Lebanon I-65 Corridor Annexation

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Overview

On May 31, 2008, the City of Lebanon published the notice of an August 5 public hearing on a forced annexation of 3,675 acres in an area roughly half a mile on either side of Interstate 65 from the southern city limits to just north of Indiana 267.

The City spent $16,050 for a May 12, 2008, Annexation Fiscal Plan, a PDF copy of which can be requested by sending an E-mail to taxless3@comcast.net. The financial analysis details that follow are based on information included in the Fiscal Plan.

The Annexation Fiscal Plan assumes that 3,486 homes with an average sales price of $145,000 would be built in the Annexation Area by 2019. Forty commercial developments with an average $18 million net assessed value would be phased in for property tax purposes over an abatement period.

The I-65 Corridor Annexation should be rejected for the following reasons: (1) the tax and utility payments of existing residents would increase significantly, (2) sufficient pertinent information has not been obtained and communicated to the public (3) Fishers-like residential and retail sprawl would be created, (4) tax abatements would be given to yet more providers of low-pay and low-benefit jobs, (5) the political motivations are not compelling, (6) the perceived economic benefits do not justify the tax, utility, and lifestyle costs.

City Property Tax Levy Increases

The Annexation Fiscal Plan estimates that the I-65 Corridor Annexation would require the City of Lebanon to make the improvements listed next.

1. The City would need to hire twenty (20) additional police officers over the next ten (10) years as a result of the annexation and the area's development. The estimated cost of adding these officers is $51,800 per officer annually for personal services and $16,550 for equipment in each officer's first year, assuming that the patrol car is leased over a 4-year period. Also, it is estimated that approximately $38,620 more per year (excluding the effects of inflation) will be spent on fuel and other materials and supplies as a result of annexation.

2. The City would incur additional costs to provide adequate fire protection services to the Annexation Area. The Lebanon Fire Department would need to hire eighteen (18) additional firefighters, spend approximately $5,000 more per year on fuel and maintenance costs, and build Station 3 as a result of the annexation. The estimated cost of adding these firefighters is $60,762 (including benefits) annually per person for personal services. The estimated annual cost for Station 3, assuming that it is financed over a 20-year period, is $200,606. There will also be an additional cost of approximately $8,790 in each firefighter's first year for turnout gear, radios, and other related equipment.

3. The City would need to hire three (3) additional Street and Sanitation Department employees as a result of the annexation as the area develops. The City also anticipates additional snow and ice removal costs of approximately $9,000 per year starting in 2010 and increasing each year thereafter based on a 3% inflation factor. Road maintenance would cost the City approximately $1,647,945 in the first 10 years following the assumed effective date of the annexation. Finally, the City would need to purchase 2 dump trucks at an estimated cost of $79,200 per truck.

4. The City would need to add 10 streetlights in the Annexation Area at an estimated monthly cost of $5.19 per light.

5. The City would need to hire one (1) additional employee in the Planning Department at an estimated cost of $43,400.

Our property taxes would go up to support the City improvements that the I-65 Corridor Annexation would require. This conclusion was reached after analyzing the Annexation Fiscal Plan. The pertinent analysis data is listed next. 

City of Lebanon Property Tax Levy WITHOUT Annexation
NOTE: Estimated Costs to serve Annexation Area deleted.
Pay 2007: $3,346,018
Pay 2008: $3,409,817 (1.9% increase)
Pay 2009: $3,511,777 (3.0% increase)
Pay 2010: $3,621,345 (3.1% increase)
Pay 2011: $3,791,956 (4.7% increase)
Pay 2012: $3,978,501 (4.9% increase)
Pay 2013: $4,173,800 (4.9% increase)
Pay 2014: $4,401,194 (5.4% increase)
Pay 2015: $4,139,407 (5.9% decrease)
9-YEAR TOTAL: $34,373,815
 
City of Lebanon Property Tax Levy WITH Annexation
SOURCE: May 12, 2008, Annexation Fiscal Plan.
Pay 2007: $3,346,018
Pay 2008: $3,409,817 (1.9% increase)
Pay 2009: $3,511,777 (3.0% increase)
Pay 2010: $5,183,762 (47.6% increase)
Pay 2011: $5,640,426 (8.8% increase)
Pay 2012: $5,895,819 (4.5% increase)
Pay 2013: $6,591,800 (11.8% increase)
Pay 2014: $6,816,796 (3.4% increase)
Pay 2015: $7,050,639 (3.4% increase)
9-YEAR TOTAL: $47,446,854
 
