City Government and Local Government and Warehousing and Taxes and Property taxes and Government & Economic Development and Government and Transportation, Distribution & Logistics and Distribution & Logistics

Apparel firm requests tax break on $15M project

March 17, 2014

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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