SB 104 revises Indiana’s tax increment financing rules for residential housing development programs. It allows redevelopment commissions to create or continue these programs for new residential construction or renovation of existing housing, establishes the required allocation area, and keeps the existing notice, hearing, consultation, and public meeting requirements for affected taxing units, school corporations, neighborhood associations, residents, and township assessors. The bill also preserves the 20-year termination limit tied to the first debt obligation or earlier satisfaction of the bonds or lease rentals used to finance the program.
The bill further changes how tax increment revenues are handled in these residential TIF areas. For allocation provisions adopted after June 30, 2025, the commission must annually transfer at least 5% of the aggregate allocated tax proceeds to the local unit that created the commission, and that money must be used for police and fire services serving the allocation area. The bill also clarifies how excess assessed value is calculated and distributed, what the allocation fund may be used for, and when the commission must notify county and municipal officials about excess property taxes available for distribution to other taxing units.
Impact
SB 104 amends IC 36-7-14 to specifically govern residential housing development programs within tax increment financing allocation areas. It affects redevelopment commissions, counties, municipalities, county auditors, the Department of Local Government Finance, school corporations, and other taxing units by changing the distribution of property tax increment revenues and by requiring a dedicated local transfer for public safety services in newer residential TIF allocation provisions. The bill also reinforces the permissible uses of the allocation fund for infrastructure, property acquisition, preparation for development, debt service, lease payments, and reimbursement of local public improvements.
Sentiment
The bill appears to have broad support in the Senate. It was reported favorably out of the Senate Committee on Tax and Fiscal Policy on an 11-0 vote and later passed third reading in the Senate by a wide margin, 46-3. The available record suggests the measure was viewed as a targeted adjustment to residential TIF policy rather than a controversial overhaul.
Contention
The main policy issue in SB 104 is how much of the tax increment generated in residential housing development areas should remain with the redevelopment commission versus being returned to the local unit and other taxing units. The bill requires a minimum 5% annual transfer to the creating unit for police and fire services, which may reflect concern about public safety costs associated with development. Another point of interest is the bill’s effect on school corporations and other taxing units located in allocation areas, since the measure continues to limit how much assessed value is captured for redevelopment purposes and requires annual notice and potential redistribution of excess assessed value.