TERRE HAUTE — The Terre Haute City Council is considering establishing a formal set of guidelines for awarding property tax abatements.
At its Thursday evening “sunshine” meeting, the council looked at a 14-page document that would create a point system for awarding abatements.
Tax abatements are “an extremely important tool” for attracting new business investment in Terre Haute, said Steve Witt, president of the Terre Haute Economic Development Corp., speaking to the council. The abatement ordinance would make it easier to explain abatement requirements to company officials considering locating in the area, he added.
“We’re not trying to put up hurdles” to new business development, with the abatement guidelines, Witt said. “We’re a pro-business” entity, he said.
The ordinance was crafted by a committee that included local business, labor, government and economic development leaders, Witt said.
Terre Haute attorney Rick Shagley, who often represents companies seeking abatements at City Council meetings, urged the council to put off a vote on the ordinance for 30 days. This would allow him time to send copies of the ordinance to local businesses that have made large investments in the area for their comments, he said.
Shagley told the council he was concerned the point system would favor large businesses over small businesses. “The point system [proposed in the ordinance] seems most advantageous to large business,” he said.
Under the proposal, a business scoring 20 or more points would receive the maximum 10 year property tax abatement. Points are awarded based the cost of a company’s new investment, number of jobs added or retained, wages paid and other criteria. The larger the investment and the greater the number of jobs created or retained, the more points are awarded, according to the proposal.
Councilman Rich Dunkin, D-1st, said he did not oppose a 30-day delay, but added that he did not believe personal property taxes on new machinery for small businesses, such as a machine costing $250,000, would “make or break” a small company. “I think [the ordinance] does its job pretty well,” he said.
Loudermilk proposed adding a provision to the ordinance that would require companies to notify the council annually about the status of the abated project. Such a requirement would allow the council to monitor the progress of companies with abatements, he said, adding that at least one company that received an abatement promising to create high-paying jobs later replaced its regular workers with lower-paid temporary employees.
“Don’t come in here and promise us the world” and then not deliver, Loudermilk said.
The committee that developed the ordinance looked at abatements granted by the council between 2005 and 2007, Witt said. Nearly all the companies that received 10-year abatements at that time would also receive them under the new guidelines, he said. The committee also looked at similar ordinances in other cities, Witt said.
In addition to awarding points based on jobs created and total investment, the new guidelines would – among other things – reward companies that have a “diverse workforce,” show community involvement, offer benefits, use Vigo County licensed contractors and buy “a substantial amount of materials and supplies” from Vigo County-based vendors.
“I don’t think this is something that is written in stone,” Azar said of the ordinance. Other councilmen agreed that the ordinance would still leave “wiggle room” for deciding future abatements and could be amended in the future. Although a vote on the ordinance could take place as early as next Thursday’s regular council meeting, several councilmen indicated they would not object to waiting 30 days to allow additional community input.
Arthur Foulkes can be reached at (812) 231-4232 or arthur.foulkes@tribstar.com.
Local & Bistate
City Council looks at abatement award system
City attorney urges 30-day wait for vote
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