Introduced Version
SENATE BILL No. 261
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 36-7-22.1.
Synopsis: Economic development districts. Creates a procedure to
establish a community infrastructure improvement district (district).
Specifies that the procedure added by the bill allowing for the
establishment of a district does not authorize the unit to establish a
district that overlaps with an economic improvement district. Requires
a petition for the establishment of a district to include a rate and
methodology report. Specifies the contents of the report. Specifies the
basis upon which benefits accruing to parcels of real property within
a district may be apportioned among those parcels. Requires a
determination that the aggregate assessments within a district: (1) do
not exceed 30% of the projected assessed value of property within the
district; or (2) in the case of a district that is established for single
family residences, do not exceed 10% of the projected assessed value
per single family residence within the district; before a legislative body
may adopt an ordinance to establish a district. Requires a community
infrastructure improvement board (board) to assist the county treasurer
in order to make certain specified determinations and designations
regarding annual assessments within a district. Adds specific
provisions that apply to the board's issuance of revenue bonds. Sunsets
these provisions after five years.
Effective: July 1, 2023.
Buchanan, Baldwin
January 11, 2023, read first time and referred to Committee on Tax and Fiscal Policy.
2023 IN 261—LS 7322/DI 120 Introduced
First Regular Session of the 123rd General Assembly (2023)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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between statutes enacted by the 2022 Regular Session of the General Assembly.
SENATE BILL No. 261
A BILL FOR AN ACT to amend the Indiana Code concerning local
government.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 36-7-22.1 IS ADDED TO THE INDIANA CODE
2 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
3 JULY 1, 2023]:
4 Chapter 22.1. Community Infrastructure Improvement
5 Districts
6 Sec. 1. (a) This chapter applies to all units except townships.
7 (b) This chapter does not authorize a unit to establish a
8 community infrastructure improvement district that overlaps with
9 an economic improvement district established under IC 36-7-22.
10 Sec. 2. As used in this chapter, "assessment" means a charge
11 determined under section 14(a) of this chapter by applying the
12 percentage of benefit apportioned to a parcel within a community
13 infrastructure improvement district to the cost associated with
14 economic development projects giving rise to such benefits. Costs
15 subject to assessment for these purposes include all costs of the
16 economic improvement projects as well as financing and
17 administrative costs. In the case of bonds or notes issued pursuant
2023 IN 261—LS 7322/DI 120 2
1 to section 26 of this chapter, financing costs shall include, without
2 limitation, principal and interest, related reserve funds, cost of
3 insurance, and costs associated with ancillary financial
4 arrangements with respect to the bonds or notes.
5 Sec. 3. As used in this chapter, "board" refers to a community
6 infrastructure improvement board established under section 13 of
7 this chapter.
8 Sec. 4. As used in this chapter, "economic improvement project"
9 means the following:
10 (1) Planning or managing development or improvement
11 activities.
12 (2) Designing, landscaping, beautifying, constructing, or
13 maintaining public areas, public improvements, or public
14 ways (including designing, constructing, or maintaining
15 lighting, infrastructure, utility facilities, improvements, and
16 equipment, water facilities, improvements, and equipment,
17 sewage facilities, improvements, and equipment, streets, or
18 sidewalks for a public area or public way).
19 (3) Promoting commercial activity or public events.
20 (4) Supporting business recruitment and development.
21 (5) Providing security for public areas.
22 (6) Acquiring, constructing, or maintaining parking facilities.
23 (7) Constructing, rehabilitating, or repairing residential
24 property, including improvements related to the habitability
25 of the residential property.
26 (8) Acquiring, constructing, rehabilitating, or repairing
27 redevelopment projects, economic development facilities
28 described in IC 36-7-11.9-3, pollution control facilities
29 described in IC 36-7-11.9-9, or other local improvements.
30 (9) Constructing, rehabilitating, or repairing industrial or
31 commercial property associated with a qualified
32 redevelopment site (as defined in IC 6-3.1-34-6).
