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Home My WebLink About6I(1) Proposal for TIF Neutralization Workseets~ L ~-~ Redevelopment Commission Staff Report from Don Inks Proposal fi-om Crowe Horwath for TIF Neutralization Calculations 6/ 1 /09 This proposal is for Crowe Horwath to prepare the City of South Bend Tax Increment Financing Neutralization Worksheets, including collecting the necessary data, preparing t11e worksheets for each TIF area and filing the worksheets with the Auditor's office. The total cost is not exceed $20,000 for professional fees and $2,500 for incidental costs related to communication, printing, travel expenses and other similar expenses. 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 104 -South Bend West Washington County Name Saint Joseph Contact Information: Financial Advisor: Crowe Horwath LLP Name: Michael C. Eby, County Auditor Name: Herschel Frierson Address: 227 West Jefferson Boulevard, 2nd Floor Address: 10 West Market Street, Suite 2000 South Bend, Indiana 46601 Indianapolis, Indiana 46204-2975 Phone: (574) 235-9668 Phone : (317) 269-2377 1. 2007p2008 Gross Real Estate Valuation' of the allocation area $ 55,397,500 2. 2006p2007 Gross Real Estate Valuation' of the allocation area $ 57,452,625 3. Divide line 1 by line 2 and carry to 5 decimal places 4. 2007p2008 Gross Real Estate Valuation` of the county 5. 2006p2007 Gross Real Estate Valuation' of the county 6. Divide line 4 by line 5 and carry to 5 decimal places 0. $ 10,225,208,380 $ 9.974,323,521 1.02515 *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. Current net base assessed valuation of the allocation area: 8. Lesser of line 3 or line 6 9. Line 8 multiplied by line 7 =tentative new 2007p2008 base assessed value $ 35.449.399 0.96422 $ 34.181,020 Determination of Adequate Potential Captured Assessment (This calculation will be specific to each allocation area within the county.) 1 a. Amount of potential captured assessment in 2006p2007. Amount of net assessed value 2006p2007 minus current base NAV $ 7,890,416 2a. Abatement reductions, if any, in pre-reassessment values, scheduled to roll off in p2008 $ 148,233 3a. Real Growth, estimated in net assessed value first assessed for 2007p2008 4a. Total of line 1a plus line 2a =Adjusted Incremental NAV 5a. 2006p2007 net tax rate of the TIF district 5b. Estimated 2007p2008 tax rate 6a. Tax revenue without reassessment line 4a multiplied by line 5a 6b. Tax revenue on real growth line 3a multiplied by line 5b 6c. Total estimated tax revenue without reassessment line 6a plus line 6b $ 8,038,649 $ 3.9607 $ 3.9607 $ 318,387 $ 88,905 $ 407,292 7a. Amount of adequate potential captured assessment required in 2007p2008. Line 6c divided by 2007p2008 net tax rate. This rate will need to be estimated. Do not use a net rate in excess of the 2006p2007 tax rate unless you are aware of a large increase in a capital project. Net tax rate used to divide into Line 6c $3.9607 $ 10,283,330 8a. 2007p2008 total net real estate assessed value of the TIF area (no deduction for base assessed value) $ 42,198,500 9a. Less 2007p2008 contested assessed value of the TIF area $ - (do not include appealed assessed value on real growth shown on line 3a) 10a. Line 8a minus line 9a = 2007p2008 net assessed value of the TIF area $ 42,198.500 11a. Less adequate potential captured assessment from line 7a $ 10,283,330 12a. Line 10a minus line 11a =tentative new base net assessed value $ 31,915,170 13a. Lesser of line 9 or 12a = 2007p2008 base assessed value $ 31,915.170 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 specific TIF district. This amount CANNOT be a negative number. If it does calculate to be a negative number, it must be adjusted to zero in order to continue the calculation. 