Major Props To Liz Brown & Karen Goldner For Considering Tax Abatement Changes
Posted by Jeff Pruitt - 9/6/08 @ 1:53 am - Filed Under City Council, Featured
The city council issued a press release today about the tax abatement policy changes that councilmembers Liz Brown and Karen Goldner have been working on. I will admit that I was highly skeptical of any significant changes coming from their 2-person committee but after taking the time to read their proposal I am impressed.
Here are some of the changes:
- Reduced fees for smaller projects making the abatement process more small-business friendly
- Projects designated as Economic Revitalization Areas must now meet all city standards including the wage guidelines.
- Projects in the Downtown Revitalization Area must adhere to the downtown design guidelines (about time!)
- Projects outside of Economic Development Target areas would no longer get the same blanket 10 year abatement as those in targeted areas. They would be evaluated on a point-based system and would qualify for either 3,5,7 or 10 year abatements determined by the number of points
- Added oversight and compliance requirements to ensure applicants are meeting their jobs and payroll promises. No more amendments to the statement of benefits for projects that have changed scope.
Well, well, well - last I heard nobody cared about tax abatement policy! Sounds like at least a few councilmembers are listening to the people. This is a great start to creating an economically sound abatement policy that actually encourages development into areas that need it the most. All of the ideas listed above are ones I support whole-heartedly. Once again, new members are breathing life into the council and local government (hint, hint in regards to the upcoming county council election).
I can’t wait to read what Mike Sylvester, John Kalb and Mark Garvin have to say considering they are the only 3 people that actually care about tax abatements - heh. Here are some additions/changes I would like to see:
- Franchise restaurants (especially fast food) should be added to the list of ineligible projects. Franchises have location scouts that help the franchisee pick profitable locations. Also, they typically have significant income requirements. There is no need for the city to subsidize this investment.
- There needs to be some kind of policy for designating an Economic Development Targeted Area. The current administration will attempt to bypass the proposed changes by creating as many targeted areas as they can and this defeats the purpose of true targeted investment. I know these require council approval but some guidelines might be appropriate
- Housing projects, i.e - apartments, condos, student housing, etc, should be added to the list of ineligible projects. There is no shortage of housing in the city and encouraging new development as opposed to infill only exacerbates our current problem.
- There needs to be a minimum number of jobs created added to the list of standards that must be met. Creating one part-time handy man position should not make you eligible - that’s exactly what one apartment complex did for which they received an abatement.
- As a way of discouraging the continuous expansion of TIF districts, I would like to see projects in these districts only be eligible for a 5 year abatement maximum.
- I would also alter the proposed point structure but I’m sure that will be debated in the future.
- How about adding a property tax abatement for residential improvements made on homes in Economic Development Targeted Areas - Phil Marx’s work on his house comes to mind. If we want to rebuild some of these neighborhoods then we shouldn’t punish those who improve their property.
In general I think it’s about time that we start actually incentivising investment into targeted areas that need it the most. Ironically, the two councilmembers (Hines & Pape) whose districts would benefit the most from the proposed changes are likely to be the most adamantly opposed - at least that’s my assumption based on prior comments.
You can share your thoughts and/or proposed modifications in the comments or submit them via a form on the city’s website.
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10 Responses to “Major Props To Liz Brown & Karen Goldner For Considering Tax Abatement Changes”
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Jeff,
Since only you guys that post original content care then I am not sure the rest of us have any right to add our thoughts. I hope that was a little humor or a shot at the local “mainstream media” which is right on!
I think Ms. Goldner and Ms. Brown have done a great job for the first update of the tax abatement rules in Fort Wayne in a long time. I not sure this is close to “best” until it is tested. By tested, I mean that we take a true sampling of tax abatements granted and see how it stacks up against the changes. Then review them to make sure what the intention of these changes seek to do actually work in “model form.” Then if changes need to be made before passage we do it.
I offer these possible businesses and wonder how they would stack up against the new rules and your proposed rules.
