DEARBORN COUNTY REDEVELOPMENT COMMISSION
ESTIMATED IMPACT ON THE OVERLAPPING TAXING UNITS OF AMENDING
THE WEST HARRISON ALLOCATION AREA AND ESTABLISHING THE SKALLY'S BAKERY ALLOCATION AREA {ll
The Dearborn County Redevelopment Commission is required by Indiana Code 36-7-14, as amended (the "Act"), to provide a statement disclosing the impact of amending a tax allocation area on the overlapping taxing units. This impact statement discloses and explains the impact on the overlapping taxing units caused by amending the West Harrison Allocation Area (as hereinafter defined), establishing the Skally's Bakery Allocation Area (as hereinafter defined), and designating a taxpayer in the Skally's Bakery Allocation Area.
AMENDMENT OF THE AREA AND THE PLAN
The Dearborn County (the "County") Redevelopment Commission (the "Commission") adopted Resolution No. 1-1999, as confirmed by Resolution No. 2-1999 (collectively, the "1999 Resolution") designating the Interstate 74 & Highway 52 Economic Development Area (the "Original Area") and a coterminous allocation area (the "Original Allocation Area") and approved an economic development plan for the Original Area (the "Original Plan"). The Original Allocation Area expires thirty (30) years from the date of Resolution No. 1-1999.
On February 6, 2006, the Commission adopted Resolution No. 2006-3 (the "2006 Amending Resolution") to expand the Original Area (as amended, the "West Harrison Area") and Original Allocation Area (the "2006 Expansion Allocation Area"), and to amend the Original Plan (as amended, the "2006 Plan"). The 2006 Expansion Area expires thirty (30) years from the date of the 2006 Amending Resolution, or February 6, 2036. The Original Allocation Area and the 2006 Expansion Allocation Area are collectively referred to as the "West Harrison Allocation Area".
On September 16, 2013, the Commission adopted Resol ution No. 2013-DCRC-002 (the "2013 Resol ution") to (1) remove certain parcels from the West Harrison Allocation Area; (2) to create a separate allocation area (the "Whitewater Mill Allocation Area") within the West Harrison Area; (3) designate Whitewater Mi ll, LLC ("Whitewater") and its successors or assigns, or any affiliates of Whitewater and their successors or assigns, as a designated taxpayer for the purpose of capturing increases in depreciable personal property assessed value; and (4) add certain projects to the 2006 Plan (as amended, the "2013 Plan"). The Whitewater Mill Allocation Area will expire twenty-five
(25) years from the date of issuance of debt secured by the allocated property taxes, or at such time as no bonds payable from allocated property taxes are outstanding. The base assessment date of the Whitewater Mill Allocation Area is March 1, 2013.
On November 12, 2015, the Commission adopted a resolution (the "2015 Resolution") to further amend the West Harrison Area and the West Harrison Allocation Area to (1) expand the West Harrison Area and the West Harrison Allocation Area; (2) remove certain parcels from the West Harrison Allocation Area and add additional parcels to create the "Skally's Bakery Allocation Area";
(3) designate Odette, LLC (the "Company") and its successors or assigns, or any affiliates of the Company and their successors or assigns, as a designated taxpayer (the "Designated Taxpayer") for the purpose of capturing increases in depreciable personal property assessed value in the Skally's Bakery Allocation Area; and (4) add certain projects to the 2013 Plan (as amended, "the Plan") (collectively, the "Amendment'').
The Commission also finds that the Amendment will be of public utility and benefit, that the public health and welfare will be benefited, and that the Amendment and the Plan conform to the comprehensive plan for the County.
Tax Increment consists of all property tax proceeds from the assessed valuation of non-residential real and designate
ed depreciable personal property in the allocation area as of the assessment date in excess of the base assessed valuation described in IC 39(b)(I ) of the Act, multiplied by the current property tax rate (referred to throughout this Report as the "Tax Increment"). The base assessed value means the net assessed value of all the property in the allocation area as finally determined for the assessment date immediately preceding the effective date of the declaratory resolution establishing the allocation area pursuant to Section 39 of the Act.
The Original Allocation Area, the 2006 Expansion Area, and the Whitewater Mill Allocation Area shall mai ntain their original base assessment dates, and the Skally's Bakery Allocation Area shall expire twenty-five (25) years from the date of issuance of debt secured by the allocated property taxes, or at such time as no bonds payable from allocated property taxes are outstanding. The base date for the Skally's Bakery Allocation Area is March 1, 2015.
PROJECT SUMMARY
The Company, Odette, LLC, is planning to build a bagel processing facility located within the Skally's Bakery Allocation Area. The Company anticipates investing $20 million in real property and $20 million in personal property (the "New Development").
The Company requested certain incentives in order to locate its new manufacturing facility in Dearborn County (the "Incentive"). The Commission plans to capture the real and depreciable personal property Tax Increment from the New Development in order to provide the Incentive. A portion of the Tax Increment will be pledged to pay bonds that will be purchased by the Company.
