§ 36-7-14-39 — Distribution and allocation of taxes; allocation area; base assessed value determinations; allocation of excess assessed value

Indiana § 36-7-14-39

• Jurisdiction: Indiana
• Title 36: LOCAL GOVERNMENT
• Art. 7: PLANNING AND DEVELOPMENT
• Ch. 14: Redevelopment of Areas Needing Redevelopment

Text

(a) As used in this section:
"Allocation area" means that part of a redevelopment project area
to which an allocation provision of a declaratory resolution adopted
under section 15 of this chapter refers for purposes of distribution and
allocation of property taxes.
"Base assessed value" means, subject to subsection (j), the
following:
(1) If an allocation provision is adopted after June 30, 1995, in a
declaratory resolution or an amendment to a declaratory
resolution establishing an economic development area:
(A) the net assessed value of all the property as finally
determined for the assessment date immediately preceding the
effective date of the allocation provision of the declaratory
resolution, as adjusted under subsection (h); plus
(B) to the extent that it is not included in clause (A), the net
assessed value of property that is assessed as residential
property under the rules of the department of local government
finance, within the allocation area, as finally determined for the
current assessment date.
(2) If an allocation provision is adopted after June 30, 1997, in a
declaratory resolution or an amendment to a declaratory
resolution establishing a redevelopment project area:
(A) the net assessed value of all the property as finally
determined for the assessment date immediately preceding the
effective date of the allocation provision of the declaratory
resolution, as adjusted under subsection (h); plus
(B) to the extent that it is not included in clause (A), the net
assessed value of property that is assessed as residential
property under the rules of the department of local government
finance, as finally determined for the current assessment date.
(3) If:
(A) an allocation provision adopted before June 30, 1995, in a
declaratory resolution or an amendment to a declaratory
resolution establishing a redevelopment project area expires
after June 30, 1997; and
(B) after June 30, 1997, a new allocation provision is included
in an amendment to the declaratory resolution;
the net assessed value of all the property as finally determined for
the assessment date immediately preceding the effective date of
the allocation provision adopted after June 30, 1997, as adjusted
under subsection (h).
(4) Except as provided in subdivision (5), for all other allocation
areas, the net assessed value of all the property as finally
determined for the assessment date immediately preceding the
effective date of the allocation provision of the declaratory
resolution, as adjusted under subsection (h).
(5) If an allocation area established in an economic development
area before July 1, 1995, is expanded after June 30, 1995, the
definition in subdivision (1) applies to the expanded part of the
area added after June 30, 1995.
(6) If an allocation area established in a redevelopment project
area before July 1, 1997, is expanded after June 30, 1997, the
definition in subdivision (2) applies to the expanded part of the
area added after June 30, 1997.
Except as provided in section 39.3 of this chapter, "property taxes"
means taxes imposed under IC 6-1.1 on real property. However, upon
approval by a resolution of the redevelopment commission adopted
before June 1, 1987, "property taxes" also includes taxes imposed
under IC 6-1.1 on depreciable personal property. If a redevelopment
commission adopted before June 1, 1987, a resolution to include within
the definition of property taxes, taxes imposed under IC 6-1.1 on
depreciable personal property that has a useful life in excess of eight
(8) years, the commission may by resolution determine the percentage
of taxes imposed under IC 6-1.1 on all depreciable personal property
that will be included within the definition of property taxes. However,
the percentage included must not exceed twenty-five percent (25%) of
the taxes imposed under IC 6-1.1 on all depreciable personal property.
