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City votes to end tax break for tech staffing firm

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The Metropolitan Development Commission voted Wednesday to cancel a tax abatement for the Market Street headquarters of the Indianapolis-based tech staffing firm BCForward, since it didn’t hit job-creation targets laid out in a 2009 economic development agreement.

BCForward executives had agreed with the Department of Metropolitan Development’s recommendation to terminate the remainder of the 10-year abatement. The MDC’s vote was unanimous.

“Overall, all segments of BCForward are growing, and the company is enthusiastic about continuing that growth in Indianapolis,” company finance and accounting director Christy Paddock said in a prepared statement. “The company is grateful for the city’s cooperation and for the dedication of its people.”

The city’s metropolitan development staff has been reviewing tax-abatement compliance for five firms, and BCForward was the first to come before the commission. Others may ultimately be found in compliance, or the city may renegotiate terms of the agreements.

BCForward, formerly known as Bucher & Christian Consulting Inc., expected to add 200 jobs by the end of 2012, but the number by August was 166, said Ryan Hunt, senior project manager at DMD. That included employees of a non-technology staffing subsidiary, StaffForward. The company also retained 276 jobs, as promised.

Hunt said BCForward's hiring has been significant. “We’re not trying to penalize them,” he said. “We just have to maintain the integrity of the program by holding people to their commitments.”

Many of BCForward's new hires have left the company's payroll for permanent positions with clients, an unexpected trend that would have made it difficult to hit job-creation targets in the future, Hunt said.

The city will not try to claw back real estate and personal-property taxes in this case, as BCForward saved only $4,100 under the first three years of the abatement, Hunt said. When officials announced the agreement in 2009, they estimated the company would save about $40,000 in taxes over the 10-year abatement.

Losing the abatement won’t drive BCForward out of the city – the firm recently signed a five-year lease extension on its headquarters at 10 W. Market St., Paddock said.

Justin Christian and Tony Bucher founded the company in 1998. It is one of the largest minority-owned businesses in the city.


 

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  • Lilly...
    Lilly does a lot more for this community than just jobs.
  • what about Lilly
    Perhaps Lilly should be held to these standards since they promised 5000 new jobs and instead have cut 5000 jobs. I wonder if they lost their 10 year tax deferrals or any other benefits or are they too big to have this happen to them.

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    1. Apologies for the wall of text. I promise I had this nicely formatted in paragraphs in Notepad before pasting here.

    2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

    3. Clearly, there is a lack of a basic understanding of economics. It is not up to the company to decide what to pay its workers. If companies were able to decide how much to pay their workers then why wouldn't they pay everyone minimum wage? Why choose to pay $10 or $14 when they could pay $7? The answer is that companies DO NOT decide how much to pay workers. It is the market that dictates what a worker is worth and how much they should get paid. If Lowe's chooses to pay a call center worker $7 an hour it will not be able to hire anyone for the job, because all those people will work for someone else paying the market rate of $10-$14 an hour. This forces Lowes to pay its workers that much. Not because it wants to pay them that much out of the goodness of their heart, but because it has to pay them that much in order to stay competitive and attract good workers.

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