Tuesday, March 15, 2011

Ballard Gives Tax Abatement And Other Incentives To Rolls-Royce To Shuffle Workers Into Lilly Building Downtown

Virtually no property in the downtown area is on the tax rolls for the benefit of local governments other than the City of Indianapolis because virtually all of it has either been awarded a tax abatement, or any taxes being paid on the property are paid into a downtown TIF district fund. Today, Ballard announced Rolls-Royce will relocate 2,500 of its employees scattered at sites around the city to a building owned by Eli Lilly that it vacated due to its shedding of thousands of employees at its downtown campus. Lilly had been granted hundreds of millions of dollars in tax abatement and other incentives a decade ago after it promised new investments that never materialized. The City never clawed back the tax incentives despite Lilly's failure to meet the goals tied to the incentives. Here's the kicker. Ballard is granting a 10-year abatement to Rolls-Royce for moving into the vacant Lilly building and $50,000 in training grants, with the state kicking in another $250,000 grant. How many new jobs? Zero! The IBJ's Scott Olson reports:

Rolls-Royce Corp. said Tuesday it will move 2,500 employees to a downtown Indianapolis office building on South Meridian Street formerly occupied by Eli Lilly and Co.

The British-based firm said it will begin relocating employees from its other locations in the Indianapolis area later this year. Terms of the agreement were not disclosed.

City officials praised the decision, saying Rolls-Royce will invest about $20 million to modernize and occupy the vacant downtown building and is contemplating additional investments of as much as $190 million in its other local facilities . . .

Develop Indy, the local economic development agency, said it will support a request for a 10-year tax abatement on the property. Develop Indy and EmployIndy also will provide $50,000 in training grants, and the state will provide $250,000 in training grants.

Officials said the city will collect an estimated $22 million more in tax revenue over 10 years as a result of the move, despite the tax abatement.

Lilly began construction on its $58 million Faris campus in 2001 with development partner Kite Realty Group Trust and it opened the following year. The campus includes the renovated Faris and Brougher buildings, a new 150,000-square-foot office building and a parking garage—all west of Meridian Street between Merrill and South streets.
So you see how this works. Lilly got a tax abatement and other incentives a decade ago, which included the improvements it made to the Faris building. It later downsizes and empties the building. Rolls-Royce takes over the vacant property and wins another 10-year tax abatement on it. That will represent at least 20 years this property has been off the tax rolls without a single job being created. The City's claim it will collect $22 million more in revenue over 10 years as a result of the move is a flat out lie. If and when this property is returned to the tax rolls, the tax revenues generated will go into a downtown TIF district fund, which is nothing more than a slush fund for the Mayor to dole out to big contributors for downtown projects. The Mayor is simply shifting dollars that would have otherwise benefited other areas of the city to benefit downtown to the detriment of the areas affected by the loss of the relocated employees.

Note also that Rolls-Royce was not required to commit to the additional $190 million investment locally it was "contemplating." Fat chance of that happening. The company relies heavily on defense contracts for its local production and the defense department will have to be slashed because the federal government is broke and foreigners will no longer finance our massive borrowing, a problem that has only grown in recent days as Japan's economy has been wrecked by the triple disasters of an earthquake, tsunami and nuclear meltdown within a several day period, forcing it to withdraw U.S. investments to focus on rebuilding its own nation. Economic development in Indianapolis can be summed up as follows: If it's good for Downtown, it's good for all of Indianapolis. A sad tour of the dying and dilapidated neighborhoods just beyond the mile square speaks a different story.


Downtown Indy said...

The Babe Denny area and others near by sure could use some property tax support from the big players.

I did not know the age of the Faris building, but clearly these companies are working the 10 year abatement gimmick to perfection. "Ten and out!" is pretty much the standard.

I wonder what happens when the Conrad reached 10 years? Changeover to a supersized Motel 6?

By the way did you see the WTHR story on LOS failing water pipes? Water bills well over $20,000 per month, millions of gallons of water wasted, and failing pipes that demand millions of dollars for replacement after just 2 1/2 years.

Another 'great' monument to union workmanship. It is sickening

Advance Indiana said...

The original contractors should be liable for those repairs. If this were a private deal, you can bet there would be lawsuits to recover if the contractors didn't make good on it. Since the politicians are in bed with the contractors, they'll just let them screw over the taxpayers by making us pick up the cost to repair. It's pointless to require these contractors to be bonded and insured if the government never avails itself of the benefit of having those guarantees.

Citizen Kane said...

Well said.

Generally, bonding is only part of the pretend government constructed to deceive people into believing government is effective. Then the few in the trenches have to fight through the pretense to accomplish anything not involving enriching the favored few.

Concerned Taxpayer said...

And some people are wondering why the local unions are endorsing Ballard!
Isn't it obvious? He's acting just like a democrat!

Advance Indiana said...

The entire tax system from top to bottom is blatantly unconstitutional because it fails on almost every level to treat similarly-situated persons equally-a clear violation of the equal protection clause. Unfortunately, the courts have pretty much abrogated their role in policing the constitutionality of our tax laws, allowing persons with clout to essentially purchase their favored tax status.

Concerned Taxpayer said...

Bart Peterson...the gift that keeps on giving!
Oh....I'm sorry...I thought the mayor was Bart Peterson!

Had Enough Indy? said...

If the Ferris building is in the downtown TIF, then the abatement must be voted on by the Council. That should be fun.

It is troubling that this represents a shift of jobs out of other Indianapolis locales. There are 396 square miles in Marion County, but there is one square miles that gets most of the economic development effort; and like this deal, at the expense of some other square mile.

A couple of years ago, the City of Indianapolis and the City of Lawrance banded together and granted Monarch Beverage abatements and incentives to move out of Decatur Township and into Lawrence, while actually reducing jobs.