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 March 20, 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)).