33 Sec. 5. As used in this chapter, "projected assessed value"
34 means:
35 (1) with respect to the community infrastructure
36 improvement district, an assessed value of the property within
37 the community infrastructure improvement district, plus the
38 as-built projected assessed value of the economic development
39 project to be constructed in the community infrastructure
40 improvement district as determined pursuant to a third party
41 evaluation accepted by the legislative body; and
42 (2) with respect to an individual parcel, the as-built (or
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1 as-improved, as appropriate) projected assessed value of the
2 parcel as determined pursuant to a third party evaluation
3 accepted by the legislative body;
4 including in both cases the assessed value of a property subject to
5 a voluntary assessment agreement as set forth in section 10(e) of
6 this chapter.
7 Sec. 6. As used in this chapter, "rate and method apportionment
8 report" means a report relating to a developer's planned economic
9 development of the subject parcels, which must set forth at least
10 the following:
11 (1) A list of parcels consistent with the parcels identified in the
12 petition for the establishment of the community infrastructure
13 improvement district under section 7 of this chapter.
14 (2) A statement of:
15 (A) the proposed assessment formula under section 7(b)(5)
16 of this chapter;
17 (B) the apportionment of benefits under section 8(a) of this
18 chapter; and
19 (C) zones or other classifications, if any, relating to the
20 formula under clause (A) or the apportionment under
21 clause (B).
22 (3) The proposed total assessment per parcel, including:
23 (A) the lump sum payment amount if the assessment is
24 payable as a lump sum;
25 (B) the method for converting a lump sum assessment to
26 annual installments, if applicable; and
27 (C) a schedule of annual installments and an
28 accompanying amortization schedule of the assessment, if
29 any.
30 (4) A statement of the basis and methodology for reassessment
31 in the case of a parcel division or consolidation of the assessed
32 property, status of development or the completion of
33 improvements associated with the assessed property or
34 changes in zoning classification of the property, and any
35 resulting assessment changes.
36 (5) The proposed maximum number of years during which the
37 assessment may be paid in annual installments.
38 (6) The proposed method for establishing the assessment for
39 the initial year and each year thereafter.
40 Sec. 7. (a) A person that intends to file a petition for the
41 establishment of a community infrastructure improvement district
42 under this section must first provide written notice to the clerk (as
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1 defined in IC 36-1-2) in the case of a municipality, or the county
2 auditor, in the case of a county, of the person's intent before
3 initiating the petition process.
4 (b) A petition for the establishment of a community
5 infrastructure improvement district may be filed with the clerk of
6 the municipality or the county auditor not later than one hundred
7 twenty (120) days after the date on which the notice of intent for
8 the petition is filed with the clerk of the municipality or the county
9 auditor under subsection (a). The petition must include the
10 following information:
11 (1) The boundaries of the proposed district, including the
12 boundaries of any zones to be established under section 8(b)
13 of this chapter.
14 (2) The name and address of each parcel and owner of land
15 within the proposed district and a description of the existing
16 land use and zoning classification of each parcel.
17 (3) A detailed description of the economic improvement
18 projects to be carried out within the proposed district, the
19 estimated cost of these projects, and the benefits to accrue to
20 the property owners within the district.
21 (4) A plan for the application of assessment revenue to the
22 cost of the economic improvement projects within the district.
23 (5) A proposed formula for determining the percentage of the
24 total benefit to be received by each parcel of real property
25 within the district, in the manner provided by section 8 of this
26 chapter.
27 (6) The number of years in which assessments will be levied.
28 (7) A proposed list of members for the board.
29 (c) The petition shall be accompanied by a rate and method
30 apportionment report.
31 (d) The clerk of the municipality or the county auditor shall
32 retain the paper copy of a petition filed under this section for not
33 less than ninety (90) days from the date the petition is filed with the
34 clerk of the municipality or the county auditor.
35 Sec. 8. (a) The benefits accruing to parcels of real property
36 within a community infrastructure improvement district may be
37 apportioned among those parcels on any basis reasonably
38 representative of the diffusion of benefits from the economic
39 improvement project, including the following:
40 (1) Proximity of the parcel to the project.
41 (2) Accessibility of the parcel to the project.
42 (3) True cash value of the parcel.
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1 (4) True cash value of any improvement on the parcel.
