The Journal Gazette
 
 
Sunday, August 01, 2021 1:00 am

Amazon reignites tax break debate

Council still at odds, even after redoing rules 3 times

DEVAN FILCHAK | The Journal Gazette

Some officials hope the Fort Wayne City Council's vote against Amazon's recent tax abatement request doesn't send the wrong message to other businesses.

City Council members were split by two schools of thought when they voted on the request that would have saved Amazon $7.3 million in personal property tax on more than $100 million in equipment once the Flaugh Road warehouse is built: Should requests that meet the city's tax abatement criteria be approved every time or should the council use its discretion to decide whether the business is worthy?

The City Council has adjusted the tax break ordinance three times in the last 12 years, and council members still have differing opinions on deciding what makes or breaks a company's chances of getting tax abatements. The members' differences of opinion were clear by the council's vote of 5-3 to deny the request with an abstention from Councilman Glynn Hines, D-at large.

If Amazon's request had been approved, its equipment's assessed value would have been reduced by 100% the first year and gradually returned to full value over the following decade. The abatement request almost wasn't introduced after four members – Sharon Tucker, D-6th; Russ Jehl, R-2nd; Paul Ensley, R-1st; and Jason Arp, R-4th – cast votes against it July 13.

The project, which initially was only known as “Project Mastodon” publicly, received a tax abatement in March for the construction of the building, but it benefited the property's developer Ambrose Property Group. It passed with all members except Ensley and Arp voting in favor of the tax break.

Several people spoke against the abatement during Tuesday's council meeting because of concerns about Amazon as a company and how it treats its employees. One person who was part of bringing Amazon to Fort Wayne spoke strongly in favor of the abatement.

John Urbahns, president of Greater Fort Wayne Inc., said the council's nonpassage of the resolution would send a message to Amazon, along with other businesses considering Fort Wayne, that the city is not welcoming. He added he is currently in talks with 22 other businesses eyeing Fort Wayne.

“It's not by accident that Fort Wayne is the fastest-growing metro area in the Great Lakes area,” Urbahns said at Tuesday's meeting. “We can easily lose that if we change direction.”

The process, Urbahns said, should be “straightforward, predictable and fair,” adding community development staff told Amazon that approval and a certain schedule is followed if warranted. Councilwoman Sharon Tucker, D-6th, later used two of his words against his position.

“'If warranted,' we utilize the schedule,” she said. “I just will continue to leave that hanging right there – 'if warranted.'”

Councilman Tom Didier, R-3rd, voted for Amazon's request and is one of the council members who usually votes in favor of tax abatement requests that meet the criteria the council has set. He's seen the council change its tax abatement ordinance three times during his terms.

“We have spent 12 years figuring out how to correct the tax abatement process, and we still can't seem to get it to the way everybody wants it,” he said Tuesday.

Council President Paul Ensley, R-1st, said requests like Amazon's are why the council's tax abatement ordinance includes the members' votes.

“If you think it's OK and good for our community to give a $7.5 million tax break while Jeff Bezos is flying a $30 million rocket to space, that's fine, but we can't really hide behind the process and say that it's the process because you could also just as easily decide that it's not,” he said before addressing his colleagues directly. “Every council member, when you vote, your discretion is part of the process, and I encourage you to use the process as it is intended to represent your constituents.”

When the council has amended the tax abatement ordinance, it has made the process more stringent each time, Councilman Geoff Paddock, D-5th, said. Paddock, who voted in favor of Amazon's abatement, was involved in adjustments to the process in 2013, and more changes were made in 2019.

A lot of changes came in 2013, including the addition of an annual compliance check. Each year since 2013, the council reviews each abatement that is active to ensure standards are being met.

If standards aren't met, the council votes after meeting with the company to determine if the business will benefit from the tax abatement an additional year. In 2018, Precision Die Technology and Coram USA LLC/JD Summit Associates had abatements revoked. Precision Die's revocation was partly due to the company not being represented as requested at the meeting.

Many abatements did not appear to be compliant in 2020 partly because of the coronavirus pandemic. The council approved nearly all of them to keep their abatements in place until the next annual review, but a few companies were recently asked to present to the council before it makes a decision on continuing the tax breaks.

The agreements up for discussion Aug. 10 are ElringKlinger Manufacturing of Indiana Inc., 2677 Persistence Drive; Revenue Cycle Service Center LLC/Magnaway LLC, 1700 Magnavox Way; and Edy's Grand Ice Cream Inc./Dreyer's Grand Ice Cream Inc., 3426 N. Wells St., for two of its abatements.

Companies are asked to come in when council members have questions. Ensley asked for Edy's to come since it was given another tax abatement this year, and Jehl asked the others to come due to their struggles with compliance before the pandemic.

The council will also decide on waiving noncompliance because of late reports from Pyromation Inc., 5211 Industrial Road, and Rogers Markets Inc., 3850 Concept Court, on Aug. 10. Last week, a resolution was introduced to end tax abatements for Cyco Properties/Red Sea LLC, 6201 Discount Drive, which had not filed any forms showing compliance or requesting to waive noncompliance.

Changes made to the tax abatement policy in 2013 and 2019 include raising the standards on the score the Community Development Division uses to determine if a business is eligible for tax breaks. Paddock said it was important in 2013 to add factors like quality of jobs, wages and benefits coming.

Depending on how a business scores, Paddock said, it can be eligible for a 10-year abatement like Amazon or for an abatement ranging from four to seven years. He added he's open to examining the tax abatement policy again, but he suggested the council use a fifth Tuesday, when it usually does not meet, to talk with all of the stakeholders – Mayor Tom Henry, the community and economic development offices, county officials and Greater Fort Wayne to name a few – so everyone can be on the same page.

The City Council has approved tax abatement requests for other large companies in the past, Paddock said, such as BAE Systems, Dana Corp., Fort Wayne Metals and Sweetwater Sound. In 2019, the application fees were raised.

Two council members don't think tax abatements like Amazon's failed request should have to be considered at all. Arp and Ensley have brought legislation to the council twice that would eliminate business personal property taxes altogether.

Ensley thinks it is “distasteful” for government to make judgment calls on businesses because the free market regulates businesses well enough on its own. He used Amazon as an example by pointing out how it raised its minimum wage to $15 an hour, which is double Indiana's minimum wage of $7.25 an hour. Amazon said Tuesday it will pay workers at the warehouse $15.50 an hour, which is about $32,000 a year, instead of the initial proposal of $15 an hour.

“You can offer as low as $7.25 but it simply won't work out here, so the market really is the best force for economic development and to raise all wages,” he said.

Arp has always opposed tax abatements because he thinks it violates the 14th Amendment, which protects citizens' rights to be treated the same as everyone else. Businesses with connections to better attorneys or other resources have better odds of making it through the “weeding out” part of the process by the city's Community Development Division, he said.

“That process means a lot of people don't have access to us,” he said.

Jehl, who voted against the request, hopes the council's failing vote does not send a bad message to Amazon or other businesses looking at Fort Wayne.

“I hope the message still that goes on is not that if you don't rally the votes, Fort Wayne doesn't want you here or appreciate you,” he said. “We've given you the bulk of the incentives and did so and when the incentives were asked for in a typical fashion.”

dfilchak@jg.net

Amazon vote

Fort Wayne City Council members were split when they voted Tuesday on the proposed $7.3 million tax abatement for more than $100 million in investments made in the Flaugh Road warehouse.

Five members voted against the request: Sharon Tucker, D-6th; Russ Jehl, R-2nd; Paul Ensley, R-1st; Jason Arp, R-4th; and Tom Freistroffer, R-at large.

Three voted in favor of the request: Michelle Chambers, D-at large; Tom Didier, R-3rd; and Geoff Paddock, D-5th.

Glynn Hines, D-at large, opted to vote last as the committee's chairman, but he decided to abstain since the request had already failed.


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