City leaders getting aggressive about recouping tax breaks

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Indianapolis is joining scores of cities across the nation that are starting to crack down on companies that promise jobs in return for tax breaks but fail to deliver.

Mayor Greg Ballard said Wednesday during his State of the City address that the city has received $5 million from Illinois-based Navistar International Corp. and expects to collect $500,000 more from other companies that also failed to meet job-creation requirements.

“It is no secret how tight our city budget is,” Ballard said.

Indeed, as the recession drags on, more municipalities struggling to fix roads, fund schools and pay bills increasingly are rescinding tax abatements to companies that don’t hire enough workers.

The shift is quite a change for cities and towns that often bend over backward to lure jobs by offering abatements and other incentives. Washington, D.C.-based economic development watchdog group Good Jobs First estimated companies in the United States spend $60 billion annually to entice prospects.

“We want to be partners with these companies and incentivize them to locate in Marion County,” City-County Council President Ryan Vaughn said. “But at the same time, we will hold them to their commitments when they come here.”

Ballard is proposing the money expected to be collected from so-called “clawback” provisions help fund economic development, convention, tourism and education efforts.

Pending Council approval, Indianapolis Economic Development Inc. will receive $3.5 million from the latest rescissions, with $2 million to invest in properties ripe for redevelopment and $1.5 million to bolster marketing initiatives.

Indianapolis Economic Development operates on a $1.1 million annual budget and receives funding from the city as well as from private sources.

The Indianapolis Convention & Visitors Association is set to receive $1.5 million, which will help it hire four additional salespeople and market Indianapolis to more cities.

One of the new hires would be located in Washington, D.C., bringing the sales staff there to four. Walsh said it is important to have a presence in the nation’s capital, given that 13,000 national associations are headquartered in the area.

The ICVA also is revamping its Web site and will unveil the new version April 1.

In addition, the mayor will seek $175,000 to transform the city’s charter schools initiative into an Office of Education Innovation. The endeavor would include restructuring the charter schools office to also serve as a county-wide hub for education initiatives and data-sharing, Ballard said.
Joanne Sanders, Council Democrat minority leader, expressed a few reservations about the mayor’s plans to spend the clawback funds.

“I know the money is going into economic development, and I certainly support that,” she said. “But I would like to see some of the money go back to the neighborhoods for infrastructure improvements.”

Navistar will pay back part of its abatement after failing to retain more than 1,800 jobs it had promised. The company, which had received $18 million in tax breaks during the past decade, announced early last year that it would close its east-side diesel engine plant.

Sanders said the city should have been more aggressive in negotiating with Navistar to collect a larger chunk of the $18 million in tax breaks it received.

Associated Press contributed to this report.



  • Eli Lilly Owes $214 Million?
    City & State Give $214 Million of Taxpayer Incentives to Eli Lilly for $1 Billion, 7,500-Job Deal

    The $214 million in incentives over 10 years is split almost evenly between the state and the city of Indianapolis. The state pledged $108 million, while the city pledged $106 million.

  • Mayor
    Yes Yes Yes..I have been alife time democrate,I now belong to the open feild, the place where public dwell.The public People Party.With Senator Evan "3way"Bayh to one side, Out ethics/out personal integrity,lack of commitment,secreacy in battle.Master at the emotion of ommition and the mayor the other. After all has been said and, the smoke and smell, starts to clear.I think i know who your next sentor should be.The man standing ,is a man that cause action,takes control,leads.He is not a last minute finger pointer.But a man of action.I follow you sir. Thank you for leading,your sense of duty,and no none sense approach to leardership.Brings hope where there is none. Not sense the great leadership of His Honor Mayor Hugnut,has we been blessed.Thank you for being here for me and my large family of us all.Your devoted freind. Don Harris President of the www.PublicParty.info
  • How Much Does Eli Lilly Owe?
    Wonder how aggressively the city is pursuing the tens of millions Eli Lilly owes taxpayers for not fulfilling its promises of over a $1 Billion capital investments and jobs.

    Suspect they will collect nothing.

    Mayor Ballard's father worked for company.

    Governor Daniels was the Lilly executive who negotiated the incentive package with city and state.

    Former Mayor Bart Peterson who gave the local taxpayer incentives is now a Eli Lilly executive.

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  1. With Pence running the ship good luck with a new government building on the site. He does everything on the cheap except unnecessary roads line a new beltway( like we need that). Things like state of the art office buildings and light rail will never be seen as an asset to these types. They don't get that these are the things that help a city prosper.

  2. Does the $100,000,000,000 include salaries for members of Congress?

  3. "But that doesn't change how the piece plays to most of the people who will see it." If it stands out so little during the day as you seem to suggest maybe most of the people who actually see it will be those present when it is dark enough to experience its full effects.

  4. That's the mentality of most retail marketers. In this case Leo was asked to build the brand. HHG then had a bad sales quarter and rather than stay the course, now want to go back to the schlock that Zimmerman provides (at a considerable cut in price.) And while HHG salesmen are, by far, the pushiest salesmen I have ever experienced, I believe they are NOT paid on commission. But that doesn't mean they aren't trained to be aggressive.

  5. The reason HHG's sales team hits you from the moment you walk through the door is the same reason car salesmen do the same thing: Commission. HHG's folks are paid by commission they and need to hit sales targets or get cut, while BB does not. The sales figures are aggressive, so turnover rate is high. Electronics are the largest commission earners along with non-needed warranties, service plans etc, known in the industry as 'cheese'. The wholesale base price is listed on the cryptic price tag in the string of numbers near the bar code. Know how to decipher it and you get things at cost, with little to no commission to the sales persons. Whether or not this is fair, is more of a moral question than a financial one.