2 (5) Age of any improvement on the parcel.
3 (6) Land use class of the parcel.
4 (7) Equivalent units, including, in the case of an apartment
5 building, the number of units in the building.
6 (8) Parcel square footage.
7 (9) Parcel front footage.
8 (10) Gross floor area.
9 (11) Benefit availability.
10 (12) Impervious surface area.
11 (13) Other similar factors.
12 The apportionment of benefits under this subsection may be
13 adjusted by zone or land use as provided in subsections (b) and (c).
14 (b) If the benefit of the economic development project varies
15 from one (1) area to another within the community infrastructure
16 improvement district, up to three (3) zones may be established
17 within the district to delineate the approximate difference in
18 beneficial impact, and benefits may be apportioned accordingly.
19 (c) In order to encourage the retention or development of
20 various land uses within the district, assessments may be adjusted
21 according to the zoning classification of the property.
22 Sec. 9. (a) After receipt of a petition under section 7 of this
23 chapter, the clerk of the municipality or the county auditor shall,
24 in the manner provided by IC 5-3-1, publish notice of a hearing on
25 the proposed community infrastructure improvement district. The
26 clerk of the municipality or the county auditor shall mail a copy of
27 the notice to each owner of real property within the proposed
28 community infrastructure improvement district. The notice must
29 include the boundaries of the proposed district, a description of the
30 proposed projects, the proposed formula for determining the
31 percentage of the total benefit to be received by each parcel of
32 property, and the hearing date. The date of the hearing may not be
33 more than sixty (60) days after the date on which the notice is
34 mailed.
35 (b) At the public hearing under subsection (a), the legislative
36 body shall hear all owners of real property in the proposed district
37 (who appear and request to be heard) upon the questions of:
38 (1) the sufficiency of the notice;
39 (2) whether the proposed economic improvement projects are
40 of public utility and benefit;
41 (3) whether the formula to be used for the assessment of
42 special benefits is appropriate; and
2023 IN 261—LS 7322/DI 120 6
1 (4) whether the district contains all, or more or less than all,
2 of the property specially benefited by the proposed project.
3 Sec. 10. (a) After conducting a hearing on the proposed
4 community infrastructure improvement district, the legislative
5 body may adopt an ordinance establishing the community
6 infrastructure improvement district if it determines that:
7 (1) the petition meets the requirements of this section and
8 sections 7 and 8 of this chapter;
9 (2) the economic improvement projects to be undertaken in
10 the district will provide special benefits to property owners in
11 the district and will be of public utility and benefit;
12 (3) the benefits provided by the project will be new benefits
13 that do not replace benefits existing before the establishment
14 of the district;
15 (4) the formula to be used for the assessment of benefits is
16 appropriate;
17 (5) except as provided in subdivision (6), aggregate
18 assessments under this chapter do not exceed thirty percent
19 (30%) of the projected assessed value of property within the
20 district; and
21 (6) in the case of a community infrastructure improvement
22 district that is established for single family residences, the
23 aggregate assessments under this chapter do not exceed ten
24 percent (10%) of the projected assessed value per single
25 family residence within the district.
26 (b) The legislative body may adopt the ordinance only if it
27 determines that the petition has been signed by one hundred
28 percent (100%) of the owners of real property subject to
29 assessment within the proposed district.
30 (c) Unless an owner of property has entered into a voluntary
31 assessment agreement associated with the economic improvement
32 project, the signature of a person shall not be considered in
33 determining whether the requirement under subsection (b) is met
34 if the person's property:
35 (1) is:
36 (A) owned by a nonprofit entity and is exempt from
37 property taxation under IC 6-1.1-10-16;
38 (B) owned by this state or a state agency or leased to a
39 state agency and is exempt from property taxation under
40 IC 6-1.1-10 or any other law; or
41 (C) owned by a political subdivision of this state and is
42 exempt from property taxation under IC 6-1.1-10 or any
2023 IN 261—LS 7322/DI 120 7
1 other law; or
2 (2) would be exempt from assessments under the ordinance.
