Property tax incentives remain valuable tools for attracting jobs and adding value to the city's tax base, but deciding how or when exactly to use them tends to be trickier, Fort Wayne City Council heard Tuesday.
Council invited city, business and labor officials to talk about tax abatement, a common incentive that lets businesses gradually phase in taxes on new or improved property over several years instead of paying the full amount right away.
“I think this is a very important issue and a very important tool that, like any tool, can be used effectively or ineffectively,” said Bill Bean, one of Fort Wayne's major players in real estate and a supporter of abatement.
Proponents of generous tax abatement policies consider the incentives a key selling point for companies deciding where to locate and a sure-fire way to produce new tax revenue on otherwise dormant property.
Critics, meanwhile, are skeptical of whether companies follow through on all their promises of investment and job creation after getting the tax breaks.
“For many of us, it ain't working, economic development,” said Tom Lewandowski, president of the Northeast Indiana Central Labor Council.
Lewandowski said extensive research by labor groups and surveys of the unemployed and “anxiously employed” have found it almost impossible to prove whether companies meet their projected payroll and employment goals after getting abatement.
“I think there is some concern, and I share that concern, about accountability,” said Councilman Geoff Paddock, D-5th.
Councilman Russ Jehl, R-2nd, who chaired the special meeting, said the city ought to look at ways to better quantify the performance and compliance of companies granted tax phase-ins. He also said council will need to consider whether it ought to grant abatement to any company that meets the city's eligibility point scale or to be more selective.
According to city data, 31 projects got tax phase-ins last year, producing more than $75 million of investment in property and equipment and a projected 370 jobs. More than 3,800 jobs also were retained, according to the data.
City and Allen County officials also have said the two local governments need to more closely align their abatement policies and set up common standards.
“The closer aligned the city council and county council are to each other on their abatement policies, the better off we all are as a community,” County Council President Larry Brown said.
One glaring difference in the city and county policies is the fact that Fort Wayne sometimes grants tax phase-ins for retail and professional developments such as car dealerships and doctor's offices, while the county does not.
City Council President Tom Smith said he and Brown would talk early next week about setting up a joint city-county subcommittee to study the issue. A county council subcommittee has already been formed, Brown said.
Overall, tax abatement accounted for only a sliver of local tax incentives in 2011, according to city figures. Homestead tax deductions comprised the vast majority of incentives that were awarded, according to the data.