Section 50 IAC 8-2-4 - Allocation of assessed valueAuthority: 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.(f) The sum of the uncaptured assessment and the base assessment equals the current base assessment. The current base assessment is subject to taxation by the taxing units and is used in calculating the property tax rates of the taxing units.Department of Local Government Finance; 50 IAC 8-2-4; filed Jan 30, 1989, 3:30 p.m.: 12 IR 1357