3 (d) In addition, unless an owner of property has entered into a
4 voluntary assessment agreement, neither the parcel of real
5 property nor the assessed value of any property may be considered
6 in determining the total parcels of real property or the total
7 assessed value of property in the proposed district for purposes of
8 determining whether the requirement under subsection (b) is met
9 if the property:
10 (1) is:
11 (A) owned by a nonprofit entity and is exempt from
12 property taxation under IC 6-1.1-10-16;
13 (B) owned by this state or a state agency or leased to a
14 state agency and is exempt from property taxation under
15 IC 6-1.1-10 or any other law; or
16 (C) owned by a political subdivision of this state and is
17 exempt from property taxation under IC 6-1.1-10 or any
18 other law; or
19 (2) would be exempt from assessment under the ordinance.
20 (e) The assessed value of a property subject to a voluntary
21 assessment agreement is the most recent of valuations from either
22 the county assessor or a third party evaluation accepted by the
23 legislative body.
24 Sec. 11. (a) An ordinance adopted under section 10 of this
25 chapter may be repealed or amended only after notice of the
26 proposed repeal or amendment is published and mailed in the
27 manner provided by section 9 of this chapter. However, in no event
28 shall any ordinance adopted under this chapter be repealed or
29 amended if there is any outstanding debt payable from
30 assessments.
31 (b) Notwithstanding subsection (a), an ordinance adopted under
32 section 10 of this chapter may be amended to add additional,
33 contiguous parcels to which benefits of economic improvement
34 projects accrue at the request of the owner or owners of such
35 parcels. If an ordinance is amended under this subsection, the rate
36 and method of apportionment report shall be amended to reflect
37 the revised list of parcels and related assessments, and notice must
38 be provided under section 14(b) of this chapter.
39 Sec. 12. An ordinance adopted under section 10 of this chapter
40 may provide that businesses established within the district after the
41 creation of the district are exempt from special assessments for a
42 period not to exceed one (1) year.
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1 Sec. 13. An ordinance adopted under section 10 of this chapter
2 must establish a community infrastructure improvement board to
3 be appointed by the legislative body. The board must have at least
4 three (3) members, and a majority of the board members must own
5 real property within the district. However, if there is only one (1)
6 property owner within a district, the legislative body shall appoint
7 one (1) member to the community infrastructure improvement
8 board who owns real property within the district and not more
9 than two (2) other members who are not required to own real
10 property within the district.
11 Sec. 14. (a) The following apply:
12 (1) The board shall use the formula approved by the
13 legislative body under section 10(a)(4) of this chapter to
14 determine the percentage of benefit to be received by each
15 parcel of real property within the community infrastructure
16 improvement district. The board shall apply the percentage
17 determined for each parcel to the total amount that is to be
18 defrayed by special assessment and determine the special
19 assessment for each parcel.
20 (2) In the event of a reassessment as provided in section 6(4)
21 of this chapter, the next assessment installment will include an
22 additional amount owed, if any, equal to the difference
23 between the amount originally calculated in subdivision (1)
24 and the amount calculated pursuant to subdivision (1) using
25 the reassessment methodology described in the rate and
26 method of apportionment report.
27 (b) Promptly after determining the proposed assessment for
28 each parcel, the board shall mail notice to each owner of property
29 to be assessed. The notice must:
30 (1) describe any potential proposed special assessment and
31 estimates of related annual installments thereof, including any
32 method by which the assessments or installments may change
33 depending on factors as set forth in the rate and method of
34 apportionment report;
35 (2) state that the rate and method of apportionment report
36 and the proposed special assessment on each parcel of real
37 property in the community infrastructure improvement
38 district is on file and can be seen in the board's office;
39 (3) state the time and place where written remonstrances
40 against the special assessment may be filed;
41 (4) set forth the time and place where the board will hear any
42 owner of assessed real property who has filed a remonstrance
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1 before the hearing date; and
2 (5) state that the board, after hearing evidence, may decrease,
3 or leave unchanged, the special assessment on any parcel.
4 (c) The notices must be deposited in the mail twenty (20) days
5 before the hearing date. The notices to the owners must be
6 addressed as the names and addresses appear on the tax duplicates
7 and the records of the county auditor.