ESTIMATED TAX INCREMENT
The Commission currently captures the Tax Increment in the West Harrison Allocation Area, which is located within Harrison Township. Per the Dearborn County Auditor's office, the estimated existing i ncremental assessed value is $1,187,857 for taxes payable in 2015. The incremental assessed value is multiplied by the 2015 tax rate of $1.8466 (per $100 of assessed value) to calculate the estimated annual real property Tax Increment of $21,930.
The Commission intends to remove nine (9) parcels from the West Harrison Allocation Area to create the Skally's Bakery Allocation Area. As a result, the West Harrison Allocation Area's incremental assessed val ue would decrease to $1 ,034,816, which is estimated to generate annual Tax Increment of $19, 1 10.The Commission intends to capture the real and depreciable personal property Tax Increment from the New Development in the Skally's Bakery Allocation Area, located within the West Harrison Area. The estimated real property assessed value is $17,150,000. The estimated assessed value assumes that the new building will be assessed at 85% of the estimated cost and the
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ESTIMATED TAX INCREMENT (Cont'd)
land will be assessed at 90% of the estimated cost. The estimated assessed value of $17, 150,000 is multiplied by the certified 201 5 tax rate for the Harrison Township taxing district (per $100 of assessed value) resulting in the estimated annual Tax Increment of $316,690 from the proposed real property investment. Th.e actual assessed value will be determined by the Dearborn County assessor u pon completion, and the actual value may vary materially different from the value assumed in this analysis.
The Company also proposes to invest $20 million in new equipment. In this analysis, the estimated assessed value is $6 million (which is the estimated value after the depreciation of the equipment to the 30% floor). The estimated depreciable personal property assessed value is multiplied by the certified 2015 tax rate of $1.8466 for the Harrison Township taxing district (per $100 of assessed value) resulting in the estimated annual Tax Increment of $110,800 from the proposed investment in designated depreciable personal property.
The total estimated Tax Increment from the existing incremental assessed value (less the value of the ni ne parcels removed) and the New Development is $446,600. No adjustment for future statewide reassessments or trend ing was made in this analysis. Future tax rates and assessed value may differ from the tax rates and assessed value used in this analysis and the differences could have an impact on the actual Tax Inc1·ement. For the purposes of this analysis, it has been assumed that the equ ipment will be purchased as new and be depreciated in Pool #2 (5-8 year useful life) for property tax purposes. Once instal led, the Company may report the depreciation in a different pool, which may have a material effect on the resulting tax increment calculations. No assumption has been made for future equipment reti rement/replacement. See sections below for additional information about the recent legislative changes as they relate to property tax changes.
Circuit Breaker Tax Credits (Property Tax Caps)
In 2007, the Indiana General Assembly enacted legislation (IC 6-1.1-20.6), which would provide taxpayers with a tax credit for property taxes in an amount that exceeded a certain percentage of the gross assessed value of real and personal property (the "Circuit Breaker Tax Credit") in effect creating a property tax cap.
Circuit Breaker Tax Credits (Property Tax Caps) (Cont'd)
Beginning with property taxes payable in 2010, and every year thereafter, property taxes for homesteads are limited to 1 .0% of the gross assessed value of the homestead; property taxes for agricultural, other residential property and long term care facilities are limited to 2.0% of their gross assessed value; and property taxes for all other real and personal property are limited to 3.0% of gross assessed value. In November of 20 I 0, Indiana voters passed a proposal to add the Circuit Breaker Tax Credit to the Indiana Constitution at the 1.0%, 2.0% and 3.0% levels, with special provisions applicable to Lake and St. Joseph Counties. Additional property tax limits have been made available to senior citizens that meet certain income and property assessed value thresholds.
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ESTIMATED TAX INCREMENT (Cont'd)
If applicable, the Circuit Breaker Tax Credit will result in a reduction of property tax collections for each political subdivision i n which the Circuit Breaker Tax Credit is applied. A political subdivision may not increase its property tax levy or borrow money to make up for any property tax revenue shortfall due to the application of the Circuit Breaker Tax Credit.
In this analysis, the Circuit Breaker Tax Credit is not assumed to reduce the estimated Tax Increment because, based on the 2015 tax rates, the estimated Tax Increment is below the maximum threshold of 3.0% of the gross assessed value for commercial and industrial property. There can be no assurance that the levies and tax rates of the County and the overlapping taxing units will not increase in some future year to the point of causing the Circuit Breaker Tax Credit to be applied to taxpayers' tax bills.
ESTIMATED IMPACT OF AMENDING THE AREA
The schedule entitled "Estimated Impact on the Overlapping Taxing Units of Amending the West Harrison Allocation Area and Establishing the Skally's Bakery Allocation Area" provides an estimate of the effect on the tax rates of the overlapping taxing units (holding all other factors constant) of amending the West Harrison Allocation, establishing Skally's Bakery Allocation Area, and naming a designated taxpayer.
