Thursday, July 07, 2011

Ballard Administration Continues To Bleed Taxing Districts With Abatements

Nearly a decade ago, the City of Indianapolis awarded Navistar a tax abatement deal that saved the company $18 million with a promise of retaining 1,800 jobs at its Indianapolis foundry. Instead, it began shutting down the facility a few years ago, failing to meet the promises it made. The Ballard administration clawed back only $5 million of the tax abatements the company took, but the City retained all of those funds for use on its own economic development activities despite the fact that all taxing districts contributed towards the abated taxes--nearly half of which would have gone to the school district. You may recall the Ballard administration gave that $5 million to the ICVA and the City's economic development corporation.

The company is back again with its hand out and the City is approving yet more give-aways to the company after it recalled a very small workforce. Yes, for creating a measly 250 jobs, the company will get millions more in tax abatements even though it defrauded the taxpayers out of tens of millions of tax dollars by failing to meet its earlier job promises. The IBJ's Scott Olson explains the insanity of the Ballard administration's taxing policies:

The company received $18 million in tax breaks from the city in the past decade, but agreed to repay $5 million in early 2010 for failing to retain more than 1,800 jobs at the plant. The huge east-side facility employed as many as 1,650 workers in 2005, but began mass layoffs amid the recession as the auto market tanked.
Still, the city is set to preliminarily approve another tax abatement because Navistar acted in “good faith” when recognizing that it fell short of meeting job commitments, said John Bartholomew, spokesman for the city’s Department of Metropolitan Development.
The Metropolitan Development Commission approved Navistar’s abatement request at its Wednesday meeting. Final approval could be granted July 20.
“They weren’t trying to fight us; that worked in their favor, so they’ve got a clean slate now,” Bartholomew said of Navistar. “This hopefully will prevent a huge industrial site from going off the tax rolls. This is a great opportunity to bring in new jobs.”
Joanne Sanders, Democrat minority leader of the City-County Council, said she is pleased the city is helping to save jobs but thinks it should have collected more from Navistar for failing to meet the requirements of the first tax abatement.
"To say they are starting with a clean slate is disingenuous," she said. The real clawback would have been close to $20 million."
Navistar has recalled 150 workers who were laid off when Indianapolis Casting Corp. stopped production in late 2010. Long-term plans include hiring 100 more employees by 2013 and investing $19 million in technology and supporting equipment.
Not surprisingly, the workers at the facility had to agree to a wage cut simply to breathe new life into the facility. I don't know who is suppose to be representing the interests of the schools and other taxing districts that are adversely impacted by the City's insane economic development policies, but clearly nobody is sitting at the table representing either the taxpayers or the other affected taxing districts. These idiot decision-makers at the City continuously make decisions that permanently erode the other taxing districts' tax bases and the only entity that ever receives any benefit from them is the City--because it establishes TIF districts in these areas that capture all of any new tax revenues generated within these areas after the abatements go away. These other taxing districts have no room to complain, particularly the schools, when they sit idly by and allow this to occur without objection.

UPDATE: Pat Andrews has uncovered the fact that the MDC also just reactivated two dormant TIF districts, the Dow Elanco TIF at 86th & Zionsville Road and the Naval Air Warfare Center in Warren Township.

10 comments:

Jon said...

Question, is there a process that allows the affected taxing districts to contest the issuance of a TIF or can the city create any TIF if and whenever they choose?

Advance Indiana said...

The unelected Metropolitan Development Commission pretty much rules the roost. There is a remonstrance opportunity by citizens, but the MDC members are always in the tank on these deals and could care less what average citizens think. You don't get appointed to the MDC unless you follow orders well; otherwise, you will be bounced for daring to exercise independent judgment. The big law firms essentially dictate to the mayor who can serve on the MDC. Most of the deals are brokered by the major law firms on behalf of their clients. Conflicts of interest abound but nobody cares.

Advance Indiana said...

There are 9 MDC members. The mayor appoints 4, the City Council appoints 3 and the county commissioners appoint 2. You cannot speak to them about any matters before the Commission other than at meetings during public comment. Of course, the people who are in on the deals always seems to have access to them to make sure they vote the correct way.

Advance Indiana said...

It's interesting to observe that the Indianapolis Public School Corporation has been the most negatively impacted by these abatements and TIF districts. Literally, the school district loses well in excess of $100 million annually in property tax revenues because of these decisions. IPS never complains. IPS' legal counsel is Baker & Daniels, which often represents clients seeking economic development incentives. The firm, in fact, hired the Mayor's former deputy mayor in charge of economic development.

Advance Indiana said...

An important legislative change in TIFS:

"Sec. 1.3. (a) After June 30, 2005, a reference in any statute, rule, ordinance, resolution, contract, or other document or record to a blighted, deteriorated, or deteriorating area established under this chapter shall be treated as a reference to an area needing redevelopment (as defined in IC 36-7-1-3).
(b) After June 30, 2005, a reference in any statute, rule, ordinance, resolution, contract, or other document or record to a redevelopment area established under this chapter shall be treated as a reference to a redevelopment project area established under IC 36-7-14 or this chapter."

The funny thing is that Indianapolis' downtown never qualified as a "blighted area". The legislature just finally got around to making the law read as it had been applied for decades.

Had Enough Indy? said...

Gary - It is not legal to discuss zoning or variance petitions that are pending before either the MDC or the BZA with any member of the Commission or Boards. You may, however, discuss other matters that are pending before the MDC.

Advance Indiana said...

Good luck trying to get them to talk to you, Pat. They are unelected and are only accountable to those who appoint them to the MDC. The rule applying to specific petitions is generally thrown up in people's faces when they approach members. Members of the public are told to come and testify at the hearing; they don't want to be bothered any other time and they are under no obligation to give you any of their time.

Concerned Taxpayer said...

Where's that arch-conservative, Ben Hunter?

Indianapolis For Sale said...

Gary, as a former MDC member I must take you to task on a couple of your comments. Claiming that MDC members don't care what average citizens think is absolutely false. Public comment by average Joes and advocates like Pat Andrews weigh heavily on the decision-making process. During my tenure; more often than not the commission sided with the citizen.

You are correct that special deals such as tax abatement, changes to ordinances and other administrative matters are brokered by major law firms but only prior to being presented to the MDC. You are flat out wrong in thinking that somebody is making sure members "vote the right way." That simply does not happen.

Alas, I am a FORMER member so I must agree with your statement that independent judgment will get you bounced.

Advance Indiana said...

Thank you for sharing your experience as a former MDC member, Indianapolis For Sale and your candor about not being reappointed because you exercised independent judgment.