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New Hostess owners want abatement for equipment

June 14, 2013

The new owners of Hostess Brands are seeking a tax abatement to support investment of $10 million in new equipment for a plant on the east side that could employ up to 145 people.

Private equity groups Apollo Global Management and Metropolis & Co. announced in April that the Indianapolis facility, at 2929 N. Shadeland Ave., is among those it plans to reopen. The company applied for the abatement on May 28.

In its application, set for an initial hearing June 19, Hostess Brands says it "anticipates the need" to invest the money in "new manufacturing, logistics and information technology equipment."

The application describes the 145 positions as "new jobs created" and specifies an average wage of $16.82 per hour. About 300 people had been working at the facility when it closed in November.

The eight-year tax abatement would save the company an estimated $536,220, or about 62 percent, on the personal property portion of its tax bill. The company would pay an estimated $333,780 in personal property taxes related to the new equipment, the city estimates. After the abatement period, the $4 million of assessed value would generate about $90,000 annually in taxes.

If the company makes the investment and the assessment estimate holds true, Hostess' personal property would be worth more than double what the current  assessment for equipment.

The company's personal property at the Shadeland Avenue plant is assessed at about $1.8 million, records show, while real property is assessed at about $3 million.

Assessor's Office records accessed online show Hostess' previous owner owes property and personal property taxes of about $160,000.

Hostess has since paid off its real property tax bill and will be required to bring its personal property tax bill up to date before the abatement hearing can proceed, said Ryan Hunt, a senior project manager for the Department of Metropolitan Development.

Apollo and Metropolis paid $410 million to buy the Hostess and Dolly Madison snack cake lines as well as five plants after the company's liquidation process began in November 2012.

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