Local authority to regulate business tax abatement is granted by state law.
On Feb. 26, the Fort Wayne City Council passed a new ordinance regarding tax abatement that will align the city’s policy with that of the county and add more accountability and oversight to the process.
I am the co-author of the ordinance, along with Councilmen Mitch Harper (R-4th) and Russ Jehl (R-2nd).
One of the most important accomplishments of the new law is that it changes the way our city will evaluate applications for tax abatement, now referred to as tax phase-ins, because they phase in the amount of property taxes owed over a period of time. The length of time will be determined by the types of jobs created and the benefits paid to full-time employees.
It has been a mission of the economic development initiative Vision 2020 to bring high-paying jobs to Fort Wayne and raise the average wage of area workers. These wages have slipped in recent years to about 80 percent of the national average.
Jobs that pay decent wages with employee benefits will also generate more income taxes for local government. Providing a tax abatement policy that rewards this is one way the city can help encourage business investment and bring in more revenue.
The new policy will also separately reward companies that retain existing jobs but also create new jobs. It will reward companies that provide a broader base for their product to be sold, therefore bringing more outside dollars to Fort Wayne and Allen County. The new system will see fewer 10-year breaks granted and more three-, five- and seven-year tax phase-ins.
The larger the investment by the company in plant, equipment and jobs with benefits, the longer the tax phase-ins will be.
A critical aspect of this new policy is adding a layer of compliance, which will help add verification to the information provided by companies about the jobs they create. In addition to verification required by the state, the city law will require more specific information about the type of job created, the wage it pays, the benefits associated with it and whether it is considered a full-time or a part-time job.
The staff of the Division of Community Development will monitor this data. If a company provides false or misleading information, the City Council can rescind the tax phase-in and require the business to repay what has already been granted.
This provision sends a strong message that city government seeks to encourage business investment but will not tolerate fraud or abuse.
The new ordinance will be reviewed in the next two to three years and is scheduled to sunset on Dec. 31, 2017, unless reauthorized. Adopting identical tax policies will guarantee more cooperation between Fort Wayne and Allen County governments, provide stronger efforts to bring in good high paying jobs, and see that tax phase-ins are complying with the law.