Introduced Version
SENATE BILL No. 494
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 36-7-32.5.
Synopsis: State and local tax capture areas. Amends provisions
concerning the designation of an innovation development district to
add certain qualification requirements (grandfathers in those districts
established under current law). Requires the Indiana economic
development corporation to establish a maximum sales tax increment
amount and state income tax increment amount that may be allocated
for each innovation development district, which may not exceed a
specified amount per state fiscal year. Adds related procedural
provisions. Makes conforming changes.
Effective: July 1, 2022 (retroactive); January 1, 2025 (retroactive).
Mishler
January 14, 2025, read first time and referred to Committee on Appropriations.
2025 IN 494—LS 7506/DI 120 Introduced
First Regular Session of the 124th General Assembly (2025)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2024 Regular Session of the General Assembly.
SENATE BILL No. 494
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 36-7-32.5-0.5 IS ADDED TO THE INDIANA
2 CODE AS A NEW SECTION TO READ AS FOLLOWS
3 [EFFECTIVE JANUARY 1, 2025 (RETROACTIVE)]: Sec. 0.5. The
4 amendments made to sections 9 and 12 of this chapter in the 2025
5 session of the general assembly apply only to innovation
6 development districts established after December 31, 2024.
7 SECTION 2. IC 36-7-32.5-9, AS AMENDED BY P.L.123-2024,
8 SECTION 17, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
9 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 9. (a) Before the
10 corporation may designate territory within the jurisdiction of a city,
11 town, or county, or within the jurisdiction of more than one (1) city,
12 town, or county, as an innovation development district under this
13 section, the board of the corporation established under IC 5-28-4 shall
14 establish uniform policies and guidelines that the corporation must
15 follow when notifying and collaborating with an executive, or, if
16 applicable, executives, to designate territory within the jurisdiction of
17 a city, town, or county as an innovation development district under this
2025 IN 494—LS 7506/DI 120 2
1 section. The corporation shall publish the uniform policies and
2 procedures established under this subsection on the corporation's
3 website.
4 (b) Subject to subsection (c), and section 12(a) of this chapter, after:
5 (1) budget committee review; and
6 (2) notifying and collaborating with the executive, or, if an
7 innovation development district will include territory within the
8 jurisdiction of more than one (1) city, town, or county, with the
9 executives of each city, town, or county, in the manner provided
10 under the policies and guidelines established under subsection
11 (a);
12 the corporation may designate only a territory that meets the
13 qualifications set forth in subsection (e), within the jurisdiction of a
14 city, town, or county, or territory within the jurisdiction of more than
15 one (1) city, town, or county, as an innovation development district if
16 the corporation determines that the designation will support economic
17 growth.
18 (c) Notwithstanding section 10(b) of this chapter, but subject to
19 section 12(c) of this chapter, the corporation may designate territory
20 that is located in an existing allocation area described in section 10(b)
21 of this chapter as an innovation development district after:
22 (1) budget committee review; and
23 (2) obtaining consent from the executive, executives, or the board
24 of any military base reuse authority, in the manner provided under
25 the policies and guidelines established under subsection (a).
26 (d) The requirements in subsection (c) apply to all innovation
27 development districts established under this chapter regardless of the
28 total costs and benefits of the proposed investment of an innovation
29 development district.
30 (e) The following conditions for designation of a territory must
31 be met as determined by the corporation and reviewed by the
32 budget committee:
33 (1) A determination of support by an Indiana institution of
34 higher education (as defined in IC 5-28-40-2) that is a member
35 of the American Association of Universities through an
36 investment of nonstate funds in an amount equal to or greater
37 than twenty-five million dollars ($25,000,000) to the
38 innovation development district. This investment shall be
39 confirmed in writing by the corporation.
40 (2) A territory must include a total investment plan of an
41 amount equal to or greater than seven hundred fifty million
42 dollars ($750,000,000).
2025 IN 494—LS 7506/DI 120 3
1 SECTION 3. IC 36-7-32.5-12, AS AMENDED BY P.L.123-2024,
2 SECTION 20, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 12. (a) If the total costs
4 and benefits of the proposed investment of an innovation development
5 district are expected to be an amount less than two billion dollars
6 ($2,000,000,000), the This section applies only to an innovation
7 development district that meets the qualifications set forth in
8 section 9(e) of this chapter. The following apply:
9 (1) The executive, or, if applicable, the executives, and the
10 corporation shall enter into an agreement establishing the terms
11 and conditions governing the innovation development district in
12 accordance with this section.
