LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7746 NOTE PREPARED: Jan 15, 2025
BILL NUMBER: HB 1561 BILL AMENDED:
SUBJECT: Tax Increment Financing.
FIRST AUTHOR: Rep. Clere BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED: GENERAL IMPACT: Local
DEDICATED
FEDERAL
Summary of Legislation: Accelerated Debt Repayments: This bill provides that a redevelopment
commission may use money from certain funds for the purpose of paying more toward debt service
obligations, in order to retire debt service earlier, regardless of whether that use is listed in the redevelopment
commission's annual spending plan. It provides that a redevelopment commission making accelerated debt
payments may retain the assessed value associated with the original debt service schedule. It also provides
that early debt retirement applies only if the early defeasance of debt is allowed according to the bond
issuance documents.
Expenditure Area: The bill provides that allocated property tax proceeds that are otherwise authorized to be
expended for purposes related to a redevelopment project that is located outside the boundaries of the
allocation area may be expended for those purposes only if the redevelopment commission immediately at
the conclusion of a public hearing adopts a declaratory resolution, and the applicable legislative body votes
to approve the declaratory resolution that finds that it has been clearly demonstrated that the expenditure:
(1) will directly benefit the allocation area; or (2) will result in the creation or retention of jobs in the private
sector and provide an estimate of how many jobs will be created or retained over a specified time period. It
also provides that the expenditure allowance does not apply to any transfer of property tax proceeds to a
school corporation, an accredited or nonaccredited public or private school, or a charter school.
TIF Allocations: The bill provides that if: (1) the amount of excess assessed value determined by a
commission is expected to generate more than 200% of the amount of allocated tax proceeds necessary to
make, when due, principal and interest payments on certain bonds; plus (2) the amount necessary for certain
other purposes; the commission shall submit to the legislative body of the unit its determination of the excess
assessed value that the commission proposes to use for nondebt, one-time purposes within the calendar year
before allocating the balance of the excess assessed value to the respective taxing units.
TIF Extensions: The bill prohibits a redevelopment commission from adopting an amendment to a
declaratory resolution that contains an allocation area provision that extends the expiration date of the
allocation area provision. It provides that after the expiration of a previous allocation area provision, a
redevelopment commission may adopt a declaratory resolution, or an amendment to a declaratory resolution,
HB 1561 1 that contains a new allocation area provision with a new expiration date, and for which the county auditor
in which the unit is located shall compute the base assessed value for the allocation area using the assessment
date immediately preceding the effective date of the new allocation provision of the declaratory resolution
or amendment.
Specified Account: The bill allows a redevelopment commission to, pursuant to the approval of the local
legislative body, create an account for a specific infrastructure purpose.
Effective Date: Upon passage; January 1, 2025 (retroactive); July 1, 2025.
Explanation of State Expenditures:
Explanation of State Revenues:
Explanation of Local Expenditures: Expenditure Area: This bill’s provisions may increase the
administrative workload of redevelopment commissions to adopt declaratory resolutions for the expenditure
project funds outside the boundaries of the TIF area (other than for educational or training programs or
transfers to a school). Approval of such a resolution would have to be voted upon by the applicable
legislative body. This provision could also result in the non-approval of some proposed expenditures.
Accelerated Debt Repayments: This bill’s provisions will allow redevelopment commissions to make
accelerated debt payments even if the accelerated payments are not listed in the plan. If a commission makes
accelerated debt payments, the AV increment associated with the original payment schedule may be retained.
Explanation of Local Revenues: TIF Allocations: Under current law, each commission must annually
determine the amount of allocated tax proceeds that will exceed the amount needed to make debt payments
and pay other expenses. If the excess revenue amount exceeds 200% of the amount needed, the commission
must submit to the unit’s legislative body its determination of the proposed excess AV amount to be passed
through to the units. The legislative body may approve or modify the AV pass-through amount. Under the
bill, the commission will instead submit its determination of the amount of excess AV proposed to use for
non-debt, one time purposes in the year, before passing through the remainder of the excess AV. If additional
AV is passed through to the taxing units, tax rates would be reduced, resulting in higher taxing unit revenues
due to lower tax cap losses. The bill also encourages redevelopment commissions to make allocations from
existing TIF areas to school corporations.
TIF Extensions: The bill prohibits the extension of a TIF area upon expiration. Instead, the bill permits a new
TIF area to be established in its place. The base AV of the new area would reflect the AV when the new TIF
is created so all of the AV in the former TIF would flow to the taxing units. The higher taxing unit base AV
reduces tax rates and increases taxing unit revenue due to reduced tax cap losses.
State Agencies Affected:
Local Agencies Affected: Redevelopment commissions; Local civil taxing units and school corporations.
Information Sources:
Fiscal Analyst: James Johnson, 317-232-9869.
HB 1561 2