14a. Line 13a divided by line 7 =factor (factor multiplied by old parcel base =new base assessed value) 0.90030 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) If line 12a is used, the potential captured assessment is the amount on Line 11A. If line 13a is a negative number that must be adjusted to zero, the potential captured assessment is the amount on line 10a. What is the potential captured assessment? (A) Line 9 is used for the base assessed valuation for March 1, 2007. Line 12a < Line 9 (B) Line 12a was used for the base assessed valuation for March 1, 2007. $ 10,283,330 '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. If applicable. please disclose on the following page any information regarding contractual obligations or debt service to be paid from the proceeds of the tax increment revenues for the ensuing budget year. 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 County Auditor (signature) 200_ County Auditor (printed name) (Please submit the completed form to John Mailers-Budget Director, Department of Local Government Finance, for action) 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 .200_ Commissioner. Department of Local Government Finance DEPARTMENT OF LOCAL GOVERNMENT FINANCE DISCLOSURE OF CONTRACTURAL OBLIGATIONS AND DEBT SERVICE Please use additional sheets if necessary 1. Describe the contractual obligation or debt service to be paid from the tax increment revenues. 2. List the date the contractual obligation or debt service was issued. 3. List the total amount of tax increment revenues required for the remainder of this contractual obligation or debt service. 4. List the amount of tax increment revenues required for this contractual obligation or debt service for the current budget year. 5. Is the contractual obligation or debt service supported by revenues other than tax increment revenues? If so, please describe. (Ex: CAGIT, COIT, CEDIT, ad valorem property taxes. other) Crowe Horwath,., Crowe Horwath LLP Member Crowe Horwath International PROJECT ASSIGNMENT City of South Bend, Indiana 10 West Market Street, Suite 2000 Indianapolis, Indiana 46204-2975 Tel 317.632.1100 Fax 317.635.6127 www.crowehorwath.com May 20, 2009 This document is a Project Assignment based on an agreement entered into between the City of South Bend ("City") and Crowe Horwath LLP (formerly, Crowe Chizek and Company LLC) ("Crowe") dated March 27, 2006. The title of this Project Assignment is: City of South Bend Tax Increment Financing Neutralization Worksheets The scope of financial advisory services provided by Crowe may include the following: Tax Increment Financin~(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 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: Executive $ 260 to $ 390 Senior Manager 155 to 250 Manager 120 to 155 Staff 90 to 120 Out-of-pocket expenses At Cost Project Assignment (Continued) City of South Bend, Indiana May 20, 2009 Page 2 Professional fees for the scope of services outlined above typically will not exceed $20,000 and this fee will not be exceeded without the written permission of the City. Services requested which are outside the scope of services listed herein will be described and quoted separately. Incidental costs are usually paid by Crowe and billed to the client at cost. These costs generally include, but are not limited to, communication, printing, binding and travel expenses incurred on behalf of the client and not to exceed $2,500. In the event the City approves the engagement of Crowe for this assignment, please sign, date and return the enclosed copy of this letter to us. Respectfully submitted, ~`~~~~~ ~''l ~ ,/~~ /~ r Michael A. Claytor Agreed and Accepted: CITY OF SOUTH SEND, INDIANA By: Date: Crone 1 fonralG I_LP is a member oJ~Cron~e Ilonvulb Inlernaliaml: I seorurlion, rr Suds as_so~ra/iort ~l Jm~r~alG). Is'arG memGerfarm of Honualli u a sepaizrle rrnd independent legal erdity. Crory tlor~natG LLP curd ils a~iliules mr na1 rr ponsible orlable fanny ar7s nr omissions ofHonnatG or any othermember of Hmrvaih and ~perijiarlly dirdaim any and alL rrspons76ilily or ha/nlily Jor gels or omissiorcr of HorvrrlLr nr any olGer men7ber of Hm~r~atb. Horvath does not under any professional serrrcer and does na! bare an orr~nerrhip orpm/rrerrGip interest in Ciorvo Harral6 l.l.P. I-]orv~alG and its otter nrenrGer firrn.~~ mr nod re.r/~onsiLle or k~aUle fnr any adr or orrrissrons of Cron~a Honr~atL LLP mul ~~ieeifreu/ly disrGrmr any and all nr.ponrilnlity rn~ liability for ads or omi.ctions of Crone 1-Ionvrrlh LLP. ~~~ 2008 Crorve Hmrr~alG 1_.LP