is the potential captured assessment? (A) Line 9 is used for the base assessed valuation for March 1, 2010. (B) Line 12a was used for the base assessed valuation for March 1, 2010. 'The amount indicated in either (A) or (8) is the amount shown as a minus amount in the certification of assessed valuation in those taxing districts containing the specific TIF district. 15. What is the potential tax increment revenue for 2011? 0.95253 Line 12a < Line 9 $ 92,589,160 $4,515,666 I, , Auditor of , County certify to the best of my knowledge that the above base assessed valuation calculation is full, true and complete for the tax increment finance allocation area. Dated this day of , 201_ County Auditor (signature) County Auditor (printed name) (Please submit the completed form to - Budget Director, Department of Local Government Finance, for action) SEND COPY TO GOVERNING BODY OF DISTRICT DEPARTMENT OF LOCAL GOVERNMENT FINANCE CERTIFICATION OF TIF INFORMATION District Name: The base assessed valuation adjustment, as certified, has been approved by the Department of Local Government Finance this day of , 201_ Commissioner, Department of Local Government Finance Crowe Horvath. Crowe Horwath LLP Independent Member Crowe Horwath International 10 West Market Street, Suite 2000 AUG 19 2011 Indianapolis, Indiana 462042975 Tel 317.632.1100 Fax 317.635.6127 www.crovmhorwath.com August 18, 2011 PROJECT ASSIGNMENT City of South Bend, Indiana This document is a Project Assignment based on an agreement entered into between the City of South Bend — Community & Economic Development Office ( "CED Office ") and Crowe Horwath LLP ( "Crowe ") dated February 3, 2010. The title of this Project Assignment is: City of South Bend (the "City ") Tax Increment Financing Neutralization Worksheets The scope of financial advisory services provided by Crowe may include the following: Tax Increment Financing (TIF) Neutralization Worksheet (the "Worksheet ") 1. Collect TIF Data from the St. Joseph County Auditor's Office (the "Auditor's Office ") 2. Preparation of the TIF Worksheet for each Allocation Area located within the City. 3. File the Worksheet and all other necessary documents with the Auditor's Office. Fees Fees shall be billed for the hours expended on this project. Hourly rates are presented below: Partner /Director $ 310 to $ 370 Senior Manager 200 to 250 Manager 155 to 200 Staff 100 to 125 Out -of- pocket expenses At Cost Professional fees for the scope of services outlined above will not exceed $15,000 and this fee will not be exceeded without the written permission of the CED Office. Services requested which are outside the scope of services listed herein will be described and quoted separately. Incidental expenses are usually paid by Crowe and billed to the client at cost. These expenses generally include, but are not limited to, communication, printing, binding and travel expenses incurred on behalf of the client. Project Assignment (Continued) City of South Bend Community & Economic Development Office August 18, 2011 Page 2 Invoices that are not paid within 30 days of receipt are subject to a monthly interest charge of one percent (1.0 %) per month or the highest interest rate allowed by law, whichever is less, which we may elect to waive at our sole discretion, plus costs of collection including reasonable attorneys' fees. In the event the CED Office approves the engagement of Crowe for this assignment, please sign, date and return the enclosed copy of this letter to us. Respectfully submitted, �- Aarlo John R. Skomp Agreed and Accepted: CITY OF SOUTH BEND — COMMUNITY & ECONOMIC DEVELOPMENT OFFICE By: Date: Crowe Horwath LLP is an independent member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath International is a separate and independent legal entity. Crowe Horwath LLP and its affiliates are not responsible or liable for any acts or omissions of Crowe Horwath International or any other member of Crowe Horwath International and specifically disclaim any and all responsibility or liability for acts or omissions of Crowe Horwath International or any other member of Crowe Horwath International. Crowe Horwath International does not render any professional services and does not have an ownership or partnership interest in Crowe Horwath LLP. Crowe Horwath International and its other member firms are not responsible or liable for any acts or omissions of Crowe Horvath LLP and specifically disclaim any and all responsibility or liability for acts or omissions of Crowe Horwath LLP.