Indianapolis is offering a popular tax break for affordable housing developers, known as a payment in lieu of taxes (PILOT) agreement. This agreement allows developers to make annual payments instead of paying property taxes, saving them hundreds of thousands or even millions of dollars.
How PILOT Agreements Work
Developers who apply for low-income housing tax credits from the state can also apply for a PILOT agreement. The agreement is made with the Department of Metropolitan Development and approved by the City-County Council. In exchange for the tax break, developers agree to rent units at a reduced rate, typically 30% of the income limit tied to the unit.
For example, a southside project from development company TWG will make a payment of $72,000 starting in 2029 for a 160-unit apartment building. The payment will increase by 3% every year until TWG pays close to $109,000 in 2043. The company estimates it will save $4.2 million in property taxes over the same period.
PILOT agreements also require developers to have a community benefits agreement, which can include providing amenities such as a fitness center or offering monthly job readiness courses. The housing stays set at the affordable rate for a minimum of 30 years through the low-income housing tax credit program.
Original reporting: Mirror Indy — read the source article.