1- Because of redevelopment a five start restaurant wishes to purchase a half block of nearly condemned housing (at fair market price and not given to them by the city), and run down buildings with a total property tax worth of $150,000. They wish to build a multi-million dollar building and equip it. The vast majority of the jobs will pay minimum waitress wage to waitresses (who keep their own tips), the rest of the non-management staff earn a couple dollars over minimum wage.
2- A company wishes to build a “section 8” apartment complex. This caters to low income people. This project would result in putting people into apartments that would result in lower utility bills (some paid by tax dollars), safer living, and healthy living conditions. This would help replace “slum lord” housing these people are forced to live in otherwise.
3- A person wishes to build a new small building that will house a machine shop. New computer controlled machine equipment costs tens of thousands of dollars each. The person will employ maybe two or three others to start with. The two or three jobs will pay $30,000 to $50,000 each.
4- A new company wants to come to town and purchase 10 acres of clear untouched land to build an operation. The building will be five or six million dollars and employ 50 people making $65,000 each.
I hope we figure it out how to tighten the current system but allow us the flexibility to still promote the growth of business.
I think tax abatements are like shooting a moving target. I think Goldner’s and Brown’s idea will get us closer to a bull’s eye.
Jeff, please do share your thoughts (either on the blog or by commenting through the city’s website) on the point system. That is a key of the new ordinance since it is the point system that will determine the length of abatements which in turn determines their economic value to the business (and cost to the taxpayer).
Thanks to Karen and Liz for their proposal. I believe this will result in better control of these incentives for worthwhile, city property tax-building projects to support all of our city’s levies. To our councilpersons: Don’t forget, after passage of whatever you do, the head person in city development needs to submit a new “procedures” for how this is handled in the Redevelopment Department. That will have to be approved by council before changes will occur in actual practice. John B. Kalb
PS: Kudos to Stephen Parker and AFW for being 1st with this info on the blogs!
JQ,
The comment about “the only 3 who care about tax abatements” was nearly a direct quote from Tim Pape during a previous council meeting…
Jeff,
Sorry, you are right on that and it slipped my mind. I remember it now…. Gosh, getting old sucks.
A good first step in a long overdue process, and a testament to the benefit of fresh eyes taking a look at rubber stamp policies.
Let’s not forget, however, the discussions of the 5th Tuesday Council session a few months back. According to the City and County officials at that meeting, tax abatement in and of itself is not the big enchilada and, generally, is not considered to be a deal maker or breaker for prospective investors (or for those who have ALREADY built their McDonald’s). These same folks went so far as to say that no one is even really sure if our abatement policy provides any net benefits to the area, but we are currently not willing to pull abatement from our “toolbox” because everyone else is still doing it…”everyone’s standing up…no one can see any better…but we’re all uncomfortable”.
What really needs to be considered in addition to tax abatement guidelines is the City’s role in redevelopment in general. We seem to be losing sight of the division between municipality and investor, with the waters in between becoming increasingly murky with public-private partnerships. Maintaining adequate infrastructure and providing for public safety while minimizing regulation and the tax burden is going the way of the Dodo.
I’m not quite naive enough to believe that City and/or State sponsored incentives to business have no redeeming qualities. However, when we feel the need to provide for private enterprise the most basic requirements of business (e.g., a liquor license), I think things have gone just a bit too far.
You are right Jeff. I cannot go anywhere without hearing people talk about the city’s tax abatement policy. The grocery store, over the backyard fence, PTA meetings, the bowling alley. It is all I hear people talking about it, and as you indicate, watch out County Council!
Jeff,
I think this is a good first step in clarifying and limiting Fort Wayne’s tax abatement policy.
I am pleased with it and I hope that it is adopted.
Mike Sylvester
Green Jeans,
You still won’t admit that people care about the issue despite the fact that it is constantly on page 1 of the Metro section and the policy is being completely overhauled by two new councilmembers.
I’m not saying the sheeple are going to turn off American Idol to discuss the topic but in general people do care…
[...] might remember that councilmembers Karen Goldner and Liz Brown have come up with a draft revision to the city tax abatement policy. I would encourage everyone to read their proposal and provide feedback via the city’s [...]