Indiana Administrative Code › Title 50 - DEPARTMENT OF LOCAL GOVERNMENT FINANCE › Article 8 - TAX INCREMENT FINANCE › Rule 2 - Determination and Use of Tax Increment › Section 2-4 - Allocation of assessed value

Current through July 10, 2024
Authority: IC 6-1.1-39; IC 36-7-14; IC 36-7-15.1
Affected: IC 6-1.1-39; IC 8-22-3.5; IC 36-7-14-39; IC
				  36-7-15.1
Sec. 4.
(a) For
				purposes of this section, obligations of a redevelopment commission are
				considered to include the payment of all obligations payable from tax increment
				as described in section 13 of this rule, and the funding of all accounts and
				reserves that might be required under a contract with bondholders or with
				lessors in lease financings.
(b)
				For purposes of the collection of tax increment in a particular year, all of
				the potential captured assessment is captured assessment unless the
				redevelopment commission notifies the county auditor by July 15 of the
				immediately preceding year to use only part of the potential captured
				assessment as captured assessment. This notice applies only to that particular
				year. The captured assessment may not exceed the potential captured
				assessment.
(c) Potential captured
				assessment may be captured only if tax increment is needed to satisfy
				obligations of the redevelopment commission. The redevelopment commission must
				determine before July 15 of each year whether the sum of the balance in the
				allocation fund plus estimated future investment earnings on that balance is
				sufficient to satisfy its obligations over the terms of those obligations. If
				so, the commission shall notify the county auditor by July 15 that no tax
				increment will be required in the following year, and that it is not necessary
				for any of the potential captured assessment to be captured. (However, see
				section 13(g) of this rule concerning the payment of collections to enterprise
				zone funds.) The redevelopment commission shall give the notice described in
				subsection (b) if it determines that capture of a portion of the potential
				captured assessment will result in a balance in the allocation fund in the
				following year that, when combined with future investment earnings on that
				balance and the resultant tax increment to be collected in the following year,
				will be sufficient to satisfy its obligations over the terms of those
				obligations.
(d) The redevelopment
				commission should consider giving the notice described in subsection (b)
				whenever it appears that the use of the entire potential captured assessment as
				captured assessment would generate more tax increment than will be needed to
				meet the obligations of the redevelopment commission. For purposes of
				determining the amount of potential captured assessment that will be captured,
				the redevelopment commission must consider the effect that the determination
				will have on the property tax rate in the taxing district in which the
				allocation area is located. The greater the amount of the potential captured
				assessment that is captured, the higher the tax rate and the tax increment will
				be.
(e) This subsection applies if
				notice has been given under subsection (b). To estimate the amount of potential
				captured assessment to be captured, the amount of tax increment that the
				redevelopment commission determines should be collected in the following year
				is divided by an estimate of the tax rate for the following year in the taxing
				district in which the allocation area is located. The estimate of the tax rate
				can be based on the current year's tax rate, with adjustments for changes for
				the following year that will be caused by factors such as the addition or
				elimination of debt service or a cumulative fund by one (1) or more of the
				taxing units that are part of the taxing district. The determination must also
				take into account the percentage of tax increment billed that is expected to be
				collected, any applicable percentage of additional credit or housing program
				credit, and any credits to be paid to taxpayers under IC 36-7-14-39(b)(2)(I).
				The redevelopment commission should determine the captured assessment in
				consultation with the county auditor, and must determine the captured
				assessment in an amount that will ensure that the redevelopment commission will
				receive tax increment sufficient to pay its obligations that are payable from
				tax increment. The county auditor must report any uncaptured assessment to the
				taxing units in which the allocation area is located by August 1.
Example
Desired tax increment = $10,000
Estimated tax rate = $8 (.08)
Estimated collection rate = 95%
Additional credit percentage = 15%
(1) In order to collect ten thousand dollars
				($10,000), taxes billed must be $10,000/.95 = $10,526.
(2) In order to bill ten thousand five
				hundred twenty-six dollars ($10,526), gross taxes (taxes before application of
				the additional credit) must be $10,526/.85 = $12,38Sec. 4.
(3) The amount of potential captured
				assessment to be captured in order to reflect gross taxes of twelve thousand
				three hundred eighty-four dollars ($12,384) is $12,384/.08 =
				$154,800.