Allen County leaders see tax phase-ins as needed tools for economic growth

January 25th, 2016

News Coverage:

Friday, January 15, 2016 7:45 AM

Allen County leaders see tax phase-ins as needed tools for economic growth

By Kevin Kilbane,

During their meeting Tuesday night, Republican members of the Fort Wayne City Council signaled a possible shift toward a more conservative approach to approving tax phase-ins for businesses. But Allen County leaders don't expect to make a similar change.

"They are the only financial tool we have to attract businesses, and everybody else is using them," said Nelson Peters, R-1st District, president of the Allen County Commissioners.

Communities in Ohio and Michigan won't stop using tax phase-ins — also known as tax abatements — so not offering them would put Allen County at a disadvantage, Peters said.

Roy Buskirk, Allen County Council president, said he was surprised some city council members may be interested in reducing use of tax phase-ins. Buskirk believes the county council still will support using them to spur business and economic growth.

At City Council's meeting Tuesday, new members Paul Ensley, R-1st, and Jason Arp, R-4th, voted against approving all three tax phase-in requests on the agenda. Two passed by a 6-2 vote, but Ensley and Arp were joined on the third request by Dr. John Crawford and Michael Barranda, both at-large Republicans. That resulted in a 4-4 tie and stalled the request by Women's Health Advantage for tax phase-in on a new, $4.5 million medical office building the business hopes to build in Lutheran Medical Park.

After the meeting, City Council President Russ Jehl, R-2nd District, said there seems to be interest among city council members in tightening up use of tax phase-ins.

A tax phase-ins allow a company to gradually build up over a period of years to paying the full amount it owes in local property taxes. The city can offer tax phase-ins only on new investment in the city limits, and Allen County can offer them only on new investment in unincorporated areas of the county. The phase-ins must be approved by the city council and county council, respectively.

If some city council members are concerned about how well companies follow through with what they pledge to do in return for the tax phase-in, Peters agrees the city and county need to do more to track businesses' compliance.

When making a decision about whether to approve a tax phase-in, a key factor should be the value of the jobs created by the business' new investment, Buskirk said. If the jobs are low-paying, it doesn't make sense to offer the company big incentives to locate here because any gains in salaries paid could be offset partially by workers' needs for food stamps or other assistance.

For example, Buskirk said, the Women's Health Advantage request to city council reportedly would create 12 new jobs paying about $27,650 per year and save 60 existing jobs paying an average of about $62,000 a year.

But the company isn't likely to leave Fort Wayne, Buskirk said, and the salary for the new jobs works out to earning $13.29 per hour. The $27,650 annual income would leave a family of four with income just over the 2015 federal poverty level of $24,250.