(b) A declaratory resolution adopted under section 15 of this chapter
on or before the allocation deadline determined under subsection (i)
may include a provision with respect to the allocation and distribution
of property taxes for the purposes and in the manner provided in this
section. A declaratory resolution previously adopted may include an
allocation provision by the amendment of that declaratory resolution on
or before the allocation deadline determined under subsection (i) in
accordance with the procedures required for its original adoption. A
declaratory resolution or amendment that establishes an allocation
provision must include a specific finding of fact, supported by
evidence, that the adoption of the allocation provision will result in
new property taxes in the area that would not have been generated but
for the adoption of the allocation provision. For an allocation area
established before July 1, 1995, the expiration date of any allocation
provisions for the allocation area is June 30, 2025, or the last date of
any obligations that are outstanding on July 1, 2015, whichever is later.
A declaratory resolution or an amendment that establishes an allocation
provision after June 30, 1995, must specify an expiration date for the
allocation provision. For an allocation area established before July 1,
2008, the expiration date may not be more than thirty (30) years after
the date on which the allocation provision is established. For an
allocation area established after June 30, 2008, the expiration date may
not be more than twenty-five (25) years after the date on which the first
obligation was incurred to pay principal and interest on bonds or lease
rentals on leases payable from tax increment revenues. However, with
respect to bonds or other obligations that were issued before July 1,
2008, if any of the bonds or other obligations that were scheduled when
issued to mature before the specified expiration date and that are
payable only from allocated tax proceeds with respect to the allocation
area remain outstanding as of the expiration date, the allocation
provision does not expire until all of the bonds or other obligations are
no longer outstanding. Notwithstanding any other law, in the case of an
allocation area that is established after June 30, 2019, and that is
located in a redevelopment project area described in section
25.1(c)(3)(C) of this chapter, an economic development area described
in section 25.1(c)(3)(C) of this chapter, or an urban renewal project
area described in section 25.1(c)(3)(C) of this chapter, the expiration
date of the allocation provision may not be more than thirty-five (35)
years after the date on which the allocation provision is established.
The allocation provision may apply to all or part of the redevelopment
project area. The allocation provision must require that any property
taxes subsequently levied by or for the benefit of any public body
entitled to a distribution of property taxes on taxable property in the
allocation area be allocated and distributed as follows:
(1) Except as otherwise provided in this section, the proceeds of
the taxes attributable to the lesser of:
(A) the assessed value of the property for the assessment date
with respect to which the allocation and distribution is made; or
(B) the base assessed value;
shall be allocated to and, when collected, paid into the funds of
the respective taxing units.
(2) This subdivision applies to a fire protection territory
established after December 31, 2022. If a unit becomes a
participating unit of a fire protection territory that is established
after a declaratory resolution is adopted under section 15 of this
chapter, the excess of the proceeds of the property taxes
attributable to an increase in the property tax rate for the
participating unit of a fire protection territory:
(A) except as otherwise provided by this subdivision, shall be
determined as follows:
STEP ONE: Divide the unit's tax rate for fire protection for
the year before the establishment of the fire protection
territory by the participating unit's tax rate as part of the fire
protection territory.
STEP TWO: Subtract the STEP ONE amount from one (1).
STEP THREE: Multiply the STEP TWO amount by the
allocated property tax attributable to the participating unit of
the fire protection territory; and
(B) to the extent not otherwise included in subdivisions (1) and
(3), the amount determined under STEP THREE of clause (A)
shall be allocated to and distributed in the form of an allocated
property tax revenue pass back to the participating unit of the
fire protection territory for the assessment date with respect to
which the allocation is made.
However, if the redevelopment commission determines that it is
unable to meet its debt service obligations with regards to the
allocation area without all or part of the allocated property tax
revenue pass back to the participating unit of a fire protection area
under this subdivision, then the allocated property tax revenue
pass back under this subdivision shall be reduced by the amount
necessary for the redevelopment commission to meet its debt
service obligations of the allocation area. The calculation under
this subdivision must be made by the redevelopment commission
in collaboration with the county auditor and the applicable fire
protection territory. Any calculation determined according to
clause (A) must be submitted to the department of local
government finance in the manner prescribed by the department
of local government finance. The department of local government
finance shall verify the accuracy of each calculation.