8 (d) At the time fixed in the notice, the board shall hear any
9 owner of assessed real property who has filed a written
10 remonstrance before the date of the hearing. The hearing may be
11 continued from time to time as long as is necessary to hear the
12 owners.
13 (e) The board shall render its decision by either confirming or
14 decreasing each special assessment by setting opposite each name,
15 parcel, and proposed assessment, the amount of the assessment as
16 determined by the board. However, if the total of the special
17 assessments exceeds the amount needed, the board shall make a
18 prorated reduction in each special assessment.
19 (f) Except as provided in section 15 of this chapter, the signing
20 of the special assessment schedule by a majority of the members of
21 the board and the delivery of the schedule to the county auditor
22 constitute a final and conclusive determination of the benefits that
23 are assessed.
24 (g) Each special assessment is a lien on the real property that is
25 assessed and is subordinate to and subject to all other liens and
26 encumbrances then existing or thereafter created.
27 (h) The board shall certify to the county auditor the schedule of
28 special assessments of benefits. For purposes of providing
29 substantiation of the deductibility of a special assessment for
30 federal adjusted gross income tax purposes under Section 164 of
31 the Internal Revenue Code, the board shall, to the extent
32 practicable, supplement the schedule of special assessments
33 provided to the county auditor with a statement that identifies the
34 part of each special assessment that is allocable to interest,
35 maintenance, and repair charges. If the board provides the county
36 auditor with the statement, the county auditor shall show, on the
37 tax statement, the part of the special assessment that is for interest
38 and maintenance and repair items separately from the remainder
39 of the special assessment.
40 (i) An assessment or reassessment, interest, the expense of
41 collection, and reasonable attorney's fees, if incurred, is:
42 (1) a lien that is effective from the date of the ordinance or
2023 IN 261—LS 7322/DI 120 10
1 order levying the assessment until the assessment is paid;
2 (2) a lien that is subject to and subordinate to:
3 (A) all liens and encumbrances existing at the time the
4 assessment lien becomes effective; and
5 (B) any later extension or amendment of the liens and
6 encumbrances existing at the time the assessment lien
7 became effective;
8 (3) a lien that runs with the land and that portion of an
9 assessment payment that has not yet come due is not
10 eliminated by transfer of the parcel to a tax exempt owner;
11 and
12 (4) an assessment lien that may be enforced by the governing
13 body in the same manner that mortgages are foreclosed.
14 (j) Delinquent installments of the assessment shall incur interest,
15 penalties, and attorney's fees in the same manner as delinquent ad
16 valorem taxes.
17 (k) The owner of assessed property, including those by way of
18 voluntary assessment, may pay at any time all or any part of the
19 assessment, with interest that has accrued on the assessment, on
20 any lot or parcel.
21 Sec. 15. (a) Any owner of real property in a community
22 infrastructure improvement district may file an action contesting
23 the validity of:
24 (1) the ordinance adopted under section 10 of this chapter; or
25 (2) the assessment schedule adopted under section 14 of this
26 chapter.
27 (b) An action under this section must be filed:
28 (1) in the circuit or superior court of the county in which the
29 community infrastructure improvement district is located;
30 and
31 (2) within thirty (30) days after adoption of either the
32 ordinance or assessment schedule, respectively.
33 Sec. 16. Within thirty (30) days after the county auditor receives
34 the certification of final scheduled assessments for the completion
35 of the economic improvement project, the auditor shall deliver a
36 copy of the certificate to the county treasurer. Each year, the
37 board, which may work through a third party administrator, shall
38 assist the county treasurer in order to:
39 (1) prepare an annual assessment roll, which shall reflect
40 which parcels, if any, have fully paid any applicable
41 assessment and therefore no longer owe an assessment
42 installment;
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1 (2) designate which parcels are assessed, and in what
2 amounts, going forward;
3 (3) establish annual assessment installments consistent with
4 the rate and method apportionment report; and
5 (4) calculate and add to the annual assessment installments
6 due any penalties, interest, fees, or payments owed under
7 section 14(j) of this chapter, and other amounts due.
