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City considers whether to revoke 3M tax break

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The city of Indianapolis could claw back more than $265,000 in property-tax breaks granted to a local division of the 3M Co. that fell short of its employment commitment.

Minneapolis-based 3M spent nearly $16 million in 2008 on buildings and equipment for Aearo Technologies, which designs and makes acoustical composites, but hasn’t hit hiring targets set out in a seven-year tax-abatement.agreement.

Aearo reported to the Department of Metropolitan Development that it has 354 employees, short of its commitment to retain 368 people and add 48 more.

While Aearo faces $265,655 in potential damages, the Metropolitan Development Commission might not be inclined to collect all that money, said Ryan Hunt, senior project manager at DMD.

“Clearly, they made a lot of investment here,” Hunt said of 3M. The commission could agree to settle for a smaller amount, based on the 354 jobs retained and value of investments, which exceeded the company’s commitment by about half a million dollars, he said.

3M could also argue that it fell short because of factors beyond its control, Hunt said. The MDC will recommend whether to draft a new abatement agreement or claw back the money before a public hearing, which will be set this spring, either April 16 or May 7, he said.

Representatives of Aearo and 3M didn’t return phone calls seeking comment.

Aearo, which is best known for making ear plugs, was on a growth tear before its sale to 3M in 2007 for $1.2 billion. It generated $508 million in annual sales, and revenue had been growing over the prior five years at an average annual rate of more than 12 percent. 3M bought the company to expand its health and environmental safety product lines.

The tax-abatement agreement called for 12,000 square feet of new office space, plus a new acoustical testing facility, both of which were constructed.

Aearo came close to hitting its hiring target in 2010, when it added 42 jobs, but the payroll declined the following year and in 2012. Hiring appears to be on the upswing, but some of that is through contract workers, which the MDC will not count toward complying with the tax-abatement agreement, Hunt said.

Aearo’s facilities are at 5457 W. 79th St. and 7911 Zionsville Road on the northwest side.

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  • How about...
    ... a fair and equal tax system that treats similar investments equally? If tax rates are considered to be so high as to inhibit development, why not make it automatic that additional taxes on new and expanded development will be phased in over time. This would be fair to all companies and would eliminate any appearance that the winners are only those who hire the politically favored consultants to convince the quasi-public Develop Indy that they should recommend a tax abatement to the MDC.
  • This should be automatic, not a decision
    There should be no decision to make here. The consequences for not meeting targets should be spelled out in advance and implemented administratively, with an appeal to a committee based only on facts in error. Doing these things on a case by case basis is a recipe for hard feelings by the company and/or weak-kneeded cave-ins by government.
  • what about
    Rolls Royce who just laid off.....

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  1. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.

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