Tax Information Corner, Summer 2005

Submitted by,
Rex D. Hume, Vice President of Real Estate Tax for
Uzelac and Associates, Inc., a member benefit partner
of the Indiana Bowling
Centers Association

The Tax Information Corner
Summer 2005

Bowling Centers May Benefit From
Property Tax Value Trending

Uzelac and Associates is constantly watching property tax legislation and how it affects our clients and their businesses. Property Tax Value Trending is a significant change that will directly affect every assessment in the State of Indiana. It may have a negative result on your business, depending on many factors. However, the following is an example of how it may help your bowling center.

In 2004 the Indiana General Assembly passed legislation requiring township assessors to update all real property assessed values by applying a “trend factor” that will make the values more current. The 2005 legislature passed SB 327 to delay the implementation of this requirement for one year, so all 2006 assessed values of property for taxes payable in 2007 will be indexed to make them reflect the market as of January 1, 2004, bringing them forward five years from January 1, 1999. New trend factors will be applied annually after 2006, with the valuation date set at January 1 of the year prior to the assessment year.

Indiana real property values have traditionally remained constant between general reassessments, and have then been adjusted in one step for the several years between reassessments. The change to annual trending is intended to:

	Make the valuation date of real property correspond to that for personal property, which is assessed annually, thereby more closely satisfying the requirement for uniformity assessing practices.
	Maintain a current relationship between values of different classes of real property current as market forces cause them to diverge.
	Stop, or at least reduce, the annual increase in tax rates caused by increases in the amount of money budgeted to be raised from property tax.

To implement this requirement, local assessing officials will conduct annual assessment ratio studies for each property class, using sales disclosures as the primary source of data. Assessment ratios – the ratio of assessed values to market values – will be calculated for each class of property within each neighborhood. A “neighborhood” is an area, usually not larger than a township, within which values per acre of land or square foot of building are approximately the same.

Unless the state acts further to help farmers and homeowners, overall implications for bowling centers are mixed but probably favorable, largely because the market value as reflected in trends in selling prices will normally increase at a higher rate for residential properties and visibility-dependant commercial properties than for industrial properties. To the extent that this is true in any given township, industrial properties will see their share of the total tax burden decline.

How will trending affect you? We can help. Over the past 15 years we have helped over 3,000 businesses save over $54,000,000 in property taxes. Feel free to contact us at (800) 313-1797, and let our expertise help ensure that trending is a positive change for your business.

Submitted by Rex D. Hume, Vice President of Real Estate Tax for Uzelac and Associates, Inc., a member benefit partner of the Indiana Bowling Centers Association.

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