City of Lebanon Property Tax Rate WITHOUT Annexation
NOTE: Property Tax Levy divided by $100 of Current City Net Assessed Value.
Pay 2007: $0.5125
Pay 2008: $0.5071
Pay 2009: $0.5070
Pay 2010: $0.5076
Pay 2011: $0.5160
Pay 2012: $0.5257
Pay 2013: $0.5354
Pay 2014: $0.5481
Pay 2015: $0.5005
 
City of Lebanon Property Tax Rate WITH Annexation
SOURCE: May 12, 2008, Annexation Fiscal Plan.
Pay 2007: $0.5125
Pay 2008: $0.5071
Pay 2009: $0.5070
Pay 2010: $0.7032
Pay 2011: $0.6952
Pay 2012: $0.6531
Pay 2013: $0.6516
Pay 2014: $0.5990
Pay 2015: $0.5499
 
Parcel 015-47000-18 Assessed Value
NOTE: Assumes an Annual Gross AV Growth Rate of 3.0%.
NOTE: Pre 2009 Net AV = Gross AV - $45,000 Standard Deduction
NOTE: Post 2008 Net AV = Gross AV - $45,000 - (Gross AV - $45,000)(0.35)
Pay 2007: $108,500 Gross and $63,500 Net
Pay 2008: $111,755 Gross and $66,755 Net
Pay 2009: $115,108 Gross and $45,570 Net
Pay 2010: $118,561 Gross and $47,815 Net
Pay 2011: $122,118 Gross and $50,127 Net
Pay 2012: $125,781 Gross and $52,508 Net
Pay 2013: $129,555 Gross and $54,961 Net
Pay 2014: $133,441 Gross and $57,487 Net
Pay 2015: $137,445 Gross and $60,089 Net
 
Parcel 015-47000-18 City Property Tax WITHOUT Annexation
NOTE: $100 of Net Assessed Value times Property Tax Rate.
NOTE: 2007 City Property Tax reduced 25.9% for Replacement and Homestead Credits.
NOTE: 2008 City Property Tax assumed to be 30% less than 2007.
NOTE: 2009 and 2010 Temporary Homestead Credits not included.
NOTE: Any Property Tax Cap effects not included.
Pay 2007: $241
Pay 2008: $169
Pay 2009: $231
Pay 2010: $243
Pay 2011: $259
Pay 2012: $276
Pay 2013: $294
Pay 2014: $315
Pay 2015: $301
9-YEAR TOTAL: $2,329
 
Parcel 015-47000-18 City Property Tax WITH Annexation
NOTE: $100 of Net Assessed Value times Property Tax Rate.
NOTE: 2007 City Property Tax reduced 25.9% for Replacement and Homestead Credits.
NOTE: 2008 City Property Tax assumed to be 30% less than 2007.
NOTE: 2009 and 2010 Temporary Homestead Credits not included.
NOTE: Any Property Tax Cap effects not included.
Pay 2007: $241
Pay 2008: $169
Pay 2009: $ 231
Pay 2010: $ 336
Pay 2011: $ 348
Pay 2012: $ 343
Pay 2013: $ 358
Pay 2014: $ 344
Pay 2015: $ 330
9-YEAR TOTAL: $2,700

For the six years 2010-15, the total City Property Tax Levy would be $13,073,039 (or 38%) more WITH the I-65 Corridor Annexation than WITHOUT the Annexation.

For the six years 2010-15, Aaron Smith's total City Property Tax (for Lebanon parcel 015-47000-18) would be $371 (or 16%) more WITH the I-65 Corridor Annexation than WITHOUT the Annexation.

Aaron Smith's City Property Tax for each of the six years 2010-15 would be more WITH the I-65 Corridor Annexation than WITHOUT the Annexation.

One often hears from developers and their supporters how any development will increase assessed value and therefore decrease the property tax burden of existing homeowners. The Annexation Fiscal Plan is not the only data source that clearly shows this will NOT be true for Lebanon. The fallacy of the property tax reduction claims by developers is also demonstrated by an analysis of the 2001 through 2007 per capita Property Tax burden of Boone County's 19 property tax districts.