(3) The excess of the proceeds of the property taxes imposed for
the assessment date with respect to which the allocation and
distribution is made that are attributable to taxes imposed after
being approved by the voters in a referendum or local public
question conducted after April 30, 2010, not otherwise included
in subdivisions (1) and (2) shall be allocated to and, when
collected, paid into the funds of the taxing unit for which the
referendum or local public question was conducted.
(4) Except as otherwise provided in this section, property tax
proceeds in excess of those described in subdivisions (1), (2), and
(3) shall be allocated to the redevelopment district and, when
collected, paid into an allocation fund for that allocation area that
may be used by the redevelopment district only to do one (1) or
more of the following:
(A) Pay the principal of and interest on any obligations payable
solely from allocated tax proceeds which are incurred by the
redevelopment district for the purpose of financing or
refinancing the redevelopment of that allocation area.
(B) Establish, augment, or restore the debt service reserve for
bonds payable solely or in part from allocated tax proceeds in
that allocation area.
(C) Pay the principal of and interest on bonds payable from
allocated tax proceeds in that allocation area and from the
special tax levied under section 27 of this chapter.
(D) Pay the principal of and interest on bonds issued by the unit
to pay for local public improvements that are physically located
in or physically connected to that allocation area.
(E) Pay premiums on the redemption before maturity of bonds
payable solely or in part from allocated tax proceeds in that
allocation area.
(F) Make payments on leases payable from allocated tax
proceeds in that allocation area under section 25.2 of this
chapter.
(G) Reimburse the unit for expenditures made by it for local
public improvements (which include buildings, parking
facilities, and other items described in section 25.1(a) of this
chapter) that are physically located in or physically connected
to that allocation area.
(H) Reimburse the unit for rentals paid by it for a building or
parking facility that is physically located in or physically
connected to that allocation area under any lease entered into
under IC 36-1-10.
(I) For property taxes first due and payable before January 1,
2009, pay all or a part of a property tax replacement credit to
taxpayers in an allocation area as determined by the
redevelopment commission. This credit equals the amount
determined under the following STEPS for each taxpayer in a
taxing district (as defined in IC 6-1.1-1-20) that contains all or
part of the allocation area:
STEP ONE: Determine that part of the sum of the amounts
under IC 6-1.1-21-2(g)(1)(A), IC 6-1.1-21-2(g)(2), IC 6-1.1-21-2(g)(3), IC 6-1.1-21-2(g)(4), and IC 6-1.1-21-2(g)(5)
(before their repeal) that is attributable to the taxing district.
STEP TWO: Divide:
(i) that part of each county's eligible property tax replacement
amount (as defined in IC 6-1.1-21-2 (before its repeal)) for
that year as determined under IC 6-1.1-21-4 (before its
repeal) that is attributable to the taxing district; by
(ii) the STEP ONE sum.
STEP THREE: Multiply:
(i) the STEP TWO quotient; times
(ii) the total amount of the taxpayer's taxes (as defined in IC 6-1.1-21-2 (before its repeal)) levied in the taxing district that
have been allocated during that year to an allocation fund
under this section.
If not all the taxpayers in an allocation area receive the credit in
full, each taxpayer in the allocation area is entitled to receive
the same proportion of the credit. A taxpayer may not receive
a credit under this section and a credit under section 39.5 of this
chapter (before its repeal) in the same year.
(J) Pay expenses incurred by the redevelopment commission for
local public improvements that are in the allocation area or
serving the allocation area. Public improvements include
buildings, parking facilities, and other items described in
section 25.1(a) of this chapter.
(K) Reimburse public and private entities for expenses incurred
in training employees of industrial facilities that are located:
(i) in the allocation area; and
(ii) on a parcel of real property that has been classified as
industrial property under the rules of the department of local
government finance.
However, the total amount of money spent for this purpose in
any year may not exceed the total amount of money in the
allocation fund that is attributable to property taxes paid by the
industrial facilities described in this clause. The
reimbursements under this clause must be made within three
(3) years after the date on which the investments that are the
basis for the increment financing are made.
