Indiana’s property tax earthquake is about to strike Marion County businesses. Thanks to a countywide reassessment, the assessed value of the county’s commercial and industrial properties soon will soar 20 percent to 30 percent, according to Marion County Assessor Greg Bowes, who has reviewed the soon-to-be-released data.
The data suggests that commercial property owners will pick up a greater share of the county’s property-tax tab, though how much tax bills will increase is not yet clear. That will hinge, in part, on future government spending levels and on what reforms the General Assembly passes this session.
But experts say the impact could be dire, accelerating the exodus of businesses from Marion County into suburban counties.
“That’s well beyond the threshold where businesses rethink their relocation decisions,” said Michael Hicks, director of Ball State University’s Bureau of Business Research. “Especially for those businesses that are footloose and can cancel a lease and move outside the county.”
According to the economic development group Indy Partnership, Marion County already has the highest taxes on commercial and industrial properties in the Indianapolis area. Owners of a Marion County building assessed at $1 million currently pay $52,800 in property tax annually. That’s $25,600 more than they’d pay for the same building a few miles southwest in Morgan County.
The reassessment will increase that disparity when the Marion County building’s assessed value becomes $1.2 million to $1.3 million.
“I don’t know anybody in central Indiana that owns commercial property that thinks they’re paying a-less-than-fair tax rate,” said David Reed, the Indianapolis managing director for Los Angeles-based CB Richard Ellis, a real estate brokerage firm. “If the assessed valuations go up by 20 [percent] to 30 percent, that will be really catastrophic for commercial property in central Indiana.”
Although homeowner assessments will change very little according to Bowes, homeowners will get a windfall of property tax relief because of the higher business assessments. You may recall that local news reports last year indicated that most business property assessments had changed very little over the past 8 years while homeowner assessments had skyrocketed. It seems to me that this is just an attempt to even things out so that businesses feel the full impact of the fiscal policies they have generally supported, which included higher taxes. They don't see it that way, however. “This isn’t going to be a good thing for Marion County as a whole,” said Roland Dorson, president of the Greater Indianapolis Chamber of Commerce. “Business understands it needs to pay its fair share. But you don’t want to drive business out of the county.” Dorson was a big proponent of the many tax increases Mayor Peterson pushed through in recent years.
12 comments:
I'd be curious to see what has happened to business's share of state and local taxes has done over the past 10 years. With the Town of St. Johns knocking out the prior residence-friendly assessment system; the inventory tax elimination; and trending, seems like the business tax burden probably shifted to residential taxpayers a good bit over the past decade.
Yeah, good point Doug. Businesses don't want to talk about how much they saved through the elimination of the inventory tax, which was not made up elsewhere. That contributed somewhat to the big residential hit in Marion County last year.
Business will leave -homeowners are trying to leave but can't sell their houses-What do they need at the state house to realize that this cannot continue.Yet they want to cling to their cash cow property tax. Get rid of it and you'll see a boom.
IIRC, the issue with the previous business assessments is that they weren't updated the way that residential assessments were. Which means that homeowners were essentially paying a greater-than-fair share of the property tax pie.
Assuming that the new business reassessments are accurate (and at least you can challenge assessments), it is fair for businesses to pay their share of the property tax. Although they may still have an issue with the tax rate, which is presumably what would make Morgan county, etc. so appealing.
I don't have a good feel for how many businesses would realistically consider moving, though. A lot of businesses can't move, of course, because they are geographically tied to their location. Other businesses probably can't afford to move because moving itself would be too expensive. But there is undoubtedly *some* group of businesses for which a 20-30% property tax savings might make sense...I just don't know how large that group might be.
Greg Bowes testified at the City Council budget hearing last year that homeowners would see maybe a 5% change in their bills after the reassessment. Homeowners may be joined now with business owners in the streets with torches and pitchforks come spring when the bills arrive.
It is worse than that. New business and new industry being attracted to Indiana because of its improved climate for business will by pass Indianapolis/Marion County. Having the worst school system in the USA is already a burden to overcome as talented employees coming with a relocation decision WON'T COME and subject their children to the ISTA WONDERLAND.
The bipartisan government-reform panel led by Indiana Supreme Court Chief Justice Randall Shepard and former Gov. Joe Kernan recommend the elimination of 1,155 units of government and 5,833 fewer elected officials statewide saving $400 million each year.
We've got to quit governing like this!
Message from former Governor Joe Kernan:
http://www.indianachamber.com/
Study shows that Kernan-Shepard recommendations would result in between $200 and $400 million in savings each year
http://www.insideindianabusiness.com/newsitem.asp?id=27617
A little perspective please.
Mely: Bowes did not "testify" to that prediction: he answered a question, when pushed by a Council committee, regarding his prediction. Stop trying to make it more than it was: a guess.
2:19: worst school system in the US? Wanna bet?
It's clear this news is not good for businesses in Marion County. I work with a lot of them regularly on their real estate needs. It's fair to say that only the large tenants or landowners will make a relocation decision based solely on tax rates. It's part of the package, but there are many variables.
Here's a prediction, to which I won't testify: as part of an incentive package to get companies to locate inside 465, you'll start seeing many more TIF and abatement requests.
Which means the Council and Mayor had better get their thinking caps on about how they're going to continue to attract companies. It will not be easy.
I was at the meeting with very few people were in attendance. It was in an auditorium at CTS. Bowes DID in fact say our bills would change maybe 5% at most. Township assessors said the same thing.
Don't even try to tell me what I heard. Were you there?
I thought the Democrats LIKED higher taxes on Businesses ? That is what Obama and Hillary are saying.
Mely I heard the same question and a slightly different answer at a CCC meeting.
I know nothing about a meeting at CTS.
But I know Greg Bowes. And some of the (worthless) township assessors.
They don't make statements like that without qualification. Particularly in this assessment-qeary political climate.
I'm suggesting you"underheard," or didn't get the whole quote. It has happened to me, too...this entire subject has been so sensitive for almost a year, that I cannot imagine any elected assessor making that kind of statement without qualifying it. I did hear Rev. Ajabu, at a public meeting, try to rephrase an answer to get what he wanted out of it, but, he's not quite that clever...
I'll see Greg tomorrow. I'll ask him.
It's not over yet. I'm betting that there will be a massive number of appeals from the business community. I don't believe for one minute that businesses went up 30%. Wait until you see how much we lose on appeals. This reassessment was a joke, no way could it be done right in such a short amount of time.
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