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City considering abatement terminations, continuances

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The city of Indianapolis is in the process of rescinding or continuing property tax abatements granted to several companies, including a local business later purchased by 3M Co. for $1.2 billion.

The Metropolitan Development Commission met Wednesday afternoon and preliminarily approved rescinding three abatements and continuing two others while those companies work to meet the requirements of the tax benefits.

The five companies were approved for the abatements between 2005 and 2007 and have collected as little as nothing to more than $140,000 in benefits.

Abatements are an economic development incentive awarded to offset property tax costs in exchange for adding jobs and purchasing equipment. They’re typically awarded to companies over several years. Property taxes typically increase annually during the life of the abatement.

Aearo Co., now a 3M division on the northwest side, has received tax breaks worth $143,76, but has yet to satisfy job-creation requirements, prompting MDC to preliminarily rescind the abatement. But the city continues to discuss the issue with company executives and likely will recommend MDC continue the abatement at its April 20 meeting, when decisions on all the abatements will be finalized.

The maker of earplugs and specialty composites said in March 2007 that it planned to add an earplug manufacturing line that would create 48 jobs, and spend $6.7 million to add office space and a 12,000-square-foot acoustical test facility.

Aearo, 5457 W. 79th St., has more than 300 employees in Indianapolis. Minneapolis-based 3M purchased the company for $1.2 billion in November 2007.

3M has spent $1.7 million on equipment and invested $15.6 million in land and buildings, nearly double the amount it agreed to spend. The company is just six jobs short of fulfilling the 48 it said it would add, according to the city.

MDC also agreed to continue abatements for manufacturers Hoosier Gasket Corp. and The Mitchel Group Inc. due to “circumstances beyond their control” related to the recession, MDC spokesman John Bartholomew said.

Hoosier Gasket, located in Keystone Enterprise Park, agreed in May 2006 to invest $2.5 million in a 135,000-square-foot manufacturing and office facility at the park, and create 90 jobs.

Ben Jackson, executive vice president and an owner of the company, said it made the promised investment in 2007 but has yet to create the expected jobs. Hoosier Gasket, which has 140 employees, has added jobs but lost others by attrition, making it difficult to pinpoint just how many jobs the company has created, Jackson said. The company had 178 employees before the recession.

Even so, he expects Hoosier Gasket to ramp up hiring and meet abatement requirements by this time next year.

The company makes gaskets for Chrysler Group LLC, Ford Motor Co. and General Motors Corp., as well as for Columbus-based Cummins Inc.

“Our business is very reliant on the automotive and heavy-duty [truck] markets,” Jackson said. “We were absolutely turned upside down by [the recession].”
 
Hoosier Gasket has received $21,748 in tax benefits, according to city records.

Meanwhile, contract manufacturer Mitchel Group on the city’s near-east side agreed to retain 238 employees and invest $1.3 million in a 20,000-square-foot addition to its building.

The company made the promised investment but cut its headcount to a low of 105 before rebounding to the current 160, Mitchel Group CEO Brad Smith said.

Mitchel Group was hit particularly hard during the recession by a lack of business from one of its largest customers, engine maker Cummins Inc.

“We hit a bottom like everyone else, and we’re charging back,” Smith said. “We’re not up to the number [of employees] we were when we got the abatement, but I think we’ll get back up there in the next couple of years.”

Mitchel Group received its six-year abatement in October 2006, though the addition was first recorded on 2008 property taxes, giving the company until 2013 to meet abatement requirements, Smith said.

The company has received $44,695.11 in benefits, according to city records.

Companies set to have their abatements terminated are Kyler Brothers Services Inc. at 4355 Lafayette Blvd. on the city’s northwest side and Super Port Holdings Inc. at 7051 Pierson Drive on the city’s far west side.  

Neither company claimed any tax benefits, Bartholomew said.

Kyler, a heating, ventilation and air-conditioning company, made a $1.1 million investment but did not fulfill an agreement to create 10 jobs and retain 50 others.

Super Port, which no longer operates, didn’t hire 251 employees nor did it make a required $3.1 million investment.

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  • Enforcement
    I'm glad to see that companies are being monitored to see that they actually deliver on what they promised at the time of the abatement, and that abatements are actually rescinded. Recession notwithstanding, companies that do not contribute to the city's economy do not deserve the tax breaks.

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  1. If I were a developer I would be looking at the Fountain Square and Fletcher Place neighborhoods instead of Broad Ripple. I would avoid the dysfunctional BRVA with all of their headaches. It's like deciding between a Blackberry or an iPhone 5s smartphone. BR is greatly in need of updates. It has become stale and outdated. Whereas Fountain Square, Fletcher Place and Mass Ave have become the "new" Broad Ripples. Every time I see people on the strip in BR on the weekend I want to ask them, "How is it you are not familiar with Fountain Square or Mass Ave? You have choices and you choose BR?" Long vacant storefronts like the old Scholar's Inn Bake House and ZA, both on prominent corners, hurt the village's image. Many business on the strip could use updated facades. Cigarette butt covered sidewalks and graffiti covered walls don't help either. The whole strip just looks like it needs to be power washed. I know there is more to the BRV than the 700-1100 blocks of Broad Ripple Ave, but that is what people see when they think of BR. It will always be a nice place live, but is quickly becoming a not-so-nice place to visit.

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  5. So Westfield invested about $30M in developing Grand Park and attendance to date is good enough that local hotel can't meet the demand. Carmel invested $180M in the Palladium - which generates zero hotel demand for its casino acts. Which Mayor made the better decision?

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