MSD Wayne Township School Board Presentation

Transcription

1 MSD Wayne Township School Board Presentation January 28, 2013 Policy Analytics, LLC 1

2 ff Introduction - Project Overview MSD Wayne Township is operating in a different fiscal environment than in the past - The State has assumed the responsibility for funding local school operations. - Property tax rate caps (Circuit Breaker Credits have significantly reduced property tax revenues). - Changing economic and demographic trends impact school tuition support and required services. Policy Analytics is assisting MSD Wayne Administrators with the following long-term planning projects - In-depth demographic analysis that results in a long-term enrollment forecast. - Property tax revenue forecast backed by detailed, parcel level tax base projections. - Elements of strategic long term financial planning. 2

3 Today s Presentation Overview of MSD Wayne Township tax base. How do TIF districts work? Analysis of TIF impacts on MSD Wayne tax base. Tax base analysis and long term AV analysis. 3

4 Millions MSD Wayne Township Property Tax Revenue History Circuit Breaker Credit CB Replacement Grants In 2009, the State CB replacement grant covered 93% of CB credit. By 2012, Circuit Breaker credit reduces prop. tax revenues by 22% Non-Operating Funds

5 105% Gross Real Estate AV Trends Compared to Other Schools 100% 95% 90% 85% 80% MSD Decatur Speedway Sch. MSD Pike IPS MSD Wayne Marion County Tax Years (Payable) GAV decreased by 7% between 2012 and

6 105% 100% 95% 90% Change in Net Real AV over Time Cumulative Change from 2007 to 2013 Net AV is Gross AV less: Homestead deduction (up to $45K) Supplemental standard deduction (35% of AV, after Hmstd. Ded.) Other property tax deductions (mortgage, veterans, disabled) Property tax abatements and TIF increment AV 85% 80% 75% 70% Decatur Twp. Sch. Speedway City SCH. Corp Pike Twp. Sch. IPS 65% 60% Marion County Wayne Twp. Sch

7 30% MSD Wayne GAV Change by Class 20% 10% Industrial Commercial Residential Personal Total 0% -10% -20% -30% Decreases in Commercial and Industrial due to the General Reassessment and Property Tax Appeals -40%

8 GAV in Millions 250 MSD Wayne Top Taxpayers - GAV Top 7 Real Property Taxpayers Top 7 Personal Property Taxpayers Top Real Property Taxpayers Include: Crossroads Indiana Target Corporation Rolls Royce Westlake Properties AERC Waterstone HCRI Indiana Spinnaker Court Top Personal Property Taxpayers Include: Rolls Royce Carrier Corporation Cellco Partnership Indianapolis Power and Light Rexnord Industries Covance Laboratory Services Vertellus Ag % Nutritional Specialties

9 Tax Increment Financing How do TIF s Work? How do TIF s affect MSD Wayne? 9

10 Airport Allocation Area TIF Boundary Wayne Township Decatur Township 10

11 Marion County Property Tax Revenue Distribution Marion County 2012 Property Taxes $933.5 million (net of CB credit) Property Tax Revenue to Units $834.3M (89% of total) Other Units 1% Cities and Towns 2% Schools 40% Townships 5% City-County 38% Muni Corps 14% TIF Increment Revenue $99.2 million (11% of total) Consolidated Allocation Area 64% Airport EDA 15% Speedway TIFs 3% HOTIFs 4% Other Indy TIFs 9% Lawrence TIFs 4% Beech Grove TIFs 1% 11

12 Impact of Circuit Breaker Credit on the relationship between TIF districts and taxing units Pre-Circuit Breaker Credit Taxing unit property tax revenue determined by levy controls. Maximum levy growth determined by change in Indiana personal income. Revenue growth is virtually guaranteed tax rates adjust to generate revenue necessary to fund levies. TIF activity does not largely impact property tax revenue for other taxing units. Post-Circuit Breaker Credit Taxing unit property tax revenue determined by rate controls. Levy controlled funds act more like rate controlled funds. Homesteads limited at 1%, other residential at 2%, all other property at 3%. Once all parcels reach circuit breaker, revenue growth only occurs through growth in the tax base. TIF activity can have negative revenue implications through higher circuit breaker losses. 12

13 TIF Neutralization Process Required annually by DLGF in accordance with 50 IAC Procedure is mandated by DLGF. Legally required process which neutralizes the effect of external factors on the base and the increment, to protect the ability of the TIF district to pay debt service on outstanding bonds. TIF neutralization outcomes: Adjust the base assessed value for market value trends (either upward or downward, depending on market conditions). Maintain at least as much incremental revenue in the ensuing year as in the preceding year. Basis for initial debt service coverage projections. 13

14 AV In Millions Impact of Declining Assessed Value on Airport TIF Base AV Original Increment Assessed Value Base moved to increment in neutralization Base Assessed Value TIF Neutralization protects bonds by moving base AV to the increment when AV declines 500 $269M $98M $243M In increment AV

15 History of Airport TIF AV Changes Increment AV Base AV Change to Market Value Assessment General Assessment resulted in a spike in AV AV growth stagnated in the 2008 recession Appeals and other adjustments led to an immediate adjustment AV (including base) declined sharply due to the 2012 reassessment and property tax appeals

16 Millions Airport Debt Service and TIF Revenue 25 Debt Service Obligations 20 Property tax revenues supplement TIF revenue to cover any debt service shortfall TIF Increment Revenues Airport Debt Service is approximately $15M annually until Debt Service from the United Maintenance Project expires in 2017 leaving opportunities for pass-through of incremental AV

17 Tax Base Forecast What is the Outlook for AV Growth in Wayne Township? 17

18 Forecast Issues Demographic changes affecting tax base. Trends in sales prices and property tax appeals. Residential homestead value compared to other townships. Economic and income related trends. Existing long-term economic forecasts. 18

19 Tax Base Forecast Methodology Review long term assessed value trends to determine the relationship between MSD Wayne tax base and Marion County tax base. Relate economic variables to changes in tax base, using an external, professionally accepted economic forecast (Woods & Poole). Customize forecast using factors specific to Wayne Township, and the characteristics of the properties within Wayne Township. 19

20 350% Long Term Assessed Value Trends 300% 250% 200% Marion County MSD Wayne Since 2007, MSD Wayne GAV has declined at a greater rate, than Marion County as a whole 150% 100% 50% 0% 20

21 Township Median Homestead AV as a Percent of County Homestead AV (2012) 60% 54% 40% 30% 20% 17% 0% 2% 4% -20% -22% -13% -12% -40% -60% -49% 21

22 Assessed Value (Millions) MSD Wayne Gross AV Forecast 6,000 Actual MSD Wayne Gross AV [Real and Personal] 5,000 4,000 4,652 4,484 4,480 4,385 4,287 4,241 Forecasted MSD Wayne GAV 4,042 3,929 3,963 4,010 4,058 4,106 4,151 3,000 2,000 1, Tax Year (Payable) 22

23 Assessed Value (Millions) MSD Wayne Net AV Forecast 5,000 4,500 4,000 3,500 3,314 3,135 Actual MSD Wayne Net AV [Real and Personal] Forecasted MSD Wayne NAV 3,000 2,500 2,000 2,694 2,656 2,547 2,489 2,271 2,197 2,217 2,245 2,273 2,301 2,328 1,500 1, Tax Year (Payable) 23