NEW PALESTINE — Town officials are moving closer to approving a tax abatement for a senior housing complex on the western edge of town that proponents say would add hugely to its tax base.
The town council on Saturday instructed its attorney to create an initial resolution on the issue, which will set in motion the process to consider the town’s first-ever abatement. The resolution is expected to be discussed at the council meeting on May 21.
The resolution, which will outline the initial tax abatement proposal, will be subject to a public hearing if it’s approved. After that, the council will consider the terms and vote on another resolution to approve the abatement, town attorney Gregg Morelock said.
Morelock said unless instructed otherwise, he will put together a standard resolution for tax abatement. Officials with the developer of the complex, the Justus Companies, are requesting the standard 10-year tax abatement at 2 percent for the construction of the $18.6 million facility on 13.27 acres of land.
If the tax abatements are given, it would also mark the first time in the county that the tax breaks would be approved for a non-industrial type of business.
Plans call for Justus to construct a 125-unit senior community called Woodland Terrace of New Palestine, consisting of 95 assisted-living and memory care units and 30 independent-living cottages. The senior living campus is proposed at 5800 W. U.S. 52 in New Palestine.
Justus representatives attended the Saturday council meeting where New Palestine officials discussed the issue.
Just prior to the meeting, the council received a review of the proposed tax abatements submitted to the town by its financial adviser, O.W. Krohn and Associates.
Buzz Krohn, the firm’s principal, submitted what he called a hypothetical abatement schedule. According to the documentation, if abatements are given in full, Justus could save as much as $2.13 million in property taxes over the 10-year period of the abatement.
The company would save an estimated $432,000 the first year while paying no taxes. By year 10, it would save $21,600 and pay $410,400 in taxes, according to Krohn’s schedule.
In a phone interview Monday, Krohn said the figures could change following an official assessment.
At the end of the proposal, Krohn said he would recommend giving serious consideration to some form of tax abatement, saying it would be prudent to consider what would happen to the land if the project were to go away.
Krohn wrote, “This one single project has the potential to increase the town’s tax base by 18.9 percent … And the average wages are quite high (over $40,000 per employee plus benefits).”
He also said it would be unfortunate to lose a project this large because of a short-term incentive that doesn’t cost the town anything.
“From what I can see, this appears to be a clean project that will provide a large jump to our tax base,” he wrote.
Chris Miller, Justus Companies’ director of operations, told the council the firm has not officially closed on the property, but it has purchased land options. Miller said getting the tax abatement is Justus’s last step to determine the feasibility of the campus.
“The abatement sets off whether we can make the project work or not,” Miller said. “After this is resolved, then we’ll go through the purchase of the land.”
Following the final purchase of the land, Miller said it will take an estimated three to four months to get approval on construction and engineering plans. If all goes well, construction of the facility could start next spring.
With an 18-month construction schedule, the facility could begin housing residents in the summer of 2016.
However, state approval on licensing might delay that a few months, pointed out Skip Kuker, executive director of the Hancock Economic Development Council.