(L) Pay the costs of carrying out an eligible efficiency project
(as defined in IC 36-9-41-1.5) within the unit that established
the redevelopment commission. However, property tax
proceeds may be used under this clause to pay the costs of
carrying out an eligible efficiency project only if those property
tax proceeds exceed the amount necessary to do the following:
(i) Make, when due, any payments required under clauses (A)
through (K), including any payments of principal and interest
on bonds and other obligations payable under this
subdivision, any payments of premiums under this
subdivision on the redemption before maturity of bonds, and
any payments on leases payable under this subdivision.
(ii) Make any reimbursements required under this
subdivision.
(iii) Pay any expenses required under this subdivision.
(iv) Establish, augment, or restore any debt service reserve
under this subdivision.
(M) Expend money and provide financial assistance as
authorized in section 12.2(a)(27) of this chapter.
(N) Expend revenues that are allocated for police and fire
services on both capital expenditures and operating expenses as
authorized in section 12.2(a)(28) of this chapter.
The allocation fund may not be used for operating expenses of the
commission.
(5) Except as provided in subsection (g), before June 15 of each
year, the commission shall do the following:
(A) Determine the amount, if any, by which the assessed value
of the taxable property in the allocation area for the most recent
assessment date minus the base assessed value, when
multiplied by the estimated tax rate of the allocation area, will
exceed the amount of assessed value needed to produce the
property taxes necessary to make, when due, principal and
interest payments on bonds described in subdivision (4), plus
the amount necessary for other purposes described in
subdivision (4).
(B) Provide a written notice to the county auditor, the fiscal
body of the county or municipality that established the
department of redevelopment, and the officers who are
authorized to fix budgets, tax rates, and tax levies under IC 6-1.1-17-5 for each of the other taxing units that is wholly or
partly located within the allocation area. The county auditor,
upon receiving the notice, shall forward this notice (in an
electronic format) to the department of local government
finance not later than June 15 of each year. The notice must:
(i) state the amount, if any, of excess assessed value that the
commission has determined may be allocated to the
respective taxing units in the manner prescribed in
subdivision (1); or
(ii) state that the commission has determined that there is no
excess assessed value that may be allocated to the respective
taxing units in the manner prescribed in subdivision (1).
The county auditor shall allocate to the respective taxing units
the amount, if any, of excess assessed value determined by the
commission. The commission may not authorize an allocation
of assessed value to the respective taxing units under this
subdivision if to do so would endanger the interests of the
holders of bonds described in subdivision (4) or lessors under
section 25.3 of this chapter.
(C) If:
(i) the amount of excess assessed value determined by the
commission is expected to generate more than two hundred
percent (200%) of the amount of allocated tax proceeds
necessary to make, when due, principal and interest payments
on bonds described in subdivision (4); plus
(ii) the amount necessary for other purposes described in
subdivision (4);
the commission shall submit to the legislative body of the unit
its determination of the excess assessed value that the
commission proposes to allocate to the respective taxing units
in the manner prescribed in subdivision (1). The legislative
body of the unit may approve the commission's determination
or modify the amount of the excess assessed value that will be
allocated to the respective taxing units in the manner prescribed
in subdivision (1).
(6) Notwithstanding subdivision (5), in the case of an allocation
area that is established after June 30, 2019, and that is located in
a redevelopment project area described in section 25.1(c)(3)(C)
of this chapter, an economic development area described in
section 25.1(c)(3)(C) of this chapter, or an urban renewal project
area described in section 25.1(c)(3)(C) of this chapter, for each
year the allocation provision is in effect, if the amount of excess
assessed value determined by the commission under subdivision
(5)(A) is expected to generate more than two hundred percent
(200%) of:
(A) the amount of allocated tax proceeds necessary to make,
when due, principal and interest payments on bonds described
in subdivision (4) for the project; plus
(B) the amount necessary for other purposes described in
subdivision (4) for the project;
the amount of the excess assessed value that generates more than
two hundred percent (200%) of the amounts described in clauses
(A) and (B) shall be allocated to the respective taxing units in the
manner prescribed by subdivision (1).
