City cracking down on noncompliant tax breaks

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The city of Indianapolis is seeking to overturn property tax breaks for more than 20 companies that have continued to apply for abatement even though they were unable to meet job commitments.

Companies that receive personal or real property tax abatements are required to self-report their employment numbers to show whether they are complying with economic-development deals.

When companies fail to comply but still file for their tax abatements with the Marion County Auditor, the city begins a process to terminate the abatements.

This year, the Department of Metropolitan Development is bringing more actions against noncompliant companies than it has "for the last several years," said Ryan Hunt, a senior project manager. He said the economic downturn appears to be the overriding factor.

Once the Metropolitan Development Commission determines that a company has failed to meet its commitment, the city has a few options: It can claw back prior abatement savings, prevent future savings or renegotiate a more realistic jobs-commitment deal, Hunt said.

Among the companies that have not met jobs commitments, some hired up to 80 percent of the employees they promised, while others failed to add any jobs, he said.

Hunt said most companies aren't trying to pull a fast one by continuing to apply for tax breaks. Abatement documents often are filed as a matter of routine by a company's accountants, who may be unfamilar with the deal requirements or not have access to up-to-date employment information.

The retail graphics firm Pratt Corp. promised in 2004 to create 141 new full-time positions paying an average of $21 per hour and retain 177 existing employee at its facility along Shadeland Avenue. The company fell below its hiring targets in 2008, but still filed for abatements in 2009 and 2010.

CEO Dan Pratt said he can't blame the city for moving to pull the abatement, "based on the agreement we signed."

Pratt said he hadn't even thought about abatements in several years as he focused instead on stabilizing and rebuilding the company, which now has about 175 local employees.

"We've had to scale down the last few years, that's just the honest truth," Pratt said. "We've had our ups and downs like most people."

Gannett Co., parent of The Indianapolis Star, promised in 2008 to create 209 new jobs as part of a National Shared Services Center, in exchange for eight years of personal and real property tax abatements worth about $36,000. But the company created only 129 jobs under the Shared Services umbrella, prompting the city to file to rescind the abatement.

Robin Pence, a Gannett spokeswoman, said the company met its jobs commitment by hiring 100 people for a separate corporate entity, Gannett Satellite Information Network.

The abatement agreement will have to be reworked to include both corporate entities, Hunt said.

Many of the economic-development deals, including Gannett's, also included incentives from the state. In Gannett's case, the Indiana Economic Development Corp. offered $780,000 in performance-based tax credits and $155,000 in training grants.

The state incentives are tied directly to actual job creation, and companies receive a prorated share based on how well they perform, said Katelyn Hancock, a spokeswoman for the IEDC.

She said IEDC, as a matter of policy, does not share information on how many jobs companies actually create or how much of the promised incentives they actually receive.

"You'll have to ask the company," she said. 

Among the other companies on the city's list of property tax abatements to cancel or renegotiate: Aero LLC (36 jobs), Auto Research Center LLC (22 jobs), Engledow Inc. (16 jobs), The Schneider Corp. (141 jobs), Sentry BioPharma (30 jobs), SVC Manufacturing (40 jobs), and Trilithic Inc. (127 jobs).


  • Come on...what's the fuss
    Gee, are we not in the era of giving tax breaks to businesses, the wealthiest, paid for by the rest of the taxpayers? Are we not told by the GOP that making Everyone pay their fair share is unamerican and against God's law? Wake up everyone, all those tax breaks, tax loop holes, all hurt those who are paying more and more and receiving less and less in basic government services - like school bus transportation for our kids, education in general, medicare for our seniors....
  • Tip Of The Iceberg
    Where Are The Jobs?

    Indianapolis - A new audit of Indiana's job creation programs confirms what WTHR has been reporting for the past year: tens of thousands of new jobs promoted by state leaders have never come. The actual number of jobs created is far less than expected.


  • About Time
    It's about time. Purposeful or not, this is basically cheating on taxes. If I cheated, they'd go after me, so they need to go after these companies, too. It's only fair.
    It seems to me that giving tax abatements for a lot of the properties I have seen (with first hand knowledge) does not make since. If you are going to provide this type of incentive, do it for primary industries, not all this little stuff. Waste of potential tax dollars that does not pay off. Clearly job creation always makes headlines, but at what cost! Franklin Township can't even afford to drive our kids to school anymore!

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  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim