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City Council OKs new rules for biz tax breaks

Wednesday, February 27, 2013 - 6:33 am

Fort Wayne City Council on Tuesday passed an updated tax-incentive policy meant to beef up the city's focus on job creation and higher wages as the criteria for companies to get tax breaks.

Council members unanimously approved the new policy, which updates the city's scorecard for evaluating tax-break applications and sets up an extra layer of oversight to make sure companies follow through on the job-creation pledges.

“As we looked at the existing policy, there just was not an emphasis on job creation,” said Councilman Russ Jehl, R-2nd, who was part of a city-county committee that spent several months updating the policy. “A retained job was treated the same as a created job.”

Elissa McGauley, an economic development specialist with the city, said the old policy gave companies the same score for jobs retained and created as a result of investments in property or equipment.

The new policy separates retained and created jobs into different categories, awarding more points for created jobs, McGauley said.

Under the new policy, fewer companies may qualify for the maximum 10-year tax abatement, according to city officials.

For example: Over the past year, 37 companies – almost every one that applied – got a 10-year tax break. Under the new guidelines, just 17 would have qualified for the maximum benefit, said Adam Welch, a city economic development specialist.

The new guidelines also use median salary instead of average salary when determining the wages created with help from tax breaks. Because a few high-paying jobs can create a misleading impression of average wages, using the median wage will give a clearer picture of how much the typical worker will be paid.

The policy also adds an extra annual compliance form on which companies will need to list the specific jobs created, based on job codes used by the U.S. Bureau of Labor Statistics.

But the new policy didn't pass council without a few tough questions. Councilman John Crawford, R-at large, said the city still hasn't found a good answer to a key question – do the tax breaks really incentivize job creation or just reward it?

In other words, would any of the companies that get the tax breaks cancel their expansions without the help?

“Are we really incentivizing job creation, or are we just being a welcome wagon,” Crawford asked.

In some cases, McGauley said, the city may never know the answer to that question because it cannot force a company to admit that it would have invested in a project with or without help from the city.

Local union officials, who have often criticized the city's tax-abatement policy as too lenient, complained Tuesday that they were excluded from the committee that worked on the new policy.

“What was really disconcerting to us is we were never asked to be part of this process,” said Tom Lewandowski, president of the Northeast Indiana Central Labor Council.

City officials said they sent Lewandowski a letter last summer inviting him to give his input on the policy.