Financial struggles by some companies in the New Albany International Business Park are causing the New Albany-Plain Local School District to bring in less revenue from income-tax-sharing agreements than originally anticipated, according to a recent district financial report.
Although the shortfalls are not considered critical at the moment, the trend bears watching, said Rebecca Jenkins, the school district's treasurer.
"Any loss in revenue is a negative for the district," Jenkins said. "In working closely with the city of New Albany, we can learn of such revenue reductions sooner rather than later so that we can proactively adjust spending in order to lessen the impact of the loss in income tax sharing."
Based on discussions district officials had with New Albany leaders, the district is expecting to receive about $500,000 less in income-tax revenue for the fiscal year -- a total of $3.2 million instead of $3.7 million, the financial report said.
The district has income-tax-sharing agreements with the city that apply to commercial properties that have received property-tax abatements, Jenkins said.
Those agreements are made so the city can make up for the property taxes the district would have received had the abatement not been in place.
However, although property taxes are abated for the building on a property, a landowner still is required to pay property taxes on the land itself, city spokesman Scott McAfee said.
The district's total real-estate-tax collections for 2017 are $47.4 million, Jenkins said. Of that, $10.2 million comes from commercial, industrial and public-utility properties, she said.
Jenkins said the revenue the district receives from the income-tax-sharing agreements is deposited into its general fund, just like other tax revenue. General-fund expenditures can include staff salaries and benefits and purchasing of materials, she said.
For the fiscal year ending June 30, the general-fund budget -- what the district plans to spend this fiscal year -- is $57.9 million. The $3.2 million in income-tax revenue is nearly 6 percent of that total.
New Albany officials had noted that businesses in the retail sector of the business park had reported they were struggling, McAfee said.
The most recent example is The Limited, the women's fashion brand that was headquartered in New Albany and in January filed for bankruptcy after announcing it was closing its stores.
New York-based private equity firm Sycamore Partners since has purchased The Limited's intellectual property and other assets.
The property abatement for the Water's Edge campus building that The Limited rented expires in 2024, McAfee said.
At least one abatement for the Abercrombie & Fitch headquarters at 6201 Fitch Path expired in 2016, he said.
Other abatements that expired last year in the business park include the Signature Office Building, Smith's Mill Office Park and Medical Office Building 1, he said.
The Smith's Mill Office Park has 11 tenants and Medical Office Building 1 has six, including Mount Carmel Health System.