8 Each year, the treasurer shall add the full annual assessment
9 installment due in that year to the tax statements of the person
10 owning the property affected by the assessment, designating it in
11 a manner distinct from general taxes.
12 Sec. 17. Assessments collected under this chapter shall be paid
13 to the board.
14 Sec. 18. (a) The board shall establish a community
15 infrastructure improvement fund and shall deposit in this fund all
16 assessments received under this chapter and any other amounts
17 received by the board.
18 (b) Money in the community infrastructure improvement fund
19 may be used only for the purposes specified in the ordinance
20 establishing the community infrastructure improvement district.
21 Any money earned from investment of money in the fund becomes
22 a part of the fund.
23 Sec. 19. (a) Before November 1 of each year, the board shall
24 prepare and submit to the fiscal body a budget for the following
25 calendar year governing the board's projected expenditures from
26 the community infrastructure improvement fund. Such budget
27 must include amounts to pay debt service on any bonds supported
28 by assessments and assessment installments until such bonds are
29 paid in full. The fiscal body may approve, modify, or reject the
30 proposed budget.
31 (b) The board may make an expenditure from the community
32 infrastructure improvement fund only if the expenditure was
33 approved by the fiscal body in its review of the board's budget or
34 was otherwise approved by the fiscal body.
35 Sec. 20. The board must comply with IC 36-1-12 when
36 contracting for public works.
37 Sec. 21. The board may enter into lease or contractual
38 agreements, or both, with governmental, not-for-profit, or other
39 private entities for the purpose of carrying out economic
40 improvement projects.
41 Sec. 22. If the ordinance that established a community
42 infrastructure improvement district is repealed, the assets and
2023 IN 261—LS 7322/DI 120 12
1 liabilities of the community infrastructure improvement district
2 shall be disposed of in the manner determined by the unit.
3 However, liabilities incurred by the community infrastructure
4 improvement district are not an obligation of the unit and are
5 payable only from the special assessments and other revenues of
6 the district.
7 Sec. 23. The board shall submit an annual report to the
8 legislative body and the fiscal body before February 15 of each
9 year. The report must summarize the board's activities and
10 expenditures during the preceding calendar year.
11 Sec. 24. The board may:
12 (1) exercise any of the powers of a unit under IC 36-7-12-18 or
13 IC 36-7-12-18.5; or
14 (2) issue revenue bonds under section 26 of this chapter;
15 to finance an economic improvement project.
16 Sec. 25. Upon acceptance or rejection of a proposed community
17 infrastructure improvement district following a petition under this
18 chapter, the resulting district (or the person that files the petition,
19 if the proposed district is rejected) shall, at the request of the unit,
20 reimburse the unit for all or part of the reasonable expenses
21 incurred by the unit to comply with this chapter. The legislative
22 body of the unit may choose not to collect all or part of the
23 reasonable expenses incurred to comply with this chapter.
24 Sec. 26. (a) In accordance with section 24 of this chapter, the
25 board may issue bonds or notes payable from assessments assessed
26 under this chapter to finance economic improvement projects. The
27 bonds or notes may be publicly offered or privately placed in the
28 manner determined by the board. Such assessments are not ad
29 valorem property taxes and any bonds or notes payable from the
30 assessment revenue are not general obligations of the unit that
31 established the community infrastructure improvement district.
32 (b) The board may enter into ancillary financial agreements
33 relating to and in furtherance of its issuance of bonds or notes
34 under this chapter, including agreements with the unit that
35 established the district.
36 (c) Bonds or notes issued under this chapter shall include
37 provisions for redemptions from property owners who choose to
38 make one (1) time lump sum assessment prepayments on the
39 unamortized portion of any assessment applicable to their
40 property.
41 (d) Bonds or notes issued under this chapter are subject to the
42 following limitations:
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1 (1) The bonds or notes may be issued for a period not to
2 exceed thirty-five (35) years.
3 (2) The average life of the bonds or notes may not exceed one
4 hundred twenty percent (120%) of the average economic life
5 of the improvements for which the bonds or notes are issued.
6 Sec. 27. This chapter expires July 1, 2028.
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