It seems counterintuitive to think that property tax abatements are responsible for creating
Rendering of the exterior of the Tween Brands campus in the New Albany International Business Park. Rendering courtesy of the city of New Albany.
more than $47 million in new revenues to our schools. After all, aren’t abatements tax giveaways? Well, yes and no.
Abatements are indeed tax breaks to companies used nationwide to attract businesses to communities. But look deeper, and the financial and land use benefits of abatements are undeniable.
Financial Benefits
Earlier this year, the city did a study in conjunction with the Franklin County Auditor’s Office to determine the total school revenues resulting from business development in the New Albany International Business Park. The numbers were staggering. Since 1998, school property tax revenues from land in the New Albany International Business Park nearly tripled ($15.8 million, compared to $5.4 million if land had not been developed). This occurs because property tax abatements are only in effect on the building, not the land itself, and land values can exponentially increase when developed.
In addition to these increased property tax revenues, the New Albany-Plain Local School District received $37.2 million in shared income tax revenues because the city shares income taxes equally with the district whenever abatements are provided to companies.
Combined, our business park has generated $53 million for our schools since 1998, even with abatements in effect. As a comparison, had this land not been developed, our schools would have received roughly $5.4 million, or $47.6 million less.
Land Use Benefits
Generally, land can either go undeveloped or be developed commercially or residentially.
Rendering courtesy of the city of New Albany
Rendering of the interior of the Tween Brands campus in the New Albany International Business Park.Development in the New Albany International Business Park generates much-needed community revenues.
Without the use of abatements, the commercial viability of land is dramatically reduced, likely prompting residential development. While business development produces zero new students, residential development eventually creates the need for more teachers and school buildings, which can greatly increase homeowner taxes. Our community success at commercial development has created jobs for our region, financially benefited our schools and assisted New Albany taxpayers by reducing the number of potential students in our schools.
In addition to our business park, the Philip Heit Center for Healthy New Albany and Market & Main are developments in the heart of our town providing community benefits to residents of all ages. The Heit Center, our community health destination, is being paid for in large measure by long-term leases from our medical partners. Foot traffic from the Heit Center helped bring about the Market & Main development (with Mellow Mushroom, Hudson 29 Kitchen + Drink and other specialty retail shops), and our schools are receiving 100 percent of their portion of property taxes from this new development.
New Albany is a master planned community, and city leaders will continue to have the best interests of our schools in mind concerning commercial or residential development. Our schools are a vital component of our community. Aside from our economic development efforts to support our schools, the city also pays 100 percent of the costs of the school resource officer and D.A.R.E. programs on the school campus throughout the year.
Even with these efforts, both financially and through the reduction of potential students within our district, our schools will continue to be reliant on your financial support to help them obtain their mission of developing high-achieving, ethical, self-directed and intellectually curious citizens of the world.
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Scott McAfee is a contributing writer and public information officer for the city of New Albany. Feedback welcome at ssole@cityscenemediagroup.com.