2007 Property Tax Per Person (change from 2001)

1. Eagle Township - $3,216 (84.72% increase)
2. Zionsville - $2,457 (118.01% increase)
3. Ulen - $2,197 (52.99% increase)
4. Union Township - $1,916 (80.41% increase)
5. Whitestown - $1,907 (316.38% increase)
6. Perry Township - $1,663 (18.36% increase)
BOONE COUNTY AVERAGE - $1,627 (62.70% increase)
7. Worth Township - $1,308 (49.49% increase)
8. Center Township - $1,207 (8.35% increase)
9. Lebanon - $1,155 (38.82% increase)
10. Sugar Creek Township - $1,033 (8.50% decrease)
11. Jefferson Township - $965 (9.53% increase)
12. Washington Township - $939 (11.65% increase)
13. Jackson Township - $919 (8.24% increase)
14. Harrison Township - $895 (1.24% increase)
15. Marion Township - $867 (6.07% decrease)
16. Clinton Township - $804 (4.40% decrease)
17. Thorntown - $548 (19.91% increase)
18. Jamestown - $541 (33.91% increase)
19. Advance - $393 (13.26% increase)

The high-growth districts of Eagle Township, Zionsville, Union Township, and Whitestown rank first, second, fourth, and fifth in highest 2007 per capita Boone County property tax burden. The collective 2007 Property Taxes per person in these four districts are 104.07% more than in 2001, which is six times more than the 17.05% inflation increase.

Taxpayer UNfriendly City Property Tax increases would be just part of the billfold abuse that the Annexation would inflict on existing City residents.

School Property Tax Increases

Lebanon schools currently educate 3,549 students in 4 elementary schools, one middle school, and one high school. The 3,486 new homes in the Annexation would add about 2,789 students. Significant school property tax increases would be needed for school construction. Property tax increases for new school construction are not included in the Annexation Fiscal Plan. 

Water and Sewer Rate Increases

The Annexation Fiscal Plan does state that the I-65 Corridor Annexation would require the Lebanon Utilities capital improvements listed next.

1. The City would need to spend approximately $6,305,000 to extend water service to the Annexation Area. The estimated costs would be covered primarily by developers, and any remaining costs will be repaid from revenues from monthly rates and charges of the Water Utility.

2. The City would need to spend approximately $14,400,000 on a sewer expansion as a result of the Annexation. The estimated costs would be covered primarily by developers, and any remaining costs will be repaid from revenues from monthly rates and charges of the Sewage Works.

3. The City would need to spend approximately $346,000 to extend electric service to the Annexation Area. The initial cost of service would be paid by the Electric Utility, and any future electric line extensions would be paid by the Electric Utility contributing 2.5 times the estimated annual revenue with any remaining cost being borne by the developing agency.

On July 21, 2008, the Lebanon Utilities General Manager, Mike Martin, stated that he would expect to minimize the possibilities of any increases in water and sewer rates to accommodate the I-65 Corridor Annexation through (a) availability, tap, and/or connection fees and (b) recoupment agreements with developers. Mr. Martin also indicated that he would not anticipate electric rate increases caused by the Annexation.

Mr. Martin did admit that increased water usage from the I-65 Corridor Annexation would likely contribute to the need for a third water plant (or equivalent alternative) and/or an expansion to the existing wastewater treatment plant depending on the timing and level of growth experienced. The Annexation would result in quicker water and sewer rate increases to build a new water plant and/or expand the existing waste treatment plant  than would otherwise be caused by growth in other parts of the City without the I-65 Corridor Annexation. 

The water and sewer rate increases for new plant construction are not included in the Annexation Fiscal Plan. Water and sewer rates would go up significantly because the Annexation would trigger the need for a third water plant (or equivalent alternative) and/or an expansion to the existing wastewater treatment plant. 

Insufficient Pertinent Information

Sufficient pertinent information has not been obtained and communicated to the public because the Annexation Fiscal Plan does not include (1) property tax increases for new schools and (2) water and sewer rate increases for new plant construction. To meet the minimal Indiana Code requirements, the Fiscal Plan does not have to include property tax projections for new school construction. Even so, the Fiscal Plan still does not conform to the puny Indiana Code requirements because water and sewer rate increases for new plant construction are not included. The Lebanon City Council would be guilty of not performing the due diligence that Lebanonís citizens deserve if it fails to obtain reliable school property tax projections from the Lebanon Community School Corporation and accurate utility rate projections from Lebanon Utilities. The Lebanon City Council should hold another public hearing after sufficient pertinent information has been obtained and communicated to the public.