13 (2) If the executive, or, if applicable, the executives, and the
14 corporation cannot enter into an agreement under subdivision (1),
15 the designation of territory under section 9 of this chapter is no
16 longer effective and the innovation development district may not
17 be designated or otherwise established under this chapter.
18 (b) The agreement must include the following provisions:
19 (1) A description of the area, including a list of all parcels to be
20 included within the innovation development district.
21 (2) Covenants and restrictions, if any, upon all or a part of the
22 properties contained within the innovation development district
23 and terms of enforcement of any covenants or restrictions.
24 (3) The due diligence and financial commitments of any party to
25 the agreement and of any owner or developer of property within
26 the innovation development district.
27 (4) The financial projections of the innovation development
28 district.
29 (5) The proposed use of the:
30 (A) net increment; and
31 (B) incremental property tax amount described in section 14(c)
32 14(d) of this chapter;
33 that is captured within the innovation development district.
34 (6) The aggregate percentage of annual incremental property tax
35 revenue that will be transferred to the city, town, county, or school
36 corporation, or, if applicable, the cities, towns, counties, or school
37 corporations, under section 19(e) of this chapter. The aggregate
38 percentage transferred may not be less than twelve percent (12%)
39 of the annual amount of incremental property tax revenue
40 deposited in the local innovation development district fund
41 established by section 19 of this chapter.
42 (7) Subject to the limitations of this chapter, the duration of the
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1 designation of an area as an innovation development district.
2 (8) The terms of enforcement of the agreement, which may
3 include the definition of events of default, cure periods, legal and
4 equitable remedies and rights, and penalties and damages, actual
5 or liquidated, upon the occurrence of an event of default.
6 (9) The public facilities to be developed for the innovation
7 development district and the estimated costs of those public
8 facilities.
9 (c) If an innovation development district will include territory
10 located in an existing allocation area described in section 10(b) of this
11 chapter, the executive, or, if applicable, the executives, and the
12 corporation shall enter into an agreement establishing the terms and
13 conditions governing the innovation development district in accordance
14 with this section. The agreement must include the following provisions:
15 (1) The provisions listed in subsection (b)(1) through (b)(9).
16 (2) A provision prohibiting the city, county, town, or other entity
17 that established the applicable existing allocation area described
18 in section 10(b) of this chapter from incurring any additional
19 obligations that require a pledge of future incremental property
20 tax revenue to be paid from the applicable existing allocation area
21 described in section 10(b) of this chapter without first obtaining
22 the consent of the corporation.
23 (3) A provision requiring the maintenance of all applicable
24 property tax records for the parcel or parcels located within the
25 innovation development district during the term of the innovation
26 development district.
27 If the executive, or, if applicable, the executives, and the corporation
28 cannot enter into an agreement under this subsection, the designation
29 of territory under section 9 of this chapter is no longer effective and the
30 innovation development district may not be designated or otherwise
31 established under this chapter.
32 (d) An executive may discuss the terms of an agreement described
33 in this section and hold a meeting as an executive session under
34 IC 5-14-1.5-6.1 with:
35 (1) in the case of a city other than a consolidated city, the
36 common council;
37 (2) in the case of a consolidated city, or a county having a
38 consolidated city, the city-county council;
39 (3) in the case of a town, the town council; and
40 (4) in the case of a county that does not have a consolidated city,
41 the board of county commissioners.
42 (e) Within fifteen (15) days of entering into an agreement under
2025 IN 494—LS 7506/DI 120 5
1 subsection (a), the corporation shall:
2 (1) submit a written report on the agreement to the budget
3 committee; and
4 (2) provide notification of the designation to the department
5 of state revenue and the department of local government
6 finance.
7 (f) Neither an executive nor the corporation may exercise the power
8 of eminent domain within an innovation development district.
