State Releases Property Tax Growth Rate for 2020

Monroe County Courthouse
Monroe County Courthouse

Local governments in Indiana eagerly await the annual release of the so-called Assessed Value Growth Quotient (AVGQ), because it represents the maximum amount that most local property tax levies can increase to fund basic government services. Yesterday, the Indiana State Budget Agency (SBA) released the number for the 2020 budget: 3.5%, a slight increase from 3.4% in 2019, and overall a very healthy number for local governments.

The AVGQ is essentially the “cost of living adjustment” for property taxes for all local units of government — the maximum amount by which local units of government are allowed to increase their controlled property tax levies by. For Monroe County Government, 3.5% is the maximum that the following levies combined can be raised for 2015: General Fund, Health, Aviation, Elections, Reassessment, and Cumulative Bridge.

Is the AVGQ Really an AVGQ?

Although still named the Assessed Value Growth Quotient in the statute, the AVGQ is a bit of a historical artifact, and actually now has absolutely nothing to do with assessed value. It is calculated as the 6-year moving average of nonfarm personal income growth. The theory behind it is that the costs of government should not be increasing at a greater rate than the taxpayers’ incomes are going up. A more accurate term would be property tax levy growth quotient, a term already used widely at the state, but not yet actually officially incorporated into the statute.

Also note that the AVGQ is independent of the circuit breakers or so-called “tax caps” (see here and here for more background). The circuit breakers can kick in and prevent a local unit of government from actually receiving the full growth in property tax levies specified by the AVGQ. In addition, the AVGQ doesn’t affect property taxes collected to service debt for capital projects (although the circuit breakers do affect these property taxes).

The AVGQ is calculated uniformly statewide — so that the limit on levy growth is the same for every local unit of government, whether the local economy is booming or busting, and regardless of the demands (or willingness of the taxpayers to pay) for services. There are, however, procedures for appeal for what is called an “excess levy” for specific cases, including: annexation, excessive growth over a 3-year period, shortfalls due to certain errors, and emergencies.

Calculations for the AVGQ

The following table shows the 6-year calculation for budget year 2020.

Note that a very low income growth number — change in the growth from 2011-2012 to 2012-2013 (0.08%) will drop off of the 6-year average next year, so look for 2021’s growth to be even larger.

How Does This Affect My Property Tax Bills?

So does a 3.5% increase in a local property tax levy mean that your particular property tax bill will go up 3.5%? Not necessarily, because there are so many other things going on. First of all, 3.5% is the amount that most local property tax levies can increase by. The levy is the total amount of taxes that can be collected by a local unit of government. But the tax rate is calculated by dividing the levy by the total assessed value in the unit of government — so if there is a lot of overall growth, the rate can go down even if the levy goes up. And further, your own assessed value can change, depending on the local real estate market, improvements of the property, etc. So there is no way to know what will happen to your own property tax bill without the full assessed value picture. The AVGQ is primarily of interest to local units of government, not taxpayers.

New Law Makes Recreational Drone Flying Difficult in Bloomington — Temporarily, At Least

TL;DR version: You can’t fly your drone recreationally (i.e., without a Part 107 certificate/”license”) in Bloomington within 4 miles of the Monroe County Airport (BMG), which includes all of downtown Bloomington, all the way up to IU at Indiana Ave, for the time being, until the FAA updates its systems.

Back in October, the President signed the FAA Reauthorization Act of 2018, the bill required to re-authorize the Federal Aviation Administration (FAA), the agency that is tasked with regulating aircraft and aviation, including drones (which the FAA refers to as Unmanned Aircraft Systems, or UAS). This bill actually included a number of changes that slipped under the radar (sorry!) and wind up actually being quite consequential to recreational drone pilots (i.e., those operating without a Part 107 certificate), and in particular make it nearly impossible to fly recreationally legally in large parts of Bloomington.

On May 17, 2009, the Federal Register published the official notice that the new rules were going into effect in the form of the Exception for Limited Recreational Operations of Unmanned Aircraft.

