Regional Development Tax Credit (RDTC) Fact Sheet
What Is the Regional Development Tax Credit Senate Bill 353 (Kruse) House Bill 1048 (Lehman)?
The Regional Development Tax Credit is a state incentive to aid in the development of communities across the state. The credit creates the opportunity to leverage private investment and align it with community goals. It also helps to mitigate the private sector’s inherent economic or environmental risks associated with redeveloping distressed properties (see Project Examples: 100 Center, Lafayette Building, Studebaker Admin. Building).
The tax credit would be accessible to every community throughout the state to support the revitalization and redevelopment of distressed properties, enhancing quality of place. The legislation would create the Regional Development Tax Credit while retiring the state’s legacy redevelopment programs:
• Industrial Recovery Tax Credit (IRTC) (commonly referred to as DINO)
• Community Revitalization Enhancement District (CReED) Tax Credit
Why Does Indiana Need the Regional Development Tax Credit?
The greatest challenge to Indiana’s continued economic growth is attracting and retaining talent. According to the U.S. Census Bureau, Indiana ranks only 24th in domestic migration, so we must build on our economic foundation to create a quality of place that attracts talent from across the country and retains future generations of Hoosiers.
We are in a national competition for investible capital that is fluid and can be invested anywhere. Communities across Indiana have inherited distressed properties that regulations have made more difficult to redevelop. The regional development tax credit is a tool that encourages the private sector to invest and fix distressed and challenged properties in Indiana.
The tax credit would be available to any community—rural, urban, and suburban—in the state, and will allow the state to maximize strategic economic development opportunities through partnerships with communities and the private sector.
A recent Ball State University study found that the state’s $126 million investment in quality of place through the Regional Cities Initiative has already sparked $835 million in new private sector investment and is expected to lead to nearly 8,000 new Indiana residents over the next eight years.
Through this program, Indiana will build on its economic development strategy to encourage long-term, collaborative, regional planning to create vibrant communities, enhance quality of place, and retain and attract talent and capital.
Benefits of Enacting the Regional Development Tax Credit
1. Encourages local investors to address distressed properties in their communities, creating world-class quality-of-place projects that attract talent and capital
2. Stimulates local economic growth and new job opportunities by leveraging private dollars to revitalize under-performing properties
3. Enhances the competitiveness of all communities throughout Indiana. Today, only communities with established CRED Districts, Enterprise Zones, or very large vacant industrial facilities can obtain state support
4. Encourages communities to embrace regionalism in competing for talent and capital by maximizing the effectiveness of their collective assets
How Does the Regional Development Tax Credit Work?
To be eligible, a proposed project must align with the state’s goal of enhancing quality of place and talent attraction.
To be eligible for the tax credit, a proposed project must be included in:
• A local development plan, or
• A regional development plan adopted by a Regional Development Authority (RDA) and approved by the IEDC Board of Directors
The maximum award a taxpayer may receive for a project is determined by the plan in which the project is included.
• 15% of qualified investment, if the project is in a local development plan
• 25% of qualified investment, if the project is in a regional development plan
To maximize the value of the state’s investment, the IEDC is authorized to negotiate for a portion of the credit to be returned to the IEDC to support the state’s economic development efforts. This return would occur in step with a refinancing for the project or once the project becomes profitable.