By JEFF SCHULTZ
Members of the Porter County Redevelopment Commission spent
two hours Thursday trying to grapple with the complexities of how a tax
increment finance allocation area around the new Porter Regional Hospital in
Liberty Twp. would affect the local taxing units.
Financial advisor Dan Botich, of Cender and Company, which
the County Commissioners hired to do the impact study, presented data
telling what to expect with the ten-year tax abatement granted by the County
Council and what impacts there would be should the TIF be established for
the next 20 years.
As the preliminary maps by the County Plan Commission have
shown, the proposed TIF boundaries run along the U.S. 6 right-of-way from
Ind. 149 to Calumet Ave. at its eastern boundary. The allocation area widens
when it gets to Meridian Road to County Road 900 North to the north and
areas of County Road 700 North to the south.
Using the hospital property in his data findings from the
County Auditor’s office, Botich said the March 1, 2012 assessment data on
the “Liberty Twp. Allocation Area,” made up of 413 real property parcels,
had $108,737,100 as its gross assessed value, with a net assessed value of
$79.3 million after $29.4 million in deductions and exemptions were applied.
The net residential assessment value at that time was $31.3
million with $48 million as the AV for commercial, rental and other types of
In this year’s 2012 pay 2013 taxes, the hospital was 90
percent complete on the March 2012 assessment date with a net AV of
$34,180,200, which generated $595,419 in taxes due, Botich reported.
For the 2013 pay 2014 taxes, the completed hospital starts
its ten-year abatement and according to Botich’s figures the taxes owed will
be reduced to $89,302 as the net assessment is $5,126,400.
Commission member Jim Polarek said he believes the assessment
of the hospital is a higher figure than Botich presented, roughly to the
tune of $200 million.
An appraisal to determine the hospital’s value is still in
process and no final figure has yet been made, according to the County
Botich said the numbers could be adjusted based on the new
This morning, Botich told the Chesterton Tribune by phone he
has updated the assessment figures to about $100 million, meaning the
figures he previously came up with should be multiplied by three to get a
more accurate idea of what the impacts will be.
An updated report will be given to the commission.
Polarek and fellow commission member Sylvia Graham, both
members of the County Council, voted against moving forward with the plan
until they see the updated figures.
Both said they are against giving control of tax revenue to a
As Botich explained, a base assessment of all real property
in an allocation area is set, or frozen, as of the March 1 assessment date
prior to the designation of the allocation area. The base assessment is
distributed each year to the various taxing units in that area.
“So those taxing units will always get what they always got?”
asked Commission President Ric Frataccia.
“Exactly,” Botich said.
Polarek asked if it were possible the base assessment in an
allocation area could decline. Botich said reductions can happen in a case
where a TIF allocation area needs to cover its debt service requirements.
The base may also rise by TIF neutralization, which factors
in general reassessment figures and trending of real property, Botich said.
Botich said any subsequent increase to the AV in an
allocation area as a direct result of redevelopment is deemed as “captured
assessment” used to determine tax increment amounts, he said.
Tax increment funds can be used to stimulate economic
development activities by making improvements to the local infrastructure
and for payment of principal and interest on bonds to pay for the
The RDC can issue municipal bonds for redevelopment projects
and would need County Council approval for bonds of more than $3 million. As
the AV in an allocation area increases, tax increment funds can be used to
pay for debt service on issued bonds, Botich said.
Botich said the RDC can capture all the roll-off from the
hospital abatement. The board can determine how much assessed value it wants
to use for projects and any excess will be reported to the county auditor by
July 15. The excess can then be distributed to the taxing units.
TIF Impacts/School Funds
Later in his presentation, Botich gave the impact estimates
for the cumulative funds of the allocation area established specific to the
Based on the $37 million assessment, the TIF would capture an
estimated total of $1,620,700 of what would have gone to the Duneland
School’s capital fund over 20 years. With the $100 million assessment, the
impact will be closer to $4.5 million.
Some commission members have commented they would like to see
all funds be returned to the school. Legal advisor Gregg Sobkowski said a
new provision in the state statute gives the RDC the ability to use up to 15
percent of the captured tax increment for schools, colleges or job skills
He said the RDC can “close that gap further” by funding other
capital projects that would benefit the school district.
Duneland School board member Ralph Ayres, who is the RDC’s
non-voting advisor said he would like it if the school corporation could
have some flexibility in use of those dollars.
He asked his peers to be mindful and be sure to include the
language in a motion for the declaratory resolution to protect school
“Everybody wants to do what they can to keep the schools
whole,” Ayres said after the meeting.
If an allocation area is set, the RDC can receive more than
$8 million from the hospital in a ten-year abatement or about $24 million
over 20 years, Botich said.
Also, the Liberty Twp. Cumulative Fire fund could see a loss
of about $180,000 in 20 years with TIF.
Each non-residential parcel in Liberty Twp. taxing unit would
be impacted by $54 per $100,000 of AV with just the 10 year abatement, the
Chesterton-Liberty Twp. unit by $41.34, Pine Twp.-Duneland Schools by $37.08
and Porter-Westchester Twp by $35.07.
Residential properties are rarely impacted by TIF and if so,
it is usually too small an effect to be noticed, Botich said.
Paths of TIFs
TIFs are established in three main phases. First there is the
declaratory phase where the RDC collects data on a proposed allocation area
and then prepares a declaratory resolution. An economic development plan
identifying projects must be made prior to the resolution.
Botich said he plans to have the economic development plan
completed by the board’s May 23 meeting with input from County officials.
Once the RDC approves the declaratory resolution, the plan
approval phase begins as the resolution is forwarded to the County Plan
If the planners approve, the resolution is then forwarded to
the County Commissioners for its approval and then a public hearing will
have to be conducted on the declaratory resolution.
In the confirming phase, the RDC will prepare and file a tax
impact statement notifying all the planning agencies of Porter County. A
draft of the “confirmatory resolution” will be made with notice of a public
Liberty Twp. resident Ed Gutt from the floor said the area
has had issues with drainage that he wanted the RDC to be aware of as it
continues planning. A steering committee for the U.S. 6 corridor development
was formed years ago which was discontinued without making enhancements to
the County’s planning ordinances. He would also like to see plans for a new
sewer line to service the surrounding mobile home properties. “We have to
think ahead of what’s going on,” he said.
RDC member Dave Burrus said the kinds of things Gutt
mentioned are the kinds of improvements a TIF area does.
“Using an allocation of the hospital taxes, we can build
infrastructure to help projects like that,” Burrus said.