Per the FAA’s Web site, here is the summary of rules for recreational drone pilots that are in effect as of the time of this posting:

  1. Register your dronemark it on the outside with the registration number (PDF), and carry proof of registration with you.
  2. Fly only for recreational purposes.
  3. Follow the safety guidelines of a community based organization.
  4. Fly your drone at or below 400 feet when in uncontrolled or “Class G” airspace. 
  5. Do NOT fly in controlled airspace (around and above many airports) unless: You are flying at a recreational flyer fixed site that has an agreement with the FAA. The FAA has posted a list of approved sites (MS Excel) and has depicted them as blue dots on a map. Each fixed site is limited to the altitude shown on this map, which varies by location.NOTE: Flight in controlled airspace is temporarily limited to these fixed fields. The FAA is upgrading the online system, known as LAANC (the Low Altitude Authorization and Notification Capability), so that recreational operations can get automated airspace authorizations to fly in controlled airspace. This system is currently only available for certified Part 107 drone pilots.NOTE: If your organization is interested in establishing a letter of agreement for a fixed flying site, please contact us at 9-AJT-UAS-Integration@faa.gov.
  6. Keep your drone within your line of sight, or within the visual line-of-sight of a visual observer who is co-located and in direct communication with you.
  7. Do NOT fly in airspace where flight is prohibited. Airspace restrictions can be found on our interactive map, and temporary flight restrictions can be found here. Drone operators are responsible for ensuring they comply with all airspace restrictions.
  8. Never fly near other aircraft, especially near airports.
  9. Never fly over groups of people, public events, or stadiums full of people.
  10. Never fly near emergencies such as any type of accident response, law enforcement activities, firefighting, or hurricane recovery efforts.
  11. Never fly under the influence of drugs or alcohol.

Most of these rules are completely commonsense, and similar to, if not identical to, the previous rules. However, the rule that represents the big change is #5, Do Not Fly in Controlled Airspace. Under the previous rules, to fly recreationally within 5 miles of an airport, you simply had to notify the airport (which, in Bloomington at least, involved a quick call to the Monroe County Airport (BMG) tower). The new rules eliminate this requirement, and instead require recreational pilots to obtain authorization from the FAA before flying in what is known as the controlled airspace around airports — that is, the airspace that is managed by the Air Traffic Control system (ATC).

In Monroe County, the controlled airspace (referred to as Class D airspace — controlled airspace is classified as Class A, B, C, D, and E) around the Monroe County airport (BMG) extends to 4 miles around the airport. Following is a map of the controlled airspace, from the Web application Airmap:

As you can see, the class D airspace around the BMG airport includes all of the west side and downtown Bloomington and goes all the way to the edge of IU, at Indiana Ave. There is a tiny exception, represented by a green circle, to the north of the County — this is the airfield of the Monroe County Radio Control Club.

If you are a recreational drone pilot, you almost certainly do not have FAA authorization for the controlled airspace. You cannot obtain authorization by calling the airport tower (which you could under the previous rules). Currently, there are two ways to obtain FAA authorization: 1. through the FAA’s Drone Zone portal — a process that can take months; and 2. though LAANC, an app-based instant-authorization system. Unfortunately LAANC isn’t even available at this time to recreational pilots!! This is ostensibly a temporary condition — the FAA has stated that they are working to include recreational pilots in LAANC, in addition to certified Part 107 pilots.

In addition, LAANC isn’t actually available for the controlled airspace around the BMG airport yet. It is available at all FAA-operated ATC towers around the country, but is not yet available to all contractor-operated towers, of which the BMG tower is one. I’m still trying to get some better information on when the BMG tower still start using LAANC. It is actually a really nice system — I used it last week flying near Miami International Airport, and it worked perfectly.

There is another change coming on the horizon — the new rules require that recreational drone pilots pass a test of aeronautical knowledge and safety. However, the test isn’t available yet, so that rule hasn’t actually gone into effect — but coming soon.

So hopefully, LAANC will be available to recreational pilots soon, and will be available at BMG. But for now, you are actually technically breaking the law if you fly within 4 miles of BMG airport without written FAA authorization!

Median Family Income for Bloomington/Monroe County

Our community, like many others around the nation, is currently engaged in difficult conservations about affordable housing. And any time the concept of “affordable housing” comes up, the inevitable question “affordable to whom?” arises. While this is a complex, and also somewhat subjective question, I thought I would throw out, over a few blog posts, some of the hard numbers that the Federal Government uses to determine eligibility for and subsidy of various housing programs.

This post shows the Median Family Income and several income limits for what is known as the Bloomington, IN HUD Metro Fair Market Rent (FMR) Area. This area encompasses Monroe County. Remember that at the median income, half of the households in Monroe County have a higher income and half have a lower income. This number, which is $75,800 for Fiscal Year 2018 (October 2017-September 2018), is often also referred to as the Area Median Income (AMI).

