City tries to claw back $380,675 from exiting Rexnord Corp.

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Indianapolis Mayor Joe Hogsett has begun the process of clawing back $380,675 in tax incentives granted to Rexnord Corp. as the firm prepares to fold its local operations and move the work to Mexico

Milwaukee, Wisconsin-based Rexnord, which operates a bearings plant in Indianapolis, said last month that it had “tentatively decided” to move Indianapolis production to an existing Rexnord facility in Monterrey, Mexico.

Last week, Rexnord reached a decision to close the west-side Indianapolis plant. Representatives of United Steelworkers Local 1999, which represents most of the 350 or so employees at the Indianapolis facility, say Rexnord informed them on Nov. 13, after rejecting the union’s ideas for cutting costs at the plant.

In light of that news, Hogsett is asking Rexnord to repay $380,675 in tax savings that the company claimed under a 2009 incentives agreement. Hogsett made the request in the form of a letter to Rexnord. The letter, which has Friday’s date on it, was made public Monday.

“Based on available information, I will be recommending to the Metropolitan Development Commission that the (incentives) agreement be terminated with a full repayment of all tax savings,” the letter reads in part.

Rexnord officials did not respond to a request for comment on Monday..

The incentive at issue is a five-year personal property tax abatement that the Department of Metropolitan Development approved in 2009.

Under that memorandum of agreement,  Rexnord  pledged to install new equipment valued at no less than $1.8 million; retain its 270 full-time employees; and create no fewer than 43 full-time positions. Both the retained and the new positions were to pay average wages of $20.93 per hour, not including overtime and benefits.

Under the terms of the agreement, Rexnord was eligible to claim tax savings from 2010 to 2014. Then the company was subject to a two-year post-contract reporting period during which it had to remain in compliance with the staffing and compensation requirements. That reporting period ends Dec. 31.

According to information provided by the city, Rexnord invested $4.5 million and created 53 new jobs in 2011. The company realized $260,676 in tax savings in 2010 and another $119,999 in 2011, but it did not receive benefit from the abatement after that. Rexnord has not claimed any tax savings under this tax abatement since 2011.

Now, Rexnord has a chance to dispute the city’s position if it chooses to do so.

As outlined in Hogsett’s letter to Rexnord, the company has 30 days in which to meet with city officials to show why it should not have to repay the tax incentives.

Rexnord will also be able to testify at a public hearing that will take place before the Metropolitan Development Commission. It will be up to the Commission to decide whether to terminate the memorandum of agreement with Rexnord, which would clear the way for the city to pursue a clawback.

As of Monday afternoon, the time and date of that hearing had not yet been announced.

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