Scenario I: Present Situation (Prior to the Amendment of the Area)
Scenario I represents the current situation (based on payable 2015 property tax information) prior to the amendment of the West Harrison Allocation Area. Scenario I presents the payable 2015 assessed values, property tax levies, and tax rates for the overlapping taxing units and provides the estimated existing Tax Increment of $21 ,930 which is currently captured in the West Harrison Allocation Area.
Scenario II: Assumes the Area isAmended
Scenario II depicts the impact on the overlapping taxing units (holding all other factors constant) if the West Harrison Allocation Area is amended, the Skally's Bakery Allocation Area is established, and a Designated Taxpayer is identified to capture Tax Increment from the New Development to finance the Incentive. Scenario II assumes the capture of an estimated $17, 150,000 of real property incremental assessed value and $6 million of incremental assessed value from the Company's designated depreciable personal property (after full depreciation) from the New Development to be located in the Skally's Bakery Allocation Area. The incremental assessed value is estimated to generate annual Tax Increment of $316,690 from the real property investment and $110,800 from the depreciable personal property investment.
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ESTIMATED IMPACT OF AMENDING THE AREA (Cont'd)
Scenario II also assumes that nine (9) parcels will be removed from the West Harrison Allocation Area to create the
Skally's Bakery Allocation Area. As a result, the West Harrison Allocation Area's incremental assessed
value will decree
se to $1,034,816,which is estimated to generate annual Tax Increment of $19,110.
Scenario III: Assumes the Area is NOT Amended
Scenario Ill represents the impact on the overlapping taxing units if the Area is not amended, and therefore, assumes that the New Development would not occur. Without the Tax Increment to finance the Incentive, it is assumed that the Company would not locate its new manufacturing facility in Dearborn County.
Impact Summary
The Commission has determined that the capture of increases in assessed value from the New Development (including the Company's real property and designated depreciable personal property) in the Skally's Bakery Allocation Area will not have a negative impact on anticipated revenues or the tax rates of the taxing u nits that are wholly or partially located in the West Harrison Area.
The Commission has made a finding that the designation of Odette, LLC (the Company) as a Designated Taxpayer wi ll result in new property taxes that would not have been generated without this new allocation provision. The Company requested incentives in order to locate and construct its new bagel processing facility in Dearborn County. The Commission cannot finance the Incentive without the Tax Increment from the New Development, including the capture of increases m depreciable personal property taxes from the Designated Taxpayer's new facility.
Therefore, the Commission does not believe that there is a negative impact on the taxpayers or the taxing units. Without the TIP-funded Incentive, the New Development would not be located in Dearborn County and the property would remain undeveloped and the tax base would remain unchanged. During the period of the Tax Increment capture, the tax base of the overlapping taxing un its will remain the same (hold ing other factors constant). After the expiration of the Skally's Bakery Allocation Area, the additional assessed value will increase the property tax base of all the overlapping taxing units.
Please note that for purposes of estimating the impact of Tax Increment financing, certain factors were held constant in this analysis. No other growth in real or personal property assessed value was assumed to take place anywhere in the County or within the Area. No increases in the budgets of the overlapping taxing units were assumed for purposes of this analysis. Potential impacts from future statewide reassessments or trending were not included in this analysis.
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ESTIMATED IMPACT OF AMENDING THE AREA (Cont'd) NON-PROPERTY TAX IMPACTS
Additional local income taxes would be generated from the new jobs associated with the New Development, assuming the new employees will be new residents of Dearborn County or from incremental growth in wages and income of current and new employees. Increases in employees and wages, would, in tum, increase local spending and commercial activity as well as residential growth. Additional revenue sources, which would potentially increase as a result of new business enterprises which locate to the West Harrison Area include: motor vehicle highway funds, local road and street funds and excise taxes.
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DEARBORN COUNTY REDEVELOPMENT COMMISSION
ESTIMATED IMPACT ON THE OVERLAPPING TAXING UNITS OF AMENDING
THE WEST HARRISON ALLOCATION AREA AND ESTABLISHING THE SKALLY'S BAKERY ALLOCATION AREA {ll
SCENARIO I: PRESENT SITUATION
Represents 2014 taxes payable 2015 property tax levies, assessed valuation, and tax rates.
Total Tax Rate (per $I 00 AV) $1.8466 $0.0000 $0
Total Tax Rate (per $100 AV) $1.8466 $0.0000 $0
(l) Based on information provided from the 2015 Budget Order. Existing Tax Increment is based on information from the Dearborn County Auditor's office.
(2) Tax rates are not adjusted for rate driven
funds. Assumes these funds are at their maximum rates.
(Subject to the attached Impact Statement dated January 20, 2016)
