Regional innovation development.
HB 1408 revises Indiana’s regional innovation development and manufacturing district law, shifting authority after June 30, 2025 from the Indiana Economic Development Corporation to regional development authorities (RDAs) to designate districts. The bill creates a new framework for “regional innovation and manufacturing districts,” defines development authorities and districts for purposes of the chapter, and updates related provisions across multiple tax, bonding, and local government statutes to reflect that change. It also requires coordination with local executives, strategic review by the relevant regional strategic body, and budget committee review before a district can be designated.
The bill also restructures the financing and tax treatment of these districts. It sets an annual state revenue transfer cap tied to population, limits transfers from the statewide district fund by lowering the threshold for transferring excess balances to the state general fund from $500 million to $100 million, and preserves the validity of districts designated before July 1, 2025. It continues to allow property tax exemptions for qualifying improvements and personal property in a district, authorizes bond issuance backed by district revenues, and maintains rules governing incremental property tax and income tax revenue capture, local district funds, and statewide grants or loans for economic development and workforce purposes.
HB 1408 would substantially amend Indiana Code provisions governing innovation development districts by transferring post-2025 designation authority from the state economic development corporation to regional development authorities and by renaming/expanding the district concept to regional innovation and manufacturing districts. It affects statutes in state finance, property tax, income tax, tax increment financing, local administration, and regional development authority law, while preserving existing districts created before July 1, 2025. The bill also changes how revenues are captured, capped, transferred, and reported, and it modifies the conditions under which local allocation areas can be renewed or extended when overlapped by a district.
The bill appears generally pro-development and pro-expansion of regional economic tools, with a strong emphasis on preserving and refining the innovation district program rather than dismantling it. The absence of committee transcripts or recorded votes limits direct evidence of debate, but the structure of the bill suggests support for continued use of tax increment financing, bonding, and incentive mechanisms to attract investment, infrastructure, and workforce development. At the same time, the bill adds more procedural oversight and tighter fiscal controls, indicating an effort to balance economic development goals with state and local accountability.
The main points of potential contention are the shift in authority from the Indiana Economic Development Corporation to regional development authorities, the ability to designate districts in or near existing allocation areas, and the fiscal impact of diverting tax revenues to district funds. Local governments and taxing units may be concerned about reduced flexibility to renew or extend allocation areas and about the required revenue-sharing percentages, while state fiscal officials may focus on the annual transfer cap and the lower threshold for sweeping excess statewide fund balances to the general fund. Another likely issue is the bill’s continued use of exemptions, bond financing, and long-term revenue commitments, which may draw scrutiny from opponents of tax incentives or from jurisdictions worried about lost tax base and diminished local control.