9 SECTION 4. IC 36-7-32.5-13, AS ADDED BY P.L.135-2022,
10 SECTION 28, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
11 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 13. If an innovation
12 development district is designated, under section 9 of this chapter or
13 described under section 12 of this chapter, each executive shall
14 designate the innovation development district as an allocation area for
15 purposes of the allocation and distribution of property taxes. Each
16 executive shall, prior to August 1 of the year following the
17 designation, set the base assessed value of the allocation area and
18 provide notice of the base assessed value provide notice of the
19 designation to the department of local government finance, the
20 county auditor, and to each taxing unit that has authority to levy
21 property taxes in the geographic area where the innovation
22 development district is located. The notice must state the general
23 boundaries of the innovation development district and include a list the
24 mailing address of all parcels to be included within the innovation
25 development district.
26 SECTION 5. IC 36-7-32.5-14, AS AMENDED BY P.L.123-2024,
27 SECTION 21, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
28 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 14. (a) An allocation area
29 designated under section 13 of this chapter must:
30 (1) apply to the entire innovation development district; and
31 (2) require that any property tax assessed on taxable real and
32 personal property used for commercial or industrial purposes
33 subsequently levied by or for the benefit of any public body
34 entitled to a distribution of property taxes in the innovation
35 development district be allocated and distributed as provided in
36 subsections (b) and (c). (d).
37 (b) Except as otherwise provided in this section:
38 (1) the proceeds of the taxes attributable to the lesser of:
39 (A) the assessed value of the taxable real and personal
40 property for the assessment date with respect to which the
41 allocation and distribution is made; or
42 (B) the base assessed value;
2025 IN 494—LS 7506/DI 120 6
1 shall be allocated and, when collected, paid into the funds of the
2 respective taxing units; and
3 (2) the excess of the proceeds of the property taxes imposed for
4 the assessment date with respect to which the allocation and
5 distribution is made that are attributable to taxes imposed after
6 being approved by the voters in a referendum or local public
7 question conducted after April 30, 2010, not otherwise included
8 in subdivision (1) shall be allocated to and, when collected, paid
9 into the funds of the taxing unit for which the referendum or local
10 public question was conducted.
11 (c) Property tax proceeds shall not be allocated under this
12 section before January 1 of the year following the year the base
13 assessed value is determined under section 13 of this chapter.
14 (c) (d) Except as provided in subsections (d) (e) and (e), (f), all the
15 property tax proceeds that:
16 (1) exceed those described in subsection (b); and
17 (2) are attributable to the assessed value of taxable real and
18 personal property used for commercial or industrial purposes;
19 shall be paid into the appropriate local innovation development district
20 fund established by section 19 of this chapter by the county auditor at
21 the same time that the county auditor distributes property taxes to other
22 local units of government under IC 6-1.1-27. Any remaining property
23 tax proceeds that exceed those described in subsection (b) that are not
24 described in subdivision (2) shall be allocated and, when collected,
25 paid into the funds of the respective taxing units.
26 (d) (e) Notwithstanding any provision to the contrary in this section,
27 if an innovation development district that is designated as an allocation
28 area under section 13 of this chapter includes territory located in an
29 existing allocation area described in section 10(b) of this chapter, the
30 county auditor shall continue to allocate to the existing allocation area
31 described in section 10(b) of this chapter any incremental property tax
32 revenues that would otherwise be allocated to the existing allocation
33 area described in section 10(b) of this chapter as if the innovation
34 development district had not been designated under this chapter, until
35 the existing allocation area described in section 10(b) of this chapter
36 expires.
37 (e) (f) Notwithstanding any other law, each assessor shall, upon
38 petition of an executive or the corporation, reassess the taxable real and
39 personal property situated upon or in, or added to, the innovation
40 development district effective on the next assessment date after the
41 petition.
42 (f) (g) Notwithstanding any other law, the assessed value of all
2025 IN 494—LS 7506/DI 120 7
1 taxable real and personal property in the innovation development
2 district, for purposes of tax limitation, property tax replacement, and
3 formulation of the budget, tax rate, and tax levy for each political
4 subdivision in which the property is located is the lesser of:
5 (1) the assessed value of the taxable real and personal property as
6 valued without regard to this section; or
7 (2) the base assessed value.
