A new Indiana law set to take effect later this year could help cities and counties with land bank programs to get a better handle on blight in their communities. Justin Groenert, the director of public policy for the Southwest Indiana Chamber, helped draft the legislation as part of a graduate school project for his master’s degree.
The amendment to Senate Enrolled Act 310 will allow cities or counties with land banks to offer tax breaks of up to 50% to people who build new homes on once blighted properties. The abatement, which only applies to properties that were once part of a land bank, would apply to the home’s property taxes for up to five years. The new law also contains a provision that would allow the remaining property tax revenue on abated properties to be funneled back into the land bank, which would create a funding mechanism for the program.
Groenert drafted the legislation for his capstone project as part the master’s degree program at the University of Southern Indiana. In order to get his master’s degree, Groenert had to intern for the city’s Department of Metropolitan Development. During the internship, he was tasked with crafting a tool that would help spur new development in addition to assisting the ongoing land banking efforts.
“For the city, it incentivizes them to find the right buyers to help turn these properties into homes and to help turn that tide in some of these faltering neighborhoods,” Groenert said. “It was a learning experience certainly but I’m really excited to see how it all turns out.”
The legislation sailed through the General Assembly before earning the governor’s signature late last month. Groenert worked with Sen. Brandt Hershman (R-7th District) and the local legislative delegation in order to get the bill passed.
“What you’re trying to do is trying to use the cheaper property and the slight abatement on the property taxes to get good owners in,” Groenert said. ” The land bank is incentivized to get good owners because by year three, four and five, you’re hopeful that those property tax values are going up.”
Kelley Coures, the executive director of the Department of Metropolitan Development, believes the legislation will serve as another tool in the city’s efforts to eliminate blight and spark further development in some impoverished areas of the city’s core. A blighted home in a neighborhood can bring up to a 10% drop in property values, Coures said.
“Everything the land bank takes are properties that have passed through the tax sale process, which means those properties haven’t generated property taxes to the city and county for at least two or three years,” Coures said “Half a loaf is better than no bread at all.”
In order to be able to offer tax breaks to homebuilders, the county would need to draft and approve of an ordinance. Coures said he looks forward to meeting and working with county leaders to help craft the ordinance.
Groenert said the process of drafting the bill and getting it passed was a fun experience and one that he learned a lot from.
“It’s the first time I’ve ever drafted legislation and to see it go through the whole process on the first try is pretty remarkable,” Groenert said.
Not bad for your first time.