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.

Ballard Administration Now Claims City May Have Lost Rolls-Royce If It Wasn't Offered Tax Breaks For Not Creating Jobs

It's no longer necessary for a company to promise to bring new jobs to the local economy in order to win tax breaks ordinary citizens and small businesses are never eligible to receive. Simply conjure up a hint there is some possibility a company might take its business elsewhere and the public's purse strings open up as far as needed. Feeling the heat of awarding a multi-million dollar tax abatement to Rolls-Royce for creating zero new jobs, the Ballard administration is now claiming the company may have moved its nearly 4,000 jobs elsewhere if the tax breaks had not been offered. The administration is saying that awarding tax breaks so the company would move jobs at its location on Tibbs Avenue to downtown made possible $190 million in upgrades that would have otherwise not been made. The IBJ's Fransesca Jarosz feeds us this latest lie from the Ballard administration:

Without Rolls-Royce being able to make the improvements necessary at Tibbs so they could remain competitive, their long-term viability at that location would be in question, and those jobs would be at risk," said Deron Kintner, executive director of the Indianapolis Bond Bank, the city's debt-financing arm."

"If the site wasn't viable long term, logic would seem to dictate that those jobs would not have remainded in Indianapolis."

Of course, Rolls-Royce, a British-owned company that is relying on federal defense contracts to fund those 4,000 jobs, made no public comment ever suggesting it might move the jobs elsewhere. The company will get not only a tax abatement on the Faris building, which was formerly occupied by Eli Lilly before it started slashing thousands of jobs locally after it was awarded hundreds of millions of dollars in tax abatements by the Peterson administration more than a decade ago, but an even larger $21 million tax abatement for its Tibbs Avenue facilities according to Jarosz. "It's unclear when the company will begin upgrading the Tibbs Avenue plants, but the company expects to complete the work by 2021," she reports. Huh? They get an abatement with a promise to make an investment at some point during the next 10 years?

An ever stranger but not surprising explanation is offered by the mayor's economic development guru. "There's a multiplier effect when you get more high-wage employees in the downtown area," said Michael Huber, the city's deputy mayor for economic development." "They're spending money [and] going out to eat downtown. We believe it also will increase the demand for housing downtown." Somebody is going to have to explain to me how there is more economic development multiplier effect if the same jobs are performed at a downtown location than a location on Tibbs Avenue. It sounds to me like someone is now trying to pick and choose which businesses in which parts of the city get the economic benefits of the jobs already located here. It's really all about pay to play politics, a term that seems almost foreign to the news media in this town.

City-County Councilors Brian Mahern and Angela Mansfield are questioning the deal given that no job creation promises are being made by Rolls-Royce to win the incentives. "Our standard practice has been to require a commitment of jobs," said Brian Mahern. "If they're unprepared to make a commitment, then we're giving them a blank check to spend how they would see fit." "Angela Mansfield said "she doubted Rolls-Royce would move its Indianapolis jobs elsewhere because doing so would be expensive." Community activist Pat Andrews, who normally sides with taxpayers in these debates, apparently thinks giving the abatement without job commitment promises is a good idea. "The size of the investment suggests that Rolls-Royce would be around for awhile after the investment was completed," said Andrews. Well, we'll have to wait about 10 years just to find out if the investment is even made.

The story makes no mention of the fact that one of Rolls-Royce's major contracts with the Defense Department that uses its local labor force is in jeopardy. As the IBJ reported on a week ago, the Defense Department directed Rolls-Royce and GE to halt work on an engine for the F-35 Joint Strike Fighter that is being manufactured locally in Indianapolis and elsewhere around the state, potentially affecting about 2,500 jobs between the two companies, which could increase to 4,300. "The Pentagon in a statement said the stop-work order applied immediately for 90-days, halting the expenditure of $1 million a day for an engine the military has said consistently since fiscal 2007 it does not want," the IBJ reported. "The order doesn’t terminate the program, however, the Pentagon said."

When Ballard ran for mayor four years ago, he complained about the city offering too much in the way of tax abatements and the tax-shifting consequences to ordinary taxpayers. Ballard promised to revamp the City's policies for awarding tax breaks. Instead, he has awarded them just as liberally as his predecessor. As he would now say, "It's the paradigm we inherited."