Bill Summary – FastDemocracy

LEGISLATIVE SERVICES AGENCY
                OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
                                     200 W. Washington St., Suite 301
                                          Indianapolis, IN 46204
                                              (317) 233-0696
                                                 iga.in.gov
                                FISCAL IMPACT STATEMENT
LS 6670                                                            NOTE PREPARED: Apr 6, 2021
BILL NUMBER: SB 214                                                BILL AMENDED: Mar 18, 2021
SUBJECT: Low Income Housing.
FIRST AUTHOR: Sen. Holdman                                         BILL STATUS: Enrolled
FIRST SPONSOR: Rep. Leonard
FUNDS AFFECTED:              GENERAL                               IMPACT: Local
                             DEDICATED
                             FEDERAL
Summary of Legislation: This bill reinstates provisions that were repealed in the 2016 session in Senate
Enrolled Act 309 regarding eligibility for the property tax exemption for improvements on real property that
are constructed, rehabilitated, or acquired for the purpose of providing low income housing. The bill provides
that payments in lieu of taxes (PILOTS) may be required from a property owner claiming such an exemption.
Effective Date: January 1, 2022.
Explanation of State Expenditures:
Explanation of State Revenues:
Explanation of Local Expenditures:
Explanation of Local Revenues: Beginning with property taxes payable in 2023, this bill provides for a
property tax exemption for real property if:
        (1) the improvements were constructed, rehabilitated, or acquired to provide housing under the
        federal low income tax credit program;
        (2) the property is subject to an extended use agreement administered by the Indiana Housing and
        Community Development Authority (IHCDA); and
        (3) the owner agrees to make PILOTS.
When assessed value (AV) is added to the tax base, the property tax levy mostly remains the same, but tax
rates are reduced and tax cap losses may be reduced. Revenue in cumulative funds and in school operating
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and safety referendum funds increases as AV increases. With the exemption, the tax rates and tax cap losses
will not be reduced and the cumulative and referendum fund revenue will not increase.
PILOTS for Exemptions Approved by a City, Town, or County (Other Than Indianapolis / Marion County):
With the approval of the property owner, the governing body of the unit may adopt an ordinance requiring
that the property owner pay PILOTS. The payments must be (1) agreed upon by the property owner and the
governing body of the authorizing unit, (2) a percentage of the taxes that would have been levied by the
authorizing unit, and (3) not more than the taxes that would have been levied by the authorizing unit. These
payments would be deposited into the authorizing unit’s affordable housing fund.
For these exemptions, the authorizing unit’s revenues could increase (in the affordable housing fund) while
the revenues for other units could be lower as compared to current law. The PILOTS generated for the
authorizing unit would be considered miscellaneous revenue and would be collected by the unit outside of
any levy limitations. The actual fiscal impact depends on the number of projects approved.
PILOTS for Exemptions Approved by a County (Other Than Marion) - Additional Option: With the approval
of the property owner, the county fiscal body may adopt an ordinance requiring that the property owner pay
PILOTS. The payments must be (1) agreed upon by the property owner and the county legislative body, (2)
a percentage of the taxes that would have been levied by the county, and (3) not more than the taxes that
would have been levied by the county. These payments would be distributed to local taxing units as if they
were property tax.
Total local revenues could increase for all units under county-approved PILOTS. The PILOTS generated for
all affected taxing units would be considered miscellaneous revenue and would be collected outside of any
levy limitations. The actual fiscal impact depends on the number of projects approved.
PILOTS for Exemptions Approved by Indianapolis / Marion County: With the approval of the property
owner, the city-county council may adopt an ordinance requiring that the property owner pay PILOTS. The
payment amount must be (1) agreed upon by the property owner and the council, (2) a percentage of the taxes
that would have been levied by the city and county, and (3) not more than the taxes that would have been
levied by the city and county. These payments would be deposited into the housing trust fund established by
the Metropolitan Development Commission.
Indianapolis/Marion County revenues could increase (in the housing trust fund) while the revenues for other
units could be lower as compared to current law. The PILOTS generated for the city/county would be
considered miscellaneous revenue and would be collected by the city/county outside of any levy limitations.
The actual fiscal impact depends on the number of projects approved.
Additional Information - Under current law, the exemption is only be available after 2017 if before 2018,
the property owner received the exemption or proceedings had already begun to obtain the exemption. For
taxes payable in 2020, 394 taxpayers received exemptions totaling $171.3 M in AV.
State Agencies Affected:
Local Agencies Affected: Local civil taxing units and school corporations.
Information Sources: LSA Property Tax Database.
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Fiscal Analyst: Bob Sigalow, 317-232-9859.
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Statutes affected: 
2. Senate Bill (S): 5-20-5-15.5, 6-1.1-10-16.7, 36-7-15.1-35.5
3. Engrossed Senate Bill (S): 5-20-5-15.5, 6-1.1-10-16.7, 36-7-15.1-35.5
4. Senate Bill (H): 5-20-5-15.5, 6-1.1-10-16.7, 36-7-15.1-35.5
5. Enrolled Senate Bill (S): 5-20-5-15.5, 6-1.1-10-16.7, 36-7-15.1-35.5