City cracking down on noncompliant tax breaks

Back to TopCommentsE-mailPrintBookmark and Share

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!

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. PJ - Mall operators like Simon, and most developers/ land owners, establish individual legal entities for each property to avoid having a problem location sink the ship, or simply structure the note to exclude anything but the property acting as collateral. Usually both. The big banks that lend are big boys that know the risks and aren't mad at Simon for forking over the deed and walking away.

  2. Do any of the East side residence think that Macy, JC Penny's and the other national tenants would have letft the mall if they were making money?? I have read several post about how Simon neglected the property but it sounds like the Eastsiders stopped shopping at the mall even when it was full with all of the national retailers that you want to come back to the mall. I used to work at the Dick's at Washington Square and I know for a fact it's the worst performing Dick's in the Indianapolis market. You better start shopping there before it closes also.

  3. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  4. If you only knew....

  5. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.