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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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