HUD FY2018 Median Income and Income Limits for Bloomington/Monroe County

In addition, HUD provides several thresholds — Low Income, Very Low Income, and Extremely Low Income — that are used to determine various subsidies and eligibility for programs. Although nominally Low Income is 80% of AMI, Very Low Income is 50% of AMI, and Extremely Low Income is 30% of AMI, there are several adjustments made.

In particular, these thresholds are not allowed to fluctuate more than a certain amount per year (so-called “hold harmless provisions”), which is why the Very Low Income limit of $34,750 for a family of 4 is actually less than 50% of $75,800. In addition, the Extremely Low Income Limit is the greater of 60% of the Very Low Income Limit (which comes out to 30%) OR the poverty guideline used by the Department of Health and Human Services. In the case of Bloomington/Monroe County, the poverty guideline ($25,100 for a family of 4 for 2018) is used instead of the lower 30% of AMI as a definition of Extremely Low Income. Finally, as these numbers are baselined on a family of 4, adjustments are made for families of different sizes.

This is actually a pretty big simplification of some fairly complex calculations. This data, along with calculation methodologies, can be found here: FY2018 Income Limits Documentation System for Bloomington, IN HUD Metro FMR Area.

Also, note that these aren’t necessarily the thresholds used for all affordable housing programs. For example, 60% of AMI is used for some housing built using the Low Income Housing Tax Credit (LIHTC), which I will talk about in a future post.

Pedestrian Hybrid Beacons: How to Use Them

Pedestrian Hybrid Beacons (PHBs) are pedestrian crossing signal devices that have recently been cropping up around Monroe County, most notably where the B-Line Trail ends at Country Club Road, where the Karst Farm Greenway crosses Vernal Pike, and most recently on State Road 46 North, near University Elementary School. Also sometimes called HAWK (High-Intensity Activated crossWalK) signals, these devices have been, in the words of the Federal Highway Administration (FHA), “have been shown to significantly reduce pedestrian crashes.”

However, the FHA also notes that because they are not widely used in many areas, any usage should also be accompanied by an education and outreach campaign. It has also been my experience that motorists who are unfamiliar with the device can be confused and unsure how to act when confronted by the device.

In the interests of education and outreach, here is a diagram that illustrates the phases of a PHB.

Illustration of the Phases of a Pedestrian Hybrid Beacon

If you think about it, although the configuration is a little different, the signals really aren’t all that different from normal traffic signals: yellow means caution, steady red means stop, and flashing red means stop and then proceed with caution.

For more details about PHBs, here is an FHA Fact Sheet.

Catalent Plans Investment / Requests Tax Abatement from City

Catalent Indiana (formerly Cook Pharmica) is requesting a tax abatement from the City of Bloomington to support a $126M investment in the plant that occupies the former RCA/Thompson property that will create at least 200 jobs with a median wage of $24.52 and an annual payroll of $44M. Catalent is a contract pharmaceutical manufacturing company, meaning that it manufactures biologics (medicines produced from living organisms) on behalf of other companies. The company currently employs 839 (full-time).

Architect’s Rendering of the Project

The Project

The proposed investment includes $40M in real property and $85M in personal property (manufacturing equipment). Catalent describes the project in their tax abatement application as follows:

The project is comprised of two phases; Phase 1 consists of building out a 15,000 sq.ft. of ISO 9 manufacturing space and is aimed to expand Catalent, Bloomington packaging capacity and add new capabilities to support specialized device assembly for biological products produced within the site by 2020. Phase 2 is to expand Catalent, Bloomington drug product sterile filling capacity by 2022 to support. The fill/finish capacity at the Bloomington site will be expanded by 79,000 sq. ft., with both GMP [Good Manufacturing Practice, an FDA standard] and non-GMP capabilities.

Phase 1 is aimed to expand Catalent, Bloomington packaging capacity and add new capabilities to support specialized device assembly for biological products produced within the site by 2020. This will be accomplished by the purchase and installatino of a Flexible top load cartoning machine, an automated Auto-injector assembly machine, and Syringe assembly equipment. A new Quality Control laboratory will also be constructed to support the expanded production.

Phase 2 is to expand Catalent, Bloomington drug product sterile filling capacity by 2022 to support commercial launches and clinical development. A high-speed flexible vial line, utilizing both ready-to-use (RTU) components and bulk filling, will be installed along with a high-speed flexible syringe/cartridge line, and a fully automated vial inspection machine. This investment will nearly double the site capacity with over 460 additional filling days.

