LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6587 NOTE PREPARED: Dec 28, 2021
BILL NUMBER: SB 166 BILL AMENDED:
SUBJECT: Tax Exemption for P3 property.
FIRST AUTHOR: Sen. Walker K BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: This bill adds definitions for "transportation facility" and "transportation project".
The bill provides that a governmental body may enter into a public-private (P3) agreement with respect to
a transportation project. It provides that any P3 agreement with respect to a transportation project may use
tolling or availability payments to finance all or a portion of the project. It also provides that a governmental
body may also enter into a development agreement with a private party for the development, construction,
and financing of a privately owned and operated transportation or infrastructure project if the development
agreement meets certain conditions.
This bill also provides for a property tax exemption and a sales tax exemption.
Effective Date: July 1, 2022.
Explanation of State Expenditures: This bill allows the state and educational institutions to enter into P3
agreements and development agreements for transportation projects. Any impact on state expenditures
depends on the scope of projects that the state might undertake as P3s or by development agreements and
how they might differ if the state constructed these projects with conventional means.
Explanation of State Revenues: Tolling: This bill permits P3 transportation projects to use tolling to finance
the project. If tolling is used then state revenues could increase. Any impact on state revenues from tolling
would depend on the nature of the P3 agreement reached between the state and the vendor and if the
agreement includes the vendor remitting a portion of tolling revenue to the state.
SB 166 1 Sales Tax: The sale of materials used in a P3 transportation project will be exempt from sales tax. Under
current law, construction materials are exempt if the ultimate purchaser or recipient of the property would
be exempt if they had purchased the materials directly from the supplier. So, under the bill, the construction
materials will be exempt from sales tax regardless of whether they are used to build a conventional project
or a P3 project.
Explanation of Local Expenditures: This bill allows local units to enter into P3 agreements and
development agreements for transportation projects. Any impact on local expenditures depends on the scope
of projects that a local unit might undertake as P3s or under development agreements and how they might
differ if the unit constructed these projects with conventional means.
Explanation of Local Revenues: Tolling: This bill permits P3 transportation projects to use tolling to
finance the project. If tolling is used then local revenues could increase. Any impact on local revenues from
tolling would depend on the nature of the P3 agreement reached between the unit and the vendor and if the
agreement includes the vendor remitting a portion of tolling revenue to the unit.
Property Tax: The bill exempts real and personal property used exclusively for a P3 transportation project
from property tax. Under current law, real and personal property owned by the state or local government is
exempt from property tax. So, under the bill, the property will be exempt from property tax regardless of
whether it is a part of a conventional project or a P3 project.
State Agencies Affected: State agencies that may build a transportation project.
Local Agencies Affected: Local units that may build a transportation project.
Information Sources:
Fiscal Analyst: Bob Sigalow, 317-232-9859; Bill Brumbach, 317-232-9559; Lauren Tanselle, 317-232-
9586.
SB 166 2