(c) For the purpose of allocating taxes levied by or for any taxing
unit or units, the assessed value of taxable property in a territory in the
allocation area that is annexed by any taxing unit after the effective
date of the allocation provision of the declaratory resolution is the
lesser of:
(1) the assessed value of the property for the assessment date with
respect to which the allocation and distribution is made; or
(2) the base assessed value.
(d) Property tax proceeds allocable to the redevelopment district
under subsection (b)(4) may, subject to subsection (b)(5), be
irrevocably pledged by the redevelopment district for payment as set
forth in subsection (b)(4).
(e) Notwithstanding any other law, each assessor shall, upon
petition of the redevelopment commission, reassess the taxable
property situated upon or in, or added to, the allocation area, effective
on the next assessment date after the petition.
(f) Notwithstanding any other law, the assessed value of all taxable
property in the allocation area, for purposes of tax limitation, property
tax replacement, and formulation of the budget, tax rate, and tax levy
for each political subdivision in which the property is located is the
lesser of:
(1) the assessed value of the property as valued without regard to
this section; or
(2) the base assessed value.
(g) If any part of the allocation area is located in an enterprise zone
created under IC 5-28-15, the unit that designated the allocation area
shall create funds as specified in this subsection. A unit that has
obligations, bonds, or leases payable from allocated tax proceeds under
subsection (b)(4) shall establish an allocation fund for the purposes
specified in subsection (b)(4) and a special zone fund. Such a unit
shall, until the end of the enterprise zone phase out period, deposit each
year in the special zone fund any amount in the allocation fund derived
from property tax proceeds in excess of those described in subsection
(b)(1), (b)(2), and (b)(3) from property located in the enterprise zone
that exceeds the amount sufficient for the purposes specified in
subsection (b)(4) for the year. The amount sufficient for purposes
specified in subsection (b)(4) for the year shall be determined based on
the pro rata portion of such current property tax proceeds from the part
of the enterprise zone that is within the allocation area as compared to
all such current property tax proceeds derived from the allocation area.
A unit that has no obligations, bonds, or leases payable from allocated
tax proceeds under subsection (b)(4) shall establish a special zone fund
and deposit all the property tax proceeds in excess of those described
in subsection (b)(1), (b)(2), and (b)(3) in the fund derived from
property tax proceeds in excess of those described in subsection (b)(1),
(b)(2), and (b)(3) from property located in the enterprise zone. The unit
that creates the special zone fund shall use the fund (based on the
recommendations of the urban enterprise association) for programs in
job training, job enrichment, and basic skill development that are
designed to benefit residents and employers in the enterprise zone or
other purposes specified in subsection (b)(4), except that where
reference is made in subsection (b)(4) to allocation area it shall refer
for purposes of payments from the special zone fund only to that part
of the allocation area that is also located in the enterprise zone. Those
programs shall reserve at least one-half (1/2) of their enrollment in any
session for residents of the enterprise zone.
(h) The state board of accounts and department of local government
finance shall make the rules and prescribe the forms and procedures
that they consider expedient for the implementation of this chapter.
After each reassessment in an area under a reassessment plan prepared
under IC 6-1.1-4-4.2, the department of local government finance shall
adjust the base assessed value one (1) time to neutralize any effect of
the reassessment of the real property in the area on the property tax
proceeds allocated to the redevelopment district under this section.
After each annual adjustment under IC 6-1.1-4-4.5, the department of
local government finance shall adjust the base assessed value one (1)
time to neutralize any effect of the annual adjustment on the property
tax proceeds allocated to the redevelopment district under this section.
