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MSD Wayne Township
School Board Presentation
January 28, 2013
Policy Analytics, LLC
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.
ff
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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.
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-
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010 2011 2012
Mill
ion
s
Circuit Breaker Credit
CB Replacement Grants
Non-Operating Funds
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MSD Wayne Township Property Tax
Revenue History
In 2009, the State CB replacement grant covered 93% of CB
credit.
By 2012, Circuit Breaker credit reduces prop. tax revenues by
22%
80%
85%
90%
95%
100%
105%
2007 2008 2009 2010 2011 2012 2013
Tax Years (Payable)
MSD Decatur
Speedway Sch.
MSD Pike
IPS
MSD Wayne
Marion County
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Gross Real Estate AV Trends Compared to Other Schools
GAV decreased by 7%
between 2012 and
2013
60%
65%
70%
75%
80%
85%
90%
95%
100%
105%
2007 2008 2009 2010 2011 2012 2013
Decatur Twp. Sch.
Speedway City SCH. Corp
Pike Twp. Sch.
IPS
Marion County
Wayne Twp. Sch.
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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
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MSD Wayne GAV Change by Class
-40%
-30%
-20%
-10%
0%
10%
20%
30%
2007 2008 2009 2010 2011 2012 2013
Industrial
Commercial
Residential
Personal
Total
Decreases in Commercial and Industrial due to the General
Reassessment and Property Tax Appeals
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0
50
100
150
200
250
2007 2008 2009 2010 2011 2012 2013
GA
V in
Mill
ion
s
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
MSD Wayne Top Taxpayers - GAV
Tax Increment Financing
How do TIF’s Work?
How do TIF’s affect MSD Wayne?
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10
Airport
Allocation Area
TIF Boundary
Wayne
Township
Decatur
Township
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TIF Increment Revenue
$99.2 million (11% of total)
City-County
38%
Muni Corps14%
Townships
5%
Cities and
Towns2%
Schools40%
Other Units
1%
Marion County 2012 Property Taxes $933.5 million (net of CB credit)
Property Tax Revenue to Units
$834.3M (89% of total)
Consolidated Allocation
Area64%
Airport EDA15%
HOTIFs4%
Other Indy TIFs9%
Lawrence TIFs4%
Beech Grove TIFs1%Speedway
TIFs3%
Marion County Property Tax Revenue
Distribution
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• 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.
• 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.
Pre-Circuit Breaker Credit Post-Circuit Breaker Credit
Impact of Circuit Breaker Credit on the relationship between TIF districts and taxing units
TIF Neutralization Process
• Required annually by DLGF in accordance with 50 IAC 8-2-
12. 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.
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-
100
200
300
400
500
600
700
800
2008 2009 2010 2011 2012 2013
AV
In M
illio
ns
Original Increment Assessed ValueBase moved to increment in neutralizationBase Assessed Value
$269M
$243M In increment AV
TIF Neutralization protects
bonds by moving base AV to the
increment when AV declines
$98M
Impact of Declining Assessed Value on
Airport TIF Base AV
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15
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
Increment AV
Base AV
Change to Market Value Assessment
General Assessment
resulted in a spikein AV
Appeals and other
adjustments led to an immediate
adjustment
AV growth stagnated in the 2008 recession
AV (including base) declined sharply due
to the 2012 reassessment and
property tax appeals
History of Airport TIF AV Changes
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-
5
10
15
20
25
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Mill
ion
s
Debt Service Obligations
TIF Increment Revenues
Airport Debt Service and TIF Revenue
Debt Service
from the United
Maintenance
Project expires
in 2017 – leaving
opportunities for
pass-through of
incremental AV.
Airport Debt Service is
approximately $15M
annually until 2016
Property tax revenues
supplement TIF
revenue to cover any
debt service shortfall
Tax Base Forecast
What is the Outlook for AV Growth
in Wayne Township?
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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.
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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.
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0%
50%
100%
150%
200%
250%
300%
350%
Marion County
MSD Wayne
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Long Term Assessed Value
Trends
Since 2007, MSD
Wayne GAV has
declined at a greater
rate, than Marion
County as a whole
-49%
-22%
-13% -12%
2% 4%
17%
30%
54%
-60%
-40%
-20%
0%
20%
40%
60%
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Township Median Homestead AV as a
Percent of County Homestead AV (2012)
4,6524,484 4,480 4,385 4,287 4,241
4,0423,929 3,963 4,010 4,058 4,106 4,151
-
1,000
2,000
3,000
4,000
5,000
6,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ass
ess
ed
Val
ue
(M
illio
ns)
Tax Year (Payable)
Actual MSD Wayne Gross AV [Real and Personal]
Forecasted MSD Wayne GAV
MSD Wayne Gross AV Forecast
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3,3143,135
2,694 2,6562,547 2,489
2,271 2,197 2,217 2,245 2,273 2,301 2,328
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Ass
ess
ed
Val
ue
(M
illio
ns)
Tax Year (Payable)
Actual MSD Wayne Net AV [Real and Personal]
Forecasted MSD Wayne NAV
MSD Wayne Net AV Forecast