A new subdivision proposed in Franklin would bring in $250,000 in new taxes, not cost extra in services, such as police or fire, and lower the city’s tax rate by about 4 percent.
And those impacts are based on conservative estimates, Franklin Mayor Joe McGuinness said.
And that’s why Franklin is weighing a proposal no other local government in Johnson County has: giving money to a developer building a new subdivision.
A new, large neighborhood would have long-term benefits that could make spending tax dollars to help start the development worthwhile, McGuinness said.
Franklin property owners likely wouldn’t see any change in their annual tax bills because of the small reduction in the city tax rate, due to the added value from the new homes.
But the extra money the city would collect from the new homes could help pay for expenses, such as salaries for employees or to purchase new equipment, or be put into savings for future construction work.
Developer John Grimmer has requested $2 million in tax dollars to help pay for infrastructure, such as sewers and roads at his proposed subdivision, Hillview.
The subdivision at Upper Shelbyville Road and Eastview Drive on the city’s east side would have 149 homes when fully built.
Members of the city redevelopment commission already have said they will not give $2 million to Grimmer but could consider a lesser amount to help build new walking trails or public parks in the subdivision.
Grimmer plans for Hillview to become a high-end custom home development for the city, with cottage homes costing about $250,000 and single-family homes that would sell for around $400,000.
The new subdivision would create more options for residents looking for high-end homes in Franklin, and the homes would generate new taxes for the city without requiring significant additional spending on services, such as police or fire, McGuinness said.
Most homes in Franklin are $150,000 or less, which means professionals or executives who work in Franklin and want a larger home are living in the Center Grove area or northern Indianapolis, he said. For example, a neurosurgeon who works at Johnson Memorial Hospital lives in Zionsville because there weren’t upper-end housing options in the city, McGuinness said.
The city had about $767 million in taxable property in 2013, and the new subdivision could raise that total by 4 percent or more. McGuinness estimated an increase of at least $28.5 million, using values for homes that are about half of what Grimmer wants to attract to the subdivision. The new subdivision would be the first in the city since 2004, and a project of that size hasn’t been started since Interstate Warehousing built a $37 million expansion in 2010.
That increase in value would generate about $285,000 more in property taxes each year, according to the mayor’s estimates. Of that amount, Franklin Community School Corp. would receive about $137,000, while the city would get $118,000.
The remainder would be split among other local governments, including the county, library district, township and solid waste district.
Added housing also could benefit the schools since they are funded by the state based on student enrollment, Superintendent David Clendening said. When Franklin built the new high school and remodeled the middle school, both were built with room to grow, and a 150-home subdivision could bring another 100 students to the area, he said.
The city tax rate would go down by about 4 percent, but homeowners likely wouldn’t see any difference in their bills. Any home in Franklin valued at more than $80,000 had taxes capped at 1 percent of the home’s value due to the combined tax rate for city residents, which include tax rates from Franklin, Franklin schools, the county, library district, township and solid waste district.
The new tax revenue would give the city more money annually to pay for salaries for employees or new equipment because the new subdivision wouldn’t require additional city workers, McGuinness and department managers said.
Current staffing at the street, fire and police departments should be adequate to cover another 150 homes, they said. For example, police officers would have to add the subdivision to their daily driving routes, but the city has allowed the police department to hire new officers in recent years, Franklin Police Chief Tim O’Sullivan said.
Officers would still be able to patrol all the areas of the city and to respond to emergencies in the new neighborhood if needed, he said.