The REI apartment complex on Michigan Road, which will begin opening in July, will have a profound financial impact on Zionsville Community Schools.
Jeremy Stephenson, vice president of development for REI Real Estate Services, said that despite being residences, the Domain will be taxed at the commercial tax cap rate of three percent. As part of the project, which began in early September, the complex was taken out of the Tax Increment Financing district.
“The complex qualifies as commercial, so it will be at a three percent cap,” he said. “The project is projected to have a net positive impact on the town and the schools.”
According to the fiscal impact study, which was completed at the beginning of the project, the project will add $253,400 to ZCS.
The study states that there will be a positive impact of $16,200 on the ZCS general fund; there would be $246,000 in additional property tax revenues in the ZCS capital project, debt service and transportation funds without being in the TIF, which would result in a combined impact of $237,200 in those three funds. There would be no change in other revenues or expenditures to the school district.
ZCS Chief Financial Officer Mike Shafer explained the difference between the $246,000 additional revenue and the $237,200 impact.
“The ($246,000) number would just be the tax generated revenues without deducting any expenses from those funds,” he said. “Obviously the transportation fund would be impacted because there would be additional expenses for transportation. The study took our most recent transportation cost and got a per pupil average, which was applied to the amount of students that would be joining the district. The study also showed some extra expenses in the capital projects fund, which they found a per pupil average for our maintenance costs and applied that.”
The study states that there is projected to be an increase of 35 new students to the school district and 350 new residents in the 219 unit complex.
Shafer said the district would not be getting the funds immediately.
“They had an assessment date on (Thursday) March 1, which just assessed what was up at that time,” he said. “We wouldn’t see those funds until later this year. They will have another assessment on March 1, 2013 on the entire complex. So, we wouldn’t see those funds until 2014.”
The project will have a $20,600 annual net impact on the town. Some of the funds the project will add to are $20,082 to the debt service fund, $9,929 to the motor vehicle highway fund and $14,007 to the fire building debt fund.
The project will have a negative impact of $37,669 on the police fund because of additional expenditure for potentially hiring a new officer. The study assumes that the police department would have to hire a new officer, which would not be covered by the additional property tax revenues.