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Lowe's seeks $500K tax break from city on customer center

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Home-improvement retail titan Lowe’s is seeking city tax incentives to help with its $20 million plan to create a massive customer service center on the northwest side that could create as many as 1,000 jobs by 2017.

Lowe’s announced in July that it intended to purchase, renovate and equip an office building in Intech Park that would serve as the center. Set to being operational in 2015, the complex and its employees would support Internet sales, delivery services and repair services for Lowe’s customers across the nation.

The 1,000 jobs would pay an average hourly wage of $15.82, according to information provided to Indianapolis officials.

The company is asking the Metropolitan Development Commission for two 10-year property tax abatements on a total of $10 million of its investment, which would save the company roughly $506,000 in taxes over the abatement period.

The company’s request for a personal property tax abatement would cover $5 million in information technology equipment to be used in the center.

Over the 10-year abatement, Lowe’s would save $277,203, or 59.8 percent of its taxes. It still would pay $186,126 of its tax bill, and then an estimated $39,714 annually in personal property taxes after the abatement expired.

The company’s request for a real property tax abatement would cover $5 million in building improvements for the complex.

Over the 10-year abatement, Lowe’s would save $229,348, or 49.5 percent of its taxes. It still would pay $233,981 of its tax bill, and then an estimated $46,333 annually in real property taxes on the improvements after the abatement expired.

The remaining $10 million in costs from Lowe’s anticipated $20 million investment would not qualify for tax abatement, according to the city.

MDC staff has recommended approving the abatements.

“Staff believes this project is significant for Pike Township in terms of new taxes and potential job creation and retention” and “will lead to continued future investment in Marion County,” according to its report to the MDC.

The preliminary abatement requests from Lowe’s are set to be heard at the MDC meeting at 1 p.m. Wednesday. If approved, they would be scheduled for public hearings and final approval at its Sept. 17 meeting.

The Indiana Economic Development Corp. also has offered Lowe’s up to $5.5 million in conditional tax credits and up to $100,000 in training grants based on the company’s job-creation plans.

Located in the southwest quadrant of West 71st Street and Interstate 465, the office building and three adjacent acres already have been purchased by Lowe’s for about $9 million. The building previously housed Eli Lilly and Co.’s information technology department from 2003 to 2013.
 

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  • Does it increase tax revenue?
    Yes it does and this is great news for the local and state economy. Since these are new jobs to the tax roll there will certainly be a nice increase of tax revenue. These aren't huge paying jobs, but anytime you have the chance to compete for 1,000 NEW jobs at an average wage of $15+/hr. you do what you can to get that company to stay or relocate. Nice work IEDC...keep the new jobs coming! Thank you, Italiano
  • Does it reduce tax revenue?
    Yes it does and for what? Jobs that pay $8 - $10 a hour. It's not worth it...
  • Dear Hoosier Lib-
    Hoosier Lib - There is yearly compliance and any company that fails to meet their job hiring/spending requirements can be forced to reimburse any funds or abatement dollars accepted. The IEDC is offering $100K for the training of up to 1,000 employees and again it seems like a good investment. The $5.5 Million is a tax credit (performance based) applied only towards the # of new hires...that is not $$ from a fund but rather a credit against future payroll taxes.
  • Dear Abury,
    Please see Paul's comments as they represent a great rebuttal. Furthermore, Yes, I do realize that call center jobs can go anywhere and I would expect them to leave as soon as the tax abatements end. All that being said, I would hope the IEDC hold back from offering incentives to every company that wants to create low paying service jobs and instead reserved those funds for higher paying jobs (i.e. $20/hr or $41k a year range). This type of behavior is the very reason why Indianapolis is going broke and needs to propose a commuter tax to raise revenue.
    • Actual pay for call center jobs?
      I'm pretty sure that nobody independently verifies whether the companies getting tax abatements actually pay the wages they report. Rather the company simply self reports on a compliance form to the city. So, it's altogether possible they could end up paying an average wage considerably lower than what's being reported. I'd also suggest that it might be more appropriate for the City to consider the median wage instead of just the average wage which can be driven up significantly by a few highly paid employees with the vast majority being paid below the average.
    • Hoosier Lib just doesn't get it
      Hoosier Lib - the article says that of 1,000 jobs, the average hourly wage is $15.82...where are you getting $8 - $10 from?They are trying to attract 1,000 NEW - good paying jobs to Pike township and renovate an existing building. Seems like a great use of incentives to me. You do realize that call center jobs can locate anywhere don't you?
    • Why?
      Why are we even giving consideration to Lowe's for more low paying service jobs. Tax incentives should be reserved for highly paying jobs, not $8 - $10 CSM jobs. The more tax revenue we give away to businesses, the more we will have to eventually pay in income taxes or the proposed commuter tax. Wake-up voters! Corporate interests are not your friends!
      • you mean Lilly's Indian Tata IT Information Services Group
        In actuality, the 71st street facility housed many of the H1B's that Lilly engaged from India/Tata during the time period involved. They have since been relocated to the downtown facility and nearly 1/3 to 1/2 of the IT workers who were Indiana/U.S. citizens were early retired or replaced with Tata IT Specialists.
      • better than angies list
        Perhaps the city can simply stop giving angies list incentives and give them to a real business that will be around in 10 years instead.
      • Cha-ching
        "It still would pay $233,981 of its tax bill, and then an estimated $46,333 annually in real property taxes on the improvements after the abatement expired." Or none, when they move on to the next Suckerville. Glad the IEDC didn't get caught flat footed on this one too.

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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

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