This evening, the Monroe County Economic Development Commission (EDC) voted 3-0 to recommend that the Monroe County Council grant a tax abatement to TASUS Corporation. Tax abatements are always a controversial subject, and I hope to blog about them frequently in the months to come — but I wanted to use this opportunity to talk a bit about the process and the various bodies that are responsible for considering and approving (or rejecting) an application for a tax abatement.
Here is the Meeting Packet that includes the abatement application. TASUS manufactures plastic injection molded parts for the automotive industry, and is requesting a $1.95M personal property tax abatement for the purchase of a 1450 ton injection molding press, along with some associated equipment to run the press. If granted, this means that the company would not pay all of the new property taxes associated with the value of the new press they are purchasing, over the period of the abatement (typically 10 years). As with any tax abatement, this would not reduce any of the company’s existing taxes — it would simply phase in the new taxes associated with the value of the new equipment they would like to purchase and install (although of course at the same time, with personal property, e.g. manufacturing equipment, the value and the taxes owed would also decline over time as the equipment depreciates).
For tax abatements in the unincorporated area of Monroe County (and that I what I will be talking about in this post), the County Council has the final authority on granting a tax abatement. However, before the final vote by the County Council on granting the tax abatement, the County Council must first vote on declaring the area in which the abatement is being considered an economic revitalization area. An economic revitalization area is defined by Indiana statute as “an area which is within the corporate limits of a city, town, or county which has become undesirable for, or impossible of, normal development and occupancy because of a lack of development, cessation of growth, deterioration of improvements or character of occupancy, age, obsolescence, substandard buildings, or other factors which have impaired values or prevent a normal development of property or use of property.” (IC 6-1.1-12.1). The County Council must also hold a public hearing before designating any property as an economic revitalization area, and there are advertising requirements associated with this hearing.
In this particular case, the County Council had already declared the TASUS property an economic revitalization area back in late 2010, when the company applied for and received another tax abatement for purchase of an identical piece of equipment. At that time, Tasus officials told the Council that they had hoped to be coming before the Council for another tax abatement on an additional piece of equipment, if their contracts with their customers panned out.
While the Council has the final say in granting the abatement, the abatement application must first be reviewed by the Economic Development Commission (EDC), which consists of an appointee of the County Council (currently Greg Travis), the County Commissioners (currently Kirk White), and the Bloomington City Council (currently Regina Moore). The EDC is an extremely important commission that performs an investigative function; they review the abatement application and statement of benefits, talk with company representatives and members of the public, deliberate on the application, visit the company’s facilities if necessary, and ultimately make a recommendation to the County Council on whether or not to support the application. In this particular case, the EDC voted to recommend approval of the abatement application to the County Council.
However, since the TASUS property is in one of Monroe County’s Tax Increment Finance (TIF) districts (the Westside Economic Development Area, also sometimes called the Richland TIF District), there are two additional steps required for approval of the abatement.Because any reduction in taxes collected within a TIF district could theoretically affect the ability of the TIF district to pay the bond associated with the infrastructure in the district, the Redevelopment Commission, which is the appointed body that oversees the finances of the TIF district, must first give its approval to the abatement. In this particular case, the RDC wouldn’t have much of a stake in the project, because the Westside TIF district doesn’t capture personal property taxes anyway (except for personal taxes from General Electric). The RDC approved the application in November.
The other step required is a new step created by legislation in 2010. When a tax abatement is requested in a TIF district, the legislative body that created the TIF district (in our case, the County Commissioners) must also approve the statement of benefits for the project. The Monroe County Commissioners approved the statement of benefits unanimously, through resolution 2011-54, in their meeting on 12/2/2011.
In short, the following steps are statutorily required for approval of a tax abatement in Monroe County:
- Approval by the Redevelopment Commission (only if the property is in a TIF district)
- Approval of the statement of benefits by the County Commissioners (only if the project is in a TIF district)
- Recommendation by the Economic Development Commission
- Designation of the property as an Economic Revitalization Area by the County Council (after conducting a public hearing)
- Approval of the abatement by the County Council
There is some debate about the best order to perform these steps (other than the obvious, which is that approval of the abatement by the County Council can’t occur before the other steps!) — this is again a topic for another posting.
The upshot, in this particular abatement application, is that, since steps #1-4 have been met, the final step is for the County Council to vote on the abatement application. This vote will likely be held in December of 2011.
I know that this discussion was very compressed, and that each statement could probably be accompanied by another page of explanation and discussion; hopefully it was useful nonetheless in explaining the process through which tax abatements are considered in Monroe County.