Indiana Administrative Code › Title 50 - DEPARTMENT OF LOCAL GOVERNMENT FINANCE › Article 8 - TAX INCREMENT FINANCE › Rule 2 - Determination and Use of Tax Increment › Section 2-9 - Apportionment; real property example

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; IC
				  36-7-15.1
Sec. 9.
This section addresses the apportionment to restore the base
				  assessment that might be required as described in section 8 of this rule. (This
				  is required only if the percentage of credit on taxes on the current base
				  assessment individual components differs from the percentage of credit on taxes
				  on the captured assessment individual components.) This section deals with a
				  tax increment finance program that includes only real property. If the current
				  year's assessed value of some of the parcels of allocation area real property
				  is lower than it was on the base assessment date, then those lower assessed
				  values must be compared with the assessed values of parcels whose current
				  year's assessed value is higher than it was on the base assessment date. From
				  the assessed value of the parcels whose assessed value is higher than it was on
				  the base assessment date, an amount must be apportioned to restore the base
				  assessment. The base assessment is restored by adding the amount apportioned
				  with respect to each such parcel to the original base assessment individual
				  real property component of that parcel. The apportionment is in the proportion
				  that the amount of the aggregate decreases in the assessed valuation of
				  allocation area real property from the base assessment date to the current
				  assessment date bears to the amount of the aggregate increases in the assessed
				  valuation of allocation area real property from the base assessment date to the
				  current assessment date.
Example
(1) Base
				assessment date is March 1, 1986.
(2) There are five (5) parcels of allocation
				area real property.
(3) AV =
				assessed valuation.
TABLE 1
3/1/86 AV
3/1/88 AV
Increases
Decreases
Parcel #1
$10,000
$20,000
+ $10,000
#2
20,000
5,000
- $15,000
#3
12,000
38,000
+ 26,000
#4
6,000
3,000
- 3,000
#5
15,000
15,000
__________
______________
$63,000
$81,000
+ $36,000
- $18,000
(4)
				The AV of all allocation area real and personal property in 1986 is sixty-three
				thousand dollars ($63,000) (base assessment).
(5) The AV of all allocation area real
				property in 1988 is eighty-one thousand dollars ($81,000). The potential
				captured assessment in 1988 is $81,000 - $63,000 = $18,000.
(6) Table 2 lists the current AV of the
				original base assessment individual real property components.
TABLE 2
1988 AV of the Original Base Assessment Individual Real
						  Property Components
Parcel #1
$10,000
#2
5,000
#3
12,000
#4
3,000
#5
15,000
$45,000
(7)
				The taxing units are actually entitled to tax AV in the amount at least equal
				to the base assessment, which was sixty-three thousand dollars ($63,000).
				Therefore, there must be an apportionment to the taxing units of part of the
				increases that occurred between 1986 and 1988 with respect to Parcels #1 and #3
				in order to assign to the taxing units an additional eighteen thousand dollars
				($18,000) from those increases to restore the base assessment. The
				apportionment is in the proportion that aggregate decreases in assessed
				valuation of allocation area real property from 1986 to 1988 (eighteen thousand
				dollars ($18,000)) bears to the aggregate increases in assessed valuation of
				allocation area real property from 1986 to 1988 (thirty-six thousand dollars
				($36,000)). Therefore, the percentage of the increase in assessed valuation of
				each real property parcel whose AV is greater in 1988 than it was in 1986 that
				is assigned to restore the base assessment is fifty percent (50%)
				($18,000/$36,000 = 50%).
TABLE 3
AV Increase 1986 to 1988
Apportionment Percentage
Assigned to Taxing Units to Restore the Base
						  Assessment
Parcel #1
$10,000
50%
= $5,000
#3
26,000
50%
=
13,000
$18,000
(8)
				The additional eighteen thousand dollars ($18,000) assigned to the taxing units
				to restore the base assessment of sixty-three thousand dollars ($63,000) is
				obtained by assigning five thousand dollars ($5,000) from the Parcel #1
				increase and thirteen thousand dollars ($13,000) from the Parcel #3 increase.
				With respect to each parcel of allocation area real property, the following
				AV's (listed in the "Total" column) are considered part of the base assessment
				and are taxable by the taxing units in the same manner as property located
				outside of the allocation area:
TABLE 4
1988 AV of the Original Base Assessment
						  Individual Real Property Components
Apportionment of Increase from 1986 to 1988
Total
Parcel #1
$10,000
+ $5,000
= $15,000
#2
5,000
5,000
#3
12,000
+ 13,000
= 25,000
#4
3,000
3,000
#5
15,000
______________
15,000
$45,000
$18,000
$63,000
(9)
				The remainder of the increases in AV from 1986 to 1988 are considered to be
				potential captured assessment. The potential captured assessment individual
				components are as follows:
TABLE 5
AV Increase 1986 to 1988
Apportioned to Taxing
						  Units
Remainder
Parcel #1
$10,000
- $5,000
= $5,000
#3
26,000
-
13,000
=
13,000
$36,000
$18,000
$18,000
(10)
				The AV taxable by the taxing units under Table 4 (sixty-three thousand dollars
				($63,000)) plus the AV taxable by the redevelopment district under Table 5
				(eighteen thousand dollars ($18,000)) equals the total March 1, 1988 AV
				(eighty-one thousand dollars ($81,000)).