8 SECTION 6. IC 36-7-32.5-17, AS AMENDED BY P.L.201-2023,
9 SECTION 277, IS AMENDED TO READ AS FOLLOWS
10 [EFFECTIVE JANUARY 1, 2025 (RETROACTIVE)]: Sec. 17. (a) If
11 an innovation development district is designated under section 9 of this
12 chapter, the corporation shall send to the department of state revenue,
13 prior to August 1 of the calendar year following the designation
14 date:
15 (1) a certified copy of the designation of the innovation
16 development district under section 9 of this chapter, including
17 the date of designation;
18 (2) if an agreement is entered into under section 12 of this
19 chapter, a certified copy of the agreement; and
20 (3) a complete list of the employers and businesses that are paying
21 for the services of individuals who are not employees in the
22 innovation development district and the street names and the
23 range of street numbers of each mailing address on each street
24 in the innovation development district. The corporation shall
25 provide, within ten (10) days of a request, any follow up
26 information requested by the department of state revenue.
27 (b) The corporation shall update and send to the department of
28 state revenue the list provided under subdivision (3) subsection (a)(3)
29 before July 1 of each year.
30 (b) Not later than sixty (60) days after receiving a copy of the
31 designation of the innovation development district, the department of
32 state revenue shall determine the gross retail base period amount and
33 the income tax base period amount.
34 SECTION 7. IC 36-7-32.5-18, AS ADDED BY P.L.135-2022,
35 SECTION 28, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
36 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 18. (a) The department
37 of state revenue shall set the gross retail base period amount and
38 the income tax base period amount prior to October 1 of the
39 calendar year following the designation date of an innovation
40 development district. The department of state revenue is entitled
41 to request and receive, within ten (10) days following the request,
42 any information necessary from the corporation and executive, or
2025 IN 494—LS 7506/DI 120 8
1 executives, in order to determine the gross retail base period
2 amount and the income tax base period amount.
3 (b) Revenue collected under the adjusted gross income tax and
4 gross retail tax shall not be allocated under this section before
5 January 1 of the year following the year the base period amounts
6 are determined under subsection (a).
7 (a) (c) Before the first business day in October of each year, the
8 department of state revenue shall calculate the income tax incremental
9 amount and the gross retail incremental amount for the preceding state
10 fiscal year for each innovation development district designated under
11 this chapter.
12 (b) (d) Taxpayers operating in an innovation development district
13 shall report annually, in the manner and form prescribed by the
14 department of state revenue, information that the department of state
15 revenue determines necessary to calculate the net increment.
16 (c) (e) A taxpayer operating in an innovation development district
17 that files a consolidated tax return with the department of state revenue
18 shall also file annually an informational return with the department of
19 state revenue for each business location of the taxpayer within the
20 innovation development district.
21 (d) (f) If a taxpayer fails to report the information required by this
22 section or file an informational return required by this section, the
23 department of state revenue shall use the best information available in
24 calculating the income tax incremental amount and gross retail
25 incremental amount.
26 (e) (g) The department of state revenue shall transfer the amount
27 calculated as provided in subsection (a) (c) to the applicable local
28 innovation development district fund established for the innovation
29 development district under section 19 of this chapter by November 1
30 of each year.
31 SECTION 8. IC 36-7-32.5-18.5 IS ADDED TO THE INDIANA
32 CODE AS A NEW SECTION TO READ AS FOLLOWS
33 [EFFECTIVE JULY 1, 2022 (RETROACTIVE)]: Sec. 18.5. (a) Upon
34 designation of an innovation development district, the corporation
35 shall establish a maximum annual incremental amount of gross
36 retail tax and adjusted gross income tax that may be allocated for
37 each innovation development district, not to exceed the lesser of:
38 (1) ten percent (10%) of the total cost and benefits of the
39 proposed investment; or
40 (2) fifteen million dollars ($15,000,000);
41 per state fiscal year.
42 (b) The corporation shall report the maximum allocation
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1 amount determined under subsection (a) for each innovation
2 development district to the budget committee within thirty (30)
3 days of the determination.
4 (c) Each state fiscal year, the combined allocated amounts of
5 the:
6 (1) income tax incremental amount; and
7 (2) gross retail incremental amount;
8 shall not exceed the maximum amount determined under
9 subsection (a).
10 SECTION 9. IC 36-7-32.5-19, AS ADDED BY P.L.135-2022,
11 SECTION 28, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
12 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 19. (a) The corporation
13 shall establish a local innovation development district fund for each
14 innovation development district designated under section 9 of this
15 chapter.
