Study: No significant TIF impact on taxes (03/15/06)

A study conducted for the Portland Redevelopment Commission concludes that a tax increment financing (TIF) plan would have no significant impact on other taxing units.

“The analysis shows that no direct or indirect material impact would occur to the taxing units overlapping with the TIF area,” wrote Greg Guerrattaz of Financial Solutions Group Inc., Bloomington.

However, the study acknowledges that those other taxing units — the county, school corporation, township, city, and library — would not receive about $200,000 each year that they would otherwise get if the TIF district did not exist.

None of the taxing units would lose property tax revenues they are now receiving, but the redevelopment commission would capture property taxes from the new Wal-Mart SuperCenter and a nearby strip mall now under construction.

It would also capture property taxes on any other new construction within the district in the future.

But because it can be argued that those would not occur except for infrastructure improvements made by the redevelopment commission, Guerrettaz wrote, “there is theoretically no argument that capturing the increased assessed valuation impacts other units of government.”

The Guerrettaz study will be on the agenda at a public hearing scheduled for Thursday at 6 p.m. in the Community Resource Center conference room, 118 S. Meridian St., Portland.

Guerrettaz estimated development within the district will generate more than $7 million in personal property investment which will be taxable by the other taxing units but won’t be taxed by the district.

The revenue from those personal property taxes could offset the impact of the lost taxes on real property, he concluded.

“We believe this district, in three to four years, will generate as much as it consumes,” he said.

Jay County Development Corporation executive director Bob Quadrozzi said the $7 million figure was developed based upon planned capital equipment investment within the district. Some of that capital equipment investment would be eligible for tax abatement, but not all of it.

“That ($7 million) may be a very conservative figure, but that’s what we used,” said Quadrozzi.

When a TIF district is created, property assessments within the district are essentially frozen, with the same level of revenues going to units of government other than the redevelopment commission.

The commission then receives property tax revenues from the higher assessed valuation stemming from new development within the district. Those revenues are used to fund infrastructure improvements within the district.

Guerrettaz estimates $4.2 million is needed for projects within the district, an area with complex boundaries which stretches from an area west of the Wal-Mart site to downtown Portland and includes Airport Industrial Park.

Widening of Industrial Park Drive and an extension of Lafayette Street to the west are among the projects city officials have cited as possibilities.

Guerrettaz said he arrived at the $4.2 million figure after discussions with The Schneider Corporation, an Indianapolis engineering firm working with the city.

The study estimates that the redevelopment commission would be able to capture property tax revenues on $6,427,080 in assessed valuation in 2008. That is estimated to rise steadily to more than $7 million by tax year 2011.

The captured tax revenues would come mostly from the Wal-Mart SuperCenter, Guerrettaz said.

He compared the increases in assessed valuation of Wal-Mart SuperCenters in Brownsburg and Avon — which are similar to the size of Portland’s new Wal-Mart — to come up with these estimates.

The Jay School Corporation, which is the largest property tax recipient in the county, would see $55,903 go to the TIF district in 2008 that it otherwise would have received for its general fund and transportation fund. Another $23,690, which would otherwise have gone to capital projects, bus replacement, and pre-school special education, would go to the TIF district that year.

That makes the total impact $79,593 in 2008. In tax year 2011, the total impact is estimated at $87,255.

Again, the school corporation would not receive less in the way of total property taxes; but it would not benefit from the assessed valuation of the SuperCenter.

For county government, the total of funds captured by the TIF district that otherwise would have gone into county coffers is estimated at $35,580 in 2008. That would rise to an estimated $39,005 by 2011.

For city government, the estimate is $78,629 in 2008, rising to an estimated $86,198 by 2011.

For Jay County Public Library, the estimate is $4,576 in 2008, rising to an estimated $5,017 by 2011.

For Wayne Township, the estimate is $1,305 in 2008, rising to an estimated $1,430 by 2011.

Calculations of the estimated impact are complex because some government funds have controls on their tax levy, the total amount that can be raised, while others have controls on the tax rate.[[In-content Ad]]