Fishers-like Residential and Retail Sprawl

The Annexation would create Fishers-like residential and retail sprawl.  

The Annexation Fiscal Plan assumes that thirty-six homes would be added in the Annexation Area by March 1, 2009, and 345 per year thereafter for the next 10 years. The average sale price for these 3,486 new homes would be about $145,000.

It is further assumed that 4 commercial developments would be added by March 1, 2010, and 4 per year thereafter for the next 9 years. The average net assessed value for the developments would be about $18 million. The assessed value of these forty developments would be phased in for property tax purposes over an abatement period.

Lebanon single-family new construction permits have averaged 47 the past 5 years. Maintaining this normal and orderly growth without the Annexation would delay for many years the need for rate increases to pay for a new water plant and expanded waste treatment plant. Also, there is sufficient classroom space to accommodate moderate growth over the next several years. If it is "natural" for Lebanon to grow southward along the I-65 Corridor, this area should develop in an orderly fashion through annexation a few hundred acres at a time. By exceeding our normal and orderly growth rate with 345 new homes per year, the Annexation would do nothing but create costly residential and retail sprawl.

Tax Abatements for Poverty-Level Employers

Another sad reality is that any commercial development receiving tax abatements in the Annexation would be yet more distribution centers. Duke Realty will direct any high-pay, full-benefit employers considering Boone County to their nearby Anson development while continuing to leave the distribution center leftovers to Lebanon. The I-64 Corridor Annexation would not overcome the Anson siren song from Duke Realty.

A full-time salary of $10.20 per hour, or $21,216 per year, is needed to exceed the federal poverty guideline for a family of four. If employees in Lebanonís distribution centers are fortunate enough to secure full-time employment, their limited-benefit jobs will barely pay more than poverty wages. When is Lebanon going to stop subsidizing poverty-level employers where you have to work two or three jobs per household just to make ends meet? Also, why do we need the costly I-65 Corridor Annexation when we already have an expanding Lebanon Business Park for yet more distribution centers?

Political Motivations

The political motivations behind the I-65 Corridor Annexation are likewise not compelling.

Some development supporters in Lebanon "fear" that the Annexation Area will be claimed by Whitestown. Whitestown is not likely to pursue additional annexation. The 2007 Whitestown per capita Property Tax burden is 316.38% more than it was in 2001. Of the 19 property tax districts in Boone County, Whitestown per capita Property Taxes have increased from the fourth LOWEST in Boone County in 2001 to the fifth HIGHEST in 2007. Whitestown residents will no longer support their elected officials if they continue their predatory annexation efforts without digesting what they have already gobbled up.

The desire to regain political power is another political motivation for Lebanon politicians. Zionsville, Eagle Township, and Union Township have agreed to a government consolidation plan that will be decided by their voters this November. This consolidation would result in an area that has 19,828 residents. Lebanon has a population of 15,259. Assuming 2.46 persons per household, the 3,486 new homes in the Annexation Area would increase Lebanon's population by 8,576. Lebanon politicians think the Annexation will help them regain political power from the high-growth area in the southeast quadrant of Boone County.

There is no return from the Boone County political power shift to the southeast quadrant. The southeast quadrant has not only been fast-growing, but new residents have also had higher incomes. The $145,000 average Annexation home price shows that Lebanon's distribution center employers will not support the kinds of higher-income families found in the southeast quadrant. Boone County's Republican Party Chairman and an increasing number of county-wide politicians reside in the southeast quadrant. Lower-income population growth in the Annexation would not enable Lebanon to politically overcome the higher-income growth in the southeast quadrant.

Unjustified Economic Benefits

Lebanonís so-called "Vision" Committee is the driving force behind this involuntary Annexation. The VC is affiliated with the developer-led and developer-financed Boone County Chamber of Commerce and Central Indiana Corporate Partnership. The stated goal of the VC is "improved, planned economic development by creating a balanced community, which supports itís citizens, schools, merchants, businesses and cultural activities." It has been amply demonstrated that the Annexation does not meet the goal of citizen and schools support Ė unless one considers imposing a runaway tax and utilities cost burden on existing Lebanon citizens a desirable improvement.

