CHRISNEY — The Spencer County Chamber of Commerce invited all area elected officials, county council and commissioners, school officials, redevelopment commissions, community advocates, and all interested residents to the Chamber sponsored Talk of the Towns event held at the St. Martin Parish Center in Chrisney on Dec. 13. The Chamber believes that these forums are a way to improve awareness between communities in the County by exploring programs and initiatives that have had or are expected to have a positive economic impact on communities similar to those in Spencer County.
Mr. Tom Pitman, an attorney with the Government Services and Finance Department at the Barnes & Thornburg law firm of Indianapolis, presented an hour long program on taxing tools and abatements as a way of encouraging various forms of economic development in the communities in Spencer County. Mr. Pitman made available a detailed handbook that he co-authored which is a guide to help communities with the development or redevelopment of their real property. Mr. Pitman’s remarks highlighted TIC (Tax Increment Financing), and Abatements as ways to provide incentives for economic development in local communities. Both TIFs and tax abatements can provide significant financing options for property investors who need assistance with financing a proposed project. To utilize them, it is important to understand the main differences and benefits of each.
A TIF is special financing vehicle offered to municipal governments that allows them to use future revenue from completion of the project as collateral to obtain financing. This future revenue usually comes in the form of increased property value or rental income. The main purpose of using TIF is to target underdeveloped areas and provide economic development through property improvement. Not only does the project help revitalize or improve the area but it also prevents the municipality from having to raise taxes to fund the project. This helps keep more money in resident pockets, which can help stimulate the economy. Municipalities that wish to offer low income housing often use TIF as the financing vehicle to be able to serve the community and improve conditions without the burden of the increased taxes. Often these projects wouldn’t be possible if the TIF wasn’t utilized.
If a municipal government wants to utilize TIF for a project, the first step is to get state level government permission for a designated area. Indiana, like other states, has laws and regulations as to what projects and properties qualify for TIF. They have specific criteria that must be met to qualify. Once this state level permission is granted the municipal can continue with the project.
The second step is to assess the current value of the property. This base value of the property will continue to pay taxes that support city services. As the property value increases the difference between this increase and the base amount is taxed but the money goes directly to paying the investors back or is considered additional government revenue.
After the approval is obtained and the base value is assessed, the project can begin to gather it’s financing for the TIF. Usually this is done through bonds which investors can buy. The bonds are backed with the collateral on the future revenue of the property. Once the money is raised, the project can begin.
A tax abatement is a reduction in taxes owed for a property owner if their property qualifies for the program criteria. Most often tax abatements are used to revitalize areas that are blighted. The designated neighborhood can be a defined area within a town, county or state. The main purpose of a tax abatement is to encourage buyers to purchase property in the designated area and revitalize it with additional funds created by the temporary tax abatement.
Tax abatements typically target low income residential development to help families with lower rent options that might not otherwise be able to afford. Tax abatements aim to help revitalize the look, value and integrity of a neighborhood.
After Mr. Pitman concluded his remarks, Chamber Executive Director Kathy Reinke continued the group discussion by asking for ideas on real estate development projects to be submitted to the Chamber, and also asked for ways to improve employer daycare as a means of attracting both potential employers and work force to Spencer County.