16 (b) Each fund consists of:
17 (1) deposits of incremental property tax revenue from the county
18 auditor as provided in section 14(c) 14(d) of this chapter; and
19 (2) transfers from the department of state revenue under section
20 18 of this chapter.
21 (c) The corporation shall administer each local innovation
22 development district fund established under this section. The expenses
23 of administering each fund shall be paid from money in that fund.
24 (d) The corporation may use money in each fund as follows:
25 (1) If an agreement described in section 12 of this chapter has
26 been entered into between the corporation and the executive, or,
27 if applicable, the executives, for any purpose authorized in the
28 agreement.
29 (2) If an agreement described in section 12 of this chapter has not
30 been entered into between the corporation and the executive, or,
31 if applicable, the executives, for the following purposes:
32 (A) The acquisition, improvement, preparation, demolition,
33 disposal, construction, reconstruction, remediation,
34 rehabilitation, restoration, preservation, maintenance, repair,
35 furnishing, and equipping of public facilities, including but not
36 limited to utilities and transportation infrastructure.
37 (B) The operation of public facilities.
38 (C) The acquisition of land within the innovation development
39 district.
40 (D) The recruitment of new businesses and new employees to
41 the innovation development district.
42 (E) The training of individuals employed in the innovation
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1 development district.
2 (e) Not later than August 1 of each year, the corporation shall
3 transfer,
4 (1) if an agreement described in section 12 of this chapter has
5 been entered into between the corporation and the executive, or
6 if applicable, the executives, the amount of incremental property
7 tax revenues determined in the agreement, and which may not be
8 less than twelve percent (12%) of the annual amount of
9 incremental property tax revenues,
10 (2) if an agreement described in section 12 of this chapter has not
11 been entered into between the corporation and the executive, or
12 if applicable, the executives, an amount of incremental property
13 tax revenues that may not be less than twelve percent (12%) of
14 the annual amount of incremental property tax revenue deposited
15 under subsection (b)(1);
16 to the general fund of each city, town, county, or school corporation
17 with territory located within the innovation development district. If the
18 corporation is required to transfer funds to more than one (1) city,
19 town, county, or school corporation under this subsection, the amount
20 transferred to each city, town, county, and school corporation must be
21 allocated among each city, town, county, and school corporation
22 proportionately based on each city's, town's, county's, and school
23 corporation's property tax levy applied to property located within the
24 innovation development district. A transfer under this subsection does
25 not reduce the actual or maximum permissible levy of a city, town,
26 county, or school corporation and may not be considered in
27 determining a city's, town's, county's, or school corporation's maximum
28 permissible ad valorem property tax levy limit under IC 6-1.1-18.5.
29 (f) Each state fiscal year, the corporation may, after making the
30 transfer required under subsection (e) and satisfying all debt service
31 obligations due and payable during the state fiscal year for bonds
32 issued under IC 5-1.2-4-4(a)(2), transfer from each local innovation
33 development district fund to the statewide innovation development
34 district fund established by section 20 of this chapter an amount not to
35 exceed one hundred percent (100%) of the net incremental revenue
36 derived from state income taxes and gross retail taxes deposited into
37 each fund during the immediately preceding state fiscal year.
38 (g) Money in each local innovation development district fund at the
39 end of a state fiscal year does not revert to the state general fund.
40 (h) Money in each local innovation development district fund is
41 continuously appropriated for the purposes specified in this section.
42 SECTION 10. IC 36-7-32.5-21 IS REPEALED [EFFECTIVE
2025 IN 494—LS 7506/DI 120 11
1 JANUARY 1, 2025 (RETROACTIVE)]. Sec. 21. (a) Except as
2 provided in subsection (b), money in the statewide innovation
3 development district fund established by section 20 of this chapter at
4 the end of the state fiscal year does not revert to the state general fund.
5 (b) Notwithstanding subsection (a), if the unobligated balance of the
6 statewide innovation development district fund established by section
7 20 of this chapter exceeds five hundred million dollars ($500,000,000)
8 at the close of any state fiscal year, the amount of funds in excess of
9 five hundred million dollars ($500,000,000) shall be transferred to the
10 state general fund.
11 (c) Money in the fund is continuously appropriated for the purposes
12 of this chapter.
13 SECTION 11. An emergency is declared for this act.
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