Application for Designation as an Economic Development Area (ERA)

The Abatement

The requested abatement is the “traditional” Indiana tax abatement, which phases in the new property taxes resulting from the company’s investment over a 10-year period (starting with 100% of the new property taxes abated in the first year, and ending with 5% in the 10th year). Using estimates based on current tax rates, the present value of the abatement over the 10-year period is around $2.6M, and the company would also pay about $2.2M in new property taxes over the same period. Tax abatements only apply to the new assessed value created by the investment; they do not reduce the existing property tax responsibility of the company.

Process

This after, the City’s Economic Development Commission (of which I am a member) reviewed the application, and heard from City Economic and Sustainable Development staff and representatives from Catalent, and forwarded on the abatement application to the City Council with a unanimously positive recommendation.

The memo from the City’s Department of Economic and Sustainable Development, which provides additional background on the application, can be found here:

In order to approve the abatement, the City Council will have to vote in favor of the application at two separate meetings (a so-called declaratory resolution and a confirmatory resolution). Most likely the soonest this could happen, if the City Council supports it, is at the March 6, 2019 meeting.

2019 Monroe County Budget Order, Tax Rates Approved

Monroe County Courthouse at Night
Monroe County Courthouse at Night

Last night, Monroe County received its 2019 Budget Order from the state, which includes:

  • The budgets for all taxing units (i.e., county, cities and towns, school districts, townships, public library, special units)
  • The property tax levies and tax rates for all taxing units
  • The property tax rates for each taxing district (i.e., the tax rates that actually affect each property owner)

The following table summarizes the total 2019 property tax rate (per $100 of net assessed value) for each taxing district in Monroe County, sorted from highest to lowest. I’ve also included the 2015-2018 tax rates for comparison.

Monroe County Property Tax Rates 2015-2019

I highlighted the taxing districts that are within incorporated municipalities in aqua.

The following are my brief observations about the 2018 tax rates:

  • Most tax rates remained about the same from 2018 to 2019 (decreased or increased less than $0.01), with two exceptions (which follow)
  • The rates for the taxing districts served by the Richland-Bean Blossom School Corporation (Ellettsville, Stinesville, and unincorporated Richland and Bean Blossom Townships). went down substantially, almost $0.25 (per $100 of assessed value). This is a result of the correction in 2019 of a bond-related tax rate error that caused rates in the areas served by R-BB to increase substantially
  • Indian Creek Township‘s rate went up almost $0.09, as a result of joining the Monroe Fire Protection District (formerly known as Perry-Clear Creek Fire Protection District)

Funding for Youth Services Expansion on Council Agenda for Tonight

Back in March, I wrote about an exciting plan for major capital improvements to Monroe County’s facilities for youth services, including the Binkley House Youth Shelter (located at 615 S Adams St).

Much has happened with this project over the last several months. An architect was hired (RQAW), the facilities were designed, and the County Commissioners have awarded a contract for construction of the new facility to Building Associates, pending funding approval by the County Council.

Architect’s rendering of the expanded youth facilities and Binkley House youth shelter

At tonight’s County Council meeting, the Council will consider the appropriation request for $2,261,000 to fund the construction. The actual bids came in quite a bit under the estimated $3M for the project. The Council will consider funding the project from three sources, all of which are earmarked specifically for funding for youth services:

  • Juvenile Per Diem Fund (which receives money from the state when youth are placed in the facility)
  • Juvenile Services Non-Reverting Fund (which received one-time money left over from the Child Welfare property tax levy when the state took over child welfare funding)
  • Juvenile Rainy Day Fund (which received certain special distributions of the Juvenile county option income tax)

None of these funds by themselves could support the entire $2.3M appropriation, but together they more than fund the project, which means that the County will not need to bond for (borrow) the money for this capital project.

When talking about youth services and our youth shelter here in Monroe County, I want to make it clear, because several constituents have asked me about it, that our youth facilities do not include any aspect of secure detention. Our Youth Services Bureau is entirely focused on supporting youth and families through advocacy, education, collaboration, and providing support to youth and families in crisis.

Monroe County’s proactive and positive approach to youth services has resulted in one of the lowest rates of youth placed in secure detention in the date, a rate radically lower than that of our peer counties.

The Monroe County Council meetings tonight, January 8, 2019 at 5:30PM in the Nat U Hill Room of the Monroe County Courthouse. The meeting will be broadcast on CATS and is open to the public. Public comment will be taken on any item on the agenda (including this proposal to fund the YSB expansion) and on topics not on the agenda.