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

Universal Citation: 50 IN Admin Code 2-2

Current through September 18, 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 36-7-1-3; IC 36-7-14; IC 36-7-15.1

Sec. 2.

(a) A redevelopment commission that designates an allocation area or amends an area declaration must immediately notify the state board of tax commissioners of the designation.

(b) This subsection applies only to redevelopment commissions established under IC 36-7-14 and metropolitan development commissions acting as redevelopment commissions. A redevelopment commission declares an area to be blighted under IC 36-7-14-15 or IC 36-7-15.1-8 by adopting a resolution. The commission may designate an allocation area in the same resolution. A redevelopment commission may also amend a prior resolution that declared a blighted area to add an allocation area by following the same procedure contained in IC 36-7-14-15 through IC 36-7-14-18 or IC 36-7-15.1-8 through IC 36-7-15.1-11. An allocation area may also be created in an economic development area established under IC 36-7-14-41 or IC 36-7-15.1-29. In order for a redevelopment commission to be eligible to include taxes imposed on allocation area personal property in the tax increment finance program, it must have adopted a resolution before June 1, 1987, to include taxes imposed on depreciable personal property that has a useful life in excess of eight (8) years (personal property reportable on Total Pool 3 line 40 and Total Pool 4 line 55 on Form 103, Long Form). If such a resolution was adopted before that date, the redevelopment commission may adopt a new resolution to include a percentage of taxes imposed on all allocation area personal property in the tax increment finance program. That percentage may not exceed twenty-five percent (25%). If the redevelopment commission fails to adopt a new resolution, then no personal property taxes are included in the program.

(c) This subsection applies only to redevelopment commissions established under IC 36-7-14 and metropolitan development commissions acting as redevelopment commissions. In order to declare a blighted area, the redevelopment commission must find that the area meets the definition in IC 36-7-1-3, that the area has become blighted to an extent that it cannot be corrected by regulatory processes, or by the ordinary operations of private enterprise without resort to the provisions of IC 36-7-14 or IC 36-7-15.1, and that the public health and welfare will be benefited by the acquisition and redevelopment of the area. The redevelopment commission may declare any part of the blighted area as an allocation area. Given the statutes' use of the term "blighted" and the finding that must be made before a redevelopment commission may adopt a declaratory resolution, the declaration of a blighted area may include only a limited area. In the typical situation, the geographic description uses city streets or similar boundaries to carve out from a political subdivision only that portion that is truly blighted. It is unlikely that the boundaries of the blighted area coincide with those of a city or any other political subdivision.

(d) This subsection applies only to redevelopment commissions established under IC 36-7-14 and metropolitan development commissions acting as redevelopment commissions. In order to implement tax increment finance in an economic development area, the redevelopment commission must find that the area meets the following:

(1) That the plan for the economic development area:
(A) promotes significant opportunities for the gainful employment of its citizens;

(B) attracts a major new business enterprise to the unit;

(C) retains or expands a significant business enterprise existing in the boundaries of the unit; or

(D) meets other purposes of IC 36-7-14-2.5, IC 36-7-14-41, IC 36-7-15.1-28 through IC 36-7-15.1-30.

(2) That the plan for the economic development area cannot be achieved by regulatory processes or by the ordinary operation of private enterprise without resorting to the powers allowed under IC 36-7-14-41, IC 36-7-14-43, IC 36-7-15.1-28 through IC 36-7-15.1-30 because of:
(A) lack of local public improvement;

(B) existence of improvements or conditions that lower the value of the land below that of nearby land;

(C) multiple ownership of land; or

(D) other similar conditions.

(3) That the public health and welfare will be benefited by accomplishment of the plan for the economic development area.

(4) That the accomplishment of the plan for the economic development area will be a public utility and benefit as measured by:
(A) attraction or retention of permanent jobs;

(B) increase in the property tax base;

(C) improved diversity of the economic base; or

(D) other similar public benefits.

(5) That the plan for the economic development area conforms to other development or redevelopment plans for the unit (the comprehensive plan of development in the case of a consolidated city).

(e) This subsection applies only to a metropolitan development commission acting as a redevelopment commission. In order to implement tax increment finance in an allocation area established under IC 36-7-15.1-32 with respect to a program for housing, the commission must find the following:

(1) That the program meets the purposes of IC 36-7-15.1-31.

(2) That the program cannot be accomplished by regulatory processes or by the ordinary operation of private enterprise because of:
(A) lack of public improvements;

(B) existence of improvements or conditions that lower the value of the land below that of nearby land; or

(C) other similar conditions.

(3) That the public health and welfare will be benefited by accomplishment of the program.

(4) That the accomplishment of the program will be of public utility and benefit as measured by:
(A) provision of adequate housing for low and moderate income persons;

(B) increase in the property tax base; or

(C) other similar public benefits.

(5) That at least one-third (1/3) of the parcels in the allocation area established by the program are vacant.

(6) That at least three-fourths (3/4) of the allocation area is used for residential purposes or is planned to be used for residential purposes.

(7) That at least one-third (1/3) of the residential units in the allocation area were constructed before 1941.

(8) That at least one-third (1/3) of the parcels in the allocation area have one (1) or more of the following characteristics:
(A) The dwelling unit on the parcel is not permanently occupied.

(B) The parcel is the subject of a governmental order, issued under a statute or ordinance, requiring the correction of a housing code violation or unsafe building condition.

(C) Two (2) or more property tax payments on the parcel are delinquent.

(D) The parcel is owned by local, state, or federal government.

(f) In order to implement tax increment finance in an economic development district declared under IC 6-1.1-39, the fiscal body of the unit must find the following:

(1) That in order to promote opportunities for the gainful employment of its citizens, the attraction of a new business enterprise to the unit, the retention or expansion of a business enterprise existing within the boundaries of the unit, or the preservation or enhancement of the tax base of the unit, an area under the fiscal body's jurisdiction should be declared an economic development district.

(2) That the public health and welfare of the unit will be benefited by designating the area as an economic development district.

(3) That there has been proposed a qualified industrial development project to be located in the economic development district, with the proposal supported by:
(A) financial and economic data; and

(B) preliminary commitments by business enterprises, associations, state or federal governmental units, or similar entities that evidence a reasonable likelihood that the proposed qualified industrial development project will be initiated and accomplished.

(g) A tax increment finance program in an economic development district declared under IC 6-1.1-39 may include any part of the property taxes imposed on depreciable personal property that the taxing unit has by ordinance allocated to the district.

However, the ordinance may not limit the allocation to taxes on depreciable personal property with any particular useful life or lives. The limitation must instead be stated as a percentage of the assessed value of the personal property. If a unit had, by ordinance adopted before May 8, 1987, allocated to an economic development district property taxes imposed under IC 6-1.1 on depreciable personal property that has a useful life in excess of eight (8) years, the ordinance continues in effect until an ordinance is adopted by the unit under IC 6-1.1-39-5(g)(2).

(h) It is unlikely that the boundaries of an economic development area, of an allocation area established under IC 36-7-15.1-32 with respect to a program for housing, or of an economic development district declared under IC 6-1.1-39-2 will coincide with those of a city or any other political subdivision. The declaration of an extensive area might violate the enabling statutes and might cause severe problems in administering the tax increment finance program. The greater the number of parcels of allocation area real property (and returns of allocation area personal property if it is part of the program), the greater is the difficulty in determining the potential captured assessment.

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