Incentives for Buckingham HQ?

October 22, 2008
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Stokley building IndianapolisThe city is taking a second look at a tax abatement request for the historic Stokely-Van Camp building at 941 N. Meridian St. Developer Buckingham Cos. bought the 114,000-square-foot building in February 2007 and began a $2.5-million renovation. The firm won a letter of support for a tax abatement from former Mayor Bart Peterson's office but the deal was never finalized. With much of the renovation work now done, Buckingham has revived its request for an 8-year abatement worth about $115,500. The planning department pulled the item from last week's MDC meeting at the last minute so Mayor Greg Ballard and his staff could have a look. A staff report on the abatement says it would create 18 new jobs and retain about 310. A key question: whether all the jobs will be located at the downtown building, a city spokesman said. (Photo/DIG-B)
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  • This seems odd. I'm not well versed in tax abatements but don't companies usually say, This is what we PLAN to do. When it's done we think we shouldn't have to pay taxes for a while. In this case they're basically saying, Look at what we did! We don't have to pay taxes, right?
  • I agree. If they were able to complete the project without the tax abatements, then they should not be applying for them now. TaxAbatements, even though I think they suck overall, should be used to help entice the company to locate to an area in return for job creation and to help save on some of the costs of building their headquarters. If they were told that because of them moving their headquarters downtown and revitalizing and restoring an old abandonded buildings that they would recieve an abatement and it got lost because of the transition of administrations, then it may be worth looking at again.
  • This is silly. Just Say NO
  • I am generally in favor of tax abatements as an economic stimulus/development tool, but only when given judiciously to deserving projects. I agree with MikeW, if the project was finished without the abatement then no abatement should be given.
  • So we'd be giving up nearly $120k for 18 new jobs? That seems excessive. Yes I read that it would help keep 310 jobs as well but still.
  • This is not the precedent; say no now, or a floodgate will be opened.
  • The statement they were able to complete the project without the tax abatements does not accurately reflect how tax abatement functions. The savings associated with abatement are realized years in the future once improvements have been made and the property has been reassessed. The company still has to secure funding for the project up front regardless of abatement.

    The fact is that Buckingham continued with their project timeline with the knowledge and assurance that the investment had been reviewed and would continue to be supported by the City. The resolution process was put on hold due to the transition of administrations.
  • There is not precedent being set by this project. It was reviewed and received support long before the project ever began.
  • Response,

    When companies anticipate an abatement in their favor, they don't leave that value off the total cost of the project and determining whether or not it will be a good deal, especially for funds down the road to afford the property. If they were truly concerned about that abatement in their internal Cost-Benefit Analysis, then they would have not proceeded with the project until receiving it.

    Just as homeowners build into their budgeting a potential reduction in property taxes so do these companies. If they went ahead with the project and used the abatement in their estimates as the project being feasible, and continued without the abatement - that's their fault. The abatement should not be given after the fact.
  • I think there is a little bit of confusion among some of the posters about why Buckingham might still have an argument that it should be granted an abatement.

    Yes, the construction project is nearly complete; however, the hiring component is not. The company can still argue (and this really for the city to scrutinize and determine if its true or not) that it won't hire or retain as many employees unless it receives the abatement.

    If Buckingham can argue that it will create and maintain jobs, then it has an argument to support asking for an abatement--and the construction project is not relevant to making a determination about the abatement. The city needs to determine if the number and quality of the jobs to be created and maintained justifies granting the abatement.
  • I aint no economist or business administrator or whatnot, but it seems a little unlikely that they would create 18 new jobs, because they get $120K in tax savings over 8 years. That's about $800 per job per year. I could be wrong (go ahead, tell me please), but I don't think $800 per year is going to make the difference in whether they can expand there workforce or not. If the question is whether or not those jobs will be in this building, I think it would be completely impossible to know or to track where these individuals are working, or whether they wouldn't have hired them anyway.

    I don't think it matters what the last administration told them. If the abatement was that important, they wouldn't have done the project without it having it inked. If the abatement is rejected, each of the remainder of property tax payers in Marion County can save about 50 cents. Imagine how fast those amounts would add up, if the City would simply turn down more of these.

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