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Apparel firm requests tax break on $15M project

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OSP Group LP is considering investing $15 million in a 900,000-square-foot distribution and fulfillment facility on the southeast side that employs 625 workers, and has asked the city for tax breaks to loosen the financial pinch.

The Indianapolis Metropolitan Development Commission on Wednesday will consider OSP’s request for a personal property tax abatement on $7.5 million in equipment for the facility, as well as a real property tax abatement on $7.5 million in improvements to the center at 2300 Southeastern Ave.

OSP recently acquired the 52-year-old facility, which was designed for distribution of clothing, according to the company’s abatement request. It is part of the national distribution network for New York-based OSP Group, a seller of men’s and women’s apparel for plus sizes.

The firm is in the midst of re-evaluating the network, and has determined the center needs $7.5 million in mechanical and structural work, as well as $7.5 million in improvements to its logistics, processing and sorting systems.

The requested tax abatements would make the project “more economically feasible,” according to an analysis by Department of Metropolitan Development staff.  If the project goes forward, the center “would remain in operation, and 625 existing jobs would be retained.”

Without the tax breaks, city staff said, “a project such as this would not be economically feasible.”

Representatives for OSP Group did not immediately respond to a request for comment from IBJ.

Both tax abatements would extend over 10 years. The real property abatement would save OSP $383,914 over 10 years. OSP still would pay $391,669 in taxes over that period, and then about $76,000 annually after the tax break expired.

The personal property abatement would save OSP $464,020 over 10 years. OSP still would pay $311,563 in taxes over that period, and then about $66,500 annually after the tax break expired.

The 625 jobs have an average wage of $21.37 per hour, according to city staff analysis.
 

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  • Boilergate
    If it weren't reported we would not know about it. This is the kind of information we need to keep tabs on this type of expenditure. Well, not that we seem to be able to do much about it.
  • tell me...
    Where will the additional $700,000 come from? I know you said taxes, but what taxes? Additionally, why would a corporation purchase such a property without determining the repairs and improvement first?
  • Agreed
    I actually agree with previous comments!!! There were no names in any part of this article...odd. Hopefully, small business can feel more incentives, too. Let's retain our solid businesses and quit recruiting (or being whored by) these loony ones. I'm surprised there wasn't a windmill or solar panel involved....
  • numbers
    The project cost is $15 million over four years. The tax savings is about $800k over 10 years. So the value is 5.3% of the project cost, not 50%. It is a savings of 50% of the new taxes that will be generated from the investment the company is making in an otherwise dated facility that employs a lot of people from the surrounding neighborhood. In spite of the abatement the company will add more than $700,000 in new taxes to city coffers. This isn't "your" tax dollars being given over to the company. These are new tax dollars the company is generating as a result of their investment that will be partially offset for a short period of time to help justify the initial cost of investment. Agree with it or dont, but understand the process and the math before ranting.
  • Boilerplate
    I love the boilerplate language from Develop Indy or DMD or whomever: -----The requested tax abatements would make the project “more economically feasible,” according to an analysis by Department of Metropolitan Development staff. If the project goes forward, the center “would remain in operation, and 625 existing jobs would be retained.” Without the tax breaks, city staff said, “a project such as this would not be economically feasible.”----- IBJ needs to stop reporting this as news because it's just what cities do. It *is* news when DMD and Develop Indy actually get on the ball and bring high-quality new jobs to Indy. It's also news if these economic development gurus somehow manage to lose a major employer. The standard procedure of giving tax abatements to anyone who threatens to move their crap jobs elsewhere is not new, and not news. How about a story on DMD/Develop Indy's 1-year, 3-year, 10-year strategies and goals for bringing great jobs to Indianapolis? You know, the 50,000 jobs that pay $50,000? That story might actually generate some meaningful feedback. Also, does anyone know how much OSP group donates to United Way of Central Indiana annually?
  • AMAZING
    HERE WE GO AGAIN. We (the people)pay 50% of the cost of the project. Another Tax the poor and support the rich project. and if you take the mega-buck salary of top management our the "average" is nowhere near $21.37 per hour. ROBBERY
    • I need
      I have two employees and I will keep them for a lousy mill for retetion and a mill for property tax. This sounds like extortion.

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