However, the adjustments under this subsection:
(1) may not include the effect of phasing in assessed value due to
property tax abatements under IC 6-1.1-12.1;
(2) may not produce less property tax proceeds allocable to the
redevelopment district under subsection (b)(4) than would
otherwise have been received if the reassessment under the
reassessment plan or the annual adjustment had not occurred; and
(3) may decrease base assessed value only to the extent that
assessed values in the allocation area have been decreased due to
annual adjustments or the reassessment under the reassessment
plan.
Assessed value increases attributable to the application of an abatement
schedule under IC 6-1.1-12.1 may not be included in the base assessed
value of an allocation area. The department of local government
finance may prescribe procedures for county and township officials to
follow to assist the department in making the adjustments.
(i) The allocation deadline referred to in subsection (b) is
determined in the following manner:
(1) The initial allocation deadline is December 31, 2011.
(2) Subject to subdivision (3), the initial allocation deadline and
subsequent allocation deadlines are automatically extended in
increments of five (5) years, so that allocation deadlines
subsequent to the initial allocation deadline fall on December 31,
2016, and December 31 of each fifth year thereafter.
(3) At least one (1) year before the date of an allocation deadline
determined under subdivision (2), the general assembly may enact
a law that:
(A) terminates the automatic extension of allocation deadlines
under subdivision (2); and
(B) specifically designates a particular date as the final
allocation deadline.
(j) If a redevelopment commission adopts a declaratory resolution
or an amendment to a declaratory resolution that contains an allocation
provision and the redevelopment commission makes either of the
filings required under section 17(e) of this chapter after the first
anniversary of the effective date of the allocation provision, the auditor
of the county in which the unit is located shall compute the base
assessed value for the allocation area using the assessment date
immediately preceding the later of:
(1) the date on which the documents are filed with the county
auditor; or
(2) the date on which the documents are filed with the department
of local government finance.
(k) For an allocation area established after June 30, 2025,
"residential property" refers to the assessed value of property that is
allocated to the one percent (1%) homestead land and improvement
categories in the county tax and billing software system.
[Pre-Local Government Recodification Citations:
18-7-7-39.1; 18-7-7.1-39.]
As added by Acts 1981, P.L.309, SEC.33. Amended by Acts
1981, P.L.57, SEC.40; Acts 1981, P.L.180, SEC.12; P.L.23-1983,
SEC.17; P.L.72-1983, SEC.5; P.L.9-1986, SEC.9; P.L.393-1987(ss),
SEC.4; P.L.37-1988, SEC.25; P.L.38-1988, SEC.11; P.L.114-1989,
SEC.9; P.L.41-1992, SEC.5; P.L.18-1992, SEC.26; P.L.25-1995,
SEC.84; P.L.85-1995, SEC.40; P.L.255-1997(ss), SEC.15;
P.L.90-2002, SEC.476; P.L.192-2002(ss), SEC.177; P.L.4-2005,
SEC.135; P.L.185-2005, SEC.22; P.L.216-2005, SEC.6; P.L.154-2006,
SEC.72; P.L.146-2008, SEC.738; P.L.88-2009, SEC.13;
P.L.182-2009(ss), SEC.404; P.L.203-2011, SEC.9; P.L.112-2012,
SEC.55; P.L.218-2013, SEC.16; P.L.149-2014, SEC.18; P.L.95-2014,
SEC.3; P.L.87-2015, SEC.3; P.L.184-2016, SEC.29; P.L.85-2017,
SEC.122; P.L.86-2018, SEC.344; P.L.214-2019, SEC.33;
P.L.257-2019, SEC.120; P.L.156-2020, SEC.139; P.L.38-2021,
SEC.88; P.L.174-2022, SEC.71; P.L.236-2023, SEC.179;
P.L.136-2024, SEC.54; P.L.181-2025, SEC.20; P.L.68-2025, SEC.234;
P.L.186-2025, SEC.281.