06-08-09 Common Council Meeting - Laserfiche WebLink

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REGULAR MEETING JUNE 8, 2009 Councilmember White made a motion to combine Bill Nos. 09-41 and 09-42 for the purpose of Public Hearing. Councilmember Oliver Davis seconded the motion which carried by a voice vote of eight (8) ayes. Councilmember Rouse, Chairperson, Community and Economic Development Committee, reported that this committee held a Public Hearing on these bills this afternoon and voted to send both Bill Nos. 09-41 and 09-42 to the full Council with no recommendation. Mr. Bernie Feeney, Registered Land Surveyor, 715 South Michigan, South Bend, Indiana, made the presentation for this bill on behalf of the petitioner, Cleland Builders. Mr. Feeney advised that this particular piece of property was omitted from an earlier renewal on the abatement for Jade Crossing Section I, omitted at the direction of the Economic Development Department and the reason for that omission was because this particular piece of property contains a house. The house is currently being used by Cleland Builders as a model home and is asking for their abatement at this time so that the model home can be sold. This sale is contingent upon the abatement being granted for this particular piece of property. Councilmember Rouse stated that Cleland Builders was using this model home as an office and had usage of that property and paying taxes. He stated that the house was built in 2006 and paid a total of $255.00 in taxes on that particular piece of property. He stated that he wanted to know why Cleland Builders would come before this Council and asked for a Tax Abatement, given this history of how generous this Council has been to Cleland Builders and know that the City has a budget crisis, knowing that they have not paid proper taxes on this property for three years. Mr. Feeney that this Council has not only be gracious but has along with the predecessors who sat on this Council before had tremendous foresight in granting abatement not only on this piece of property but a number of pieces of property throughout the City of South Bend. Tax Abatement was created as a tool to stimulate building within the City of South Bend. As a result, many developers, Cleland Builders among them have decided to take their land and at their expense extend sewer and water to the property, develop the property and annex it into the City of South Bend. Not only because of the sewer and water that is available to them, but also because of the economic stimulus provided through abatement. This has been a bold move that has created building starts with the City of South Bend. Those building starts have created a not so much a lessening of property taxes, but they have allowed taxes to increase less rapidly than they might have otherwise have without these homes, to spread some of the tax burden throughout the city. This home in and of itself, by its definition as a model home has been provided special treatment by the Indiana Legislature. The Indiana Legislature back in 1975-1980 in conjunction with the Indiana Association of Home Builders in active legislation which home builders to build spec homes or model homes that were allowed to be taxed at a pro-rata portion of the original rate at which the undeveloped land was taxed. Mr. Feeney gave an example of a 40 acre piece of land and it was developed into eight (80) th home sites and build one home on one of those home sites, 1/80 would be paid in taxes. And that would remain in effect until that home was sold to the first owner. This allowed builders to construct model homes to show their skill to the public in a real environment, where the public would find it desirable to build homes not only of that type but in that sub-division. That stimulus kept the building industry going through many lean times like the one that this economy is going through right now and has suited the building industry and the State of Indiana throughout those lean times. That law is still on the books and that law is the reason that Cleland Builders has approximately $73.00 in taxes over the past three years on this particular piece of property. This is by no means a rationalization but once this piece of property is sold, if the abatement is granted, there will be an increase of approximately six times that rate of taxes for a period of five (5) years. That six times increase may not sound like much that after that five year period, it will revert to its normal rate which will twenty times the amount that it currently pays. It will be consistent with the other homes in that subdivision. This home like others in that 15