Valparaiso City Council members, by a vote of 4-2, passed an ordinance earlier this month that will continue a tax-based development fund despite concerns about the attached tax commitment.
Baker Tilly partner Eric Walsh, of the municipal advising firms representing the City of Valparaiso, reviewed the financial incentive and tax formula included in the description of the ordinance, which was passed at the April 11 meeting.
“State legislature in this session has now passed a bill that once you have reestablished your CCD fund, you no longer have to go through this process, compared to every year having to reestablishing it to keep your rate,” Walsh said.
“The City of Valparaiso’s current rate is now .0124 cents, so you can see you are very far from the maximum since it’s been around for about 20 years since the city established the rate. Every community around Porter County, with the exception of Pines, has a CCD rate and Valparaiso has the lowest of any of these. It will generate around an additional half million dollars a year and the increase would be realized about this same time next year when the tax bills go out.”
Walsh said the impact to “average residents, as well as commercial business owners and those with farmland” would result in a $50,000 valued homestead would have an estimated tax bill increase annually of $2.76, and for example, for a $100,000 home it would be an annual increase of $9. Any residents who have reached their tax cap would not receive an increase to their bill. For farmland and agricultural land owners, 100 acres would result in a $41 dollar annual increase. For every $100,000 value of a commercial property, it results in a $27 increase per year.
The fund can be used for any legal purpose of the city, much like the general fund.
“Currently, this fund has around $200,000 in it, and you’re saying this will generate an additional $500,000, so that’s around $700,000 total, when so many other government entities are scaling back and sending their tax dollars back to residents,” Councilman Robert Cotton, D-2nd, said.
“The greatest impact seems to be on the lowest rung, and perhaps that $2.76 increase does have a negative effect. It feels a little bit like reverse Robin Hood.”
Kevin Cornett was one of the residents who addressed the council during the public comment portion for feedback before the passing of the ordinance and he asked, “why right now?”
“We just got our property taxes and I think everybody’s in Valpo went up already,” Cornett said.
“We are now at over $4 a gallon for gas and groceries are up, and everything’s expensive, so for you to come back to the taxpayers at this time seems like you’re not paying attention to what’s going on and it does affect the people at the bottom, even if this doesn’t sound like a lot to some. It’s like a constant drip that just keeps adding up. I’d like to see you push this (ordinance) further down the road, but not pass it today.”
Council member Diana Reed, D-1st, suggested delaying the ordinance until 2024, noting “everyone’s feeling the pinch right now.”
“I’ve heard from individuals who are renting their properties and I know their costs are going up and that cost is being passed on to those who are the renters,” Reed said.
“So I have a great concern, even though I’m in favor of it, and would like to see it delayed.”
Reed and Cotton voted against the ordinance, which passed and drew further unfavorable public comment about the tax and financial implications expressed by more residents during the general public comment portion at the close of the meeting.
Philip Potempa is a freelance reporter for the Post-Tribune.
