Tax abatement is an economic development tool used to assist business and property owners when making a capital investment. The goals of this economic development incentive are to expand the tax base, to create and retain good paying jobs, and to diversify the local economy.
Tax abatement does not provide a 100% abatement of property taxes each year. The increase in the assessed value due to the project will gradually phase in over a one-to-ten-year period. The granting of tax abatement is a public sector investment in the company and the economic development staff evaluates each application based on policy criteria when making recommendations to the City Council for tax abatement.
Communities throughout the State of Indiana have used property tax abatement to attract new and promote expansion of existing businesses. The tax abatement comes to the recipient in the form of a reduction in assessed valuation on investments (improvements) made in one or more of the following:
Applicants for tax abatement are required to submit a Statement of Benefits Form (SB-1) and a non-refundable filing fee of $300. Form SB-1 and filing fees are to be submitted to the New Albany Economic Development Dept. Tax abatement must be approved prior to installing eligible equipment or rehabilitation of real property.
Upon review by the city’s economic development dept., a project summary (including all attachments) should be submitted to that office. Once reviewed by the economic development staff, the request will be presented to the New Albany City Council for a vote. A tax abatement request may be awarded for a period of one to ten years.
Additionally, the city council, as the Designating Body, will review annually by way of Compliance Form (CF-1), to ensure the applicant is in compliance with the abatement and may if appropriate, reduce or rescind for non-compliance.
The city council requires the applicant to work in cooperation with the New Albany Economic Development Dept. to prepare and submit documents in the following order:
1. Complete a tax abatement application, turn into economic development office.
2. If the business isn’t located within an Economic Revitalization Area, such area will need to be established. A resolution will need to approved by the New Albany City Council.
3. The application will be scored by the Redevelopment Commission.
4. Upon recommendation from the Redevelopment Commission, the company must complete Statement of Benefits form (SB-1) for personal property (PP) or for real property (RE) and the economic development staff will draft the resolution.
5. Economic development staff will present the application, resolution & SB-1 to the New Albany City Council for approval.
Successful applicants must file, with the Floyd County Auditor’s office and the city’s Economic Development Dept., one or more of the following forms to initiate and maintain tax abatement:
1. Application for Deduction from Assessed Valuation of Structures in Economic Revitalization Areas (Form 322 ERA)
2. Schedule of Deduction from Assessed Valuation Eligible Equipment in Economic Revitalization Area (Form 103-ERA)
3. Business Tangible Personal Property Return (Form 103 short)
4. Business Tangible Personal Property Assessment Return (Form 103 long)
5. Copy of Statement of Benefits (SB-1/RE or CF-1/PP)
6. Compliance Form (CF-1/RE or CF-1/PP)
After the tax abatement has been approved, the recipient must file an annual Compliance Form (CF-1) with the Floyd County Auditor’s office and with the city’s Economic Development Dept.
For real property and improvements, the CF-1/RE must be filed with the initial deduction application (Form 322 ERA) and then annually by May 15. For qualified personal property, the applicant must file the CF-1 along with Form 103/PP and Personal Property filings between March 1st and May 15th of each year unless a filing extension under IC 6-1.1-3.7 has been granted. The applicant obtaining an extension must then file between March 1st and June 14th.
Should the applicant fail to submit the CF-1 prior to the required deadline, the city council may take action including termination of abatement and or requiring a reinstatement fee.
The City of New Albany Economic Development Dept. charges a 10% fee, which is 10% of the total savings. There is also a $150 filing fee charged annually per CF-1. The filing fee for each SB-1 is $300, if the property is already in an Economic Revitalization Area. If an Economic Revitalization Area (ERA) needs to be established, a $600 filing fee will be imposed for each SB-1.
IC 6-1.1-12.1-2-5, IC 6-1.1-12.1-3 and IC 6-1.1-12.1-4.5 provides the city with the mechanisms to establish an area as ERA and also give guidance with regard to Statement of Benefits and filing requirements with regard to compliance. The Statute also describes the methods and ability of the city to rescind tax abatement for non-compliance. Questions regarding this policy or tax abatement should be directed to the New Albany Economic Development Dept., 812.948.5333.