Of course, excessive tax, utility, and lifestyle costs borne by average citizens might be disregarded by some. Many, such as bankers, newspaper publishers, radio station owners, investment advisors, lawyers, hospital administrators, auto dealers, realtors, insurance agents, and print shop owners, figure that one more customer justifies any action no matter how detrimental to others. It is sad that these same persons do not appreciate the negative economic impact of the millions of dollars that the Annexation would take from working families and give to government agencies. Instead of citizens efficiently spending their money on goods and services, the government agencies will less efficiently spend the same money on development infrastructure.

While on the subject of government shortcomings, one wonders about the grandiose assumptions in the Annexation Fiscal Plan. From 2005 through 2007, the number of Lebanon single family new construction permits steadily declined from 64 to 32 to 26. Who in the world really believes the Fiscal Plan assumption that 345 homes per year will be built in the Annexation Area for 10 years starting March 1, 2009? Does anyone really believe the housing market will improve enough to support an 800% increase in Lebanon homebuilding?

No matter how little actual development takes place, Lebanon would be legally required to provide the Annexation with non-capital services within one year and capital improvements within three years. It looks like Lebanon citizens would lose either way Ė we would have higher than assumed property tax and utility increases if the homebuilding assumptions are not met Ė if the homebuilding assumptions are met, we would still have property tax and utility increases together with Fishers-like residential and retail sprawl.

Development supporters in Lebanon have made bad predictions before. Lebanon Utilities and the Lebanon Utility Service Board both have members on the so-called Vision Committee. This Council recently decided that the Lebanon Utilities failed iLines internet service should be discontinued. However, the unelected Utility Service Board decided to continue iLines in spite of a $1.5 million debt that iLines revenues cannot repay. Retiring this debt will take revenue from our utility bill payments away from needed utility improvements. The Annexation promises to be a bigger failure than iLines, and it is hoped the development gang does not win again.

Annexation Remonstrance

Lebanon working families have almost no protection from the developers. City Council members should be embarrassed to look their friends, family members, and neighbors in the eye if they vote for this rapacious Annexation. However, unless the City Council members unexpectedly vote against the Annexation they have already voted for once, the best hope for concerned citizens is a successful remonstrance.

It APPEARS that a successful remonstrance opposing the annexation (whether by Whitestown or Lebanon) can be filed by (a) at least sixty-five percent (65%) of the owners of land in the territory proposed to be annexed or (b) the owners of more than seventy-five percent (75%) in assessed valuation of the land in the territory proposed to be annexed. The proposed annexation does not seem to meet one of the three requirements listed next.

1. The resident population density of the territory sought to be annexed is NOT at least three (3) persons per acre. If there were 3 persons per acre, the 3,675 acres in the proposed annexation would have 10,965 persons. The Annexation Fiscal Pan estimates the current population of the annexation area to be 273 persons.

2. Sixty percent (60%) of the territory is NOT subdivided into lots and parcels one acre or less. A glance at the annexation map seems to confirm that less than 60% of the annexation area is included in a subdivision as defined in the Lebanon Zoning Ordinance: the division of any lot, tract or parcel of land, separately described in a deed on record in the Office of the County Recorder, into two (2) or more contiguous parcels, sites, or lots fronting on public street, for the purpose of immediate or future offer, sale, lease, or development. 

3. The territory is NOT zoned for commercial, business, or industrial uses. According to the Annexation Fiscal Plan, the majority of the annexation area consists of residential and agricultural land.

School Referendum

Many have heard the rumor that the Vision Committee wants Lebanon to build a new $100 million high school. Any school construction to support costly residential and retail sprawl in the I-65 Corridor Annexation would go before the voters in a referendum. Defeating school construction via referendum is the only way that Lebanonís existing citizens can stop unwanted development.

Conclusion

The Lebanon City Council should stop its headlong pursuit of the shameful I-65 Corridor Annexation because (1) the tax and utility payments of existing residents would increase significantly, (2) sufficient pertinent information has not been obtained and communicated to the public (3) Fishers-like residential and retail sprawl would be created, (4) tax abatements would be given to yet more providers of low-pay and low-benefit jobs, (5) the political motivations are not compelling, and (6) the perceived economic benefits do not justify the tax, utility, and lifestyle costs.

If the Lebanon City Council fails to act responsibly, it is hoped the land owners within the Annexation Area will defeat the Annexation. Otherwise, Lebanon might as well change its name to West Fishers.

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This page was last updated on 07/03/13.