Specs to avoid abatement review

February 3rd, 2016

News Coverage:

February 3, 2016

Specs to avoid abatement review

Policy change won't apply to current vacant buildings

DAVE GONG | The Journal Gazette

Companies that are given tax abatements for shell buildings will now be exempt from the city of Fort Wayne’s annual abatement review process.

Under the amended policy, approved in a 6-2 preliminary City Council vote Tuesday with one councilman abstaining, shell buildings will not be subject to the review. 

Typically, companies with projects that receive tax abatements, which phase in taxes over a three-, five- or 10-year period, must prove they are substantially meeting their projected job creation, salary and job retention goals. If the council finds a company is not in compliance with the goals it laid out in the abatement application, council members can vote to revoke the abatement or grant the company a waiver of noncompliance, which continues the abatement anyway.

Shell buildings – also known as spec buildings – are empty structures that can easily be modified to fit the needs of a potential tenant or buyer. Companies interested in shell buildings are typically interested in starting operations as quickly as possible and do not want to wait to build a new building on their own. 

Councilmen Paul Ensley, R-1st, and Jason Arp, R-4th, voted against the proposal. Councilman Michael Barranda, R-at large, abstained.

Council President Russ Jehl, R-2nd, said amending the existing policy was a common-sense way to eliminate a “catch-22” that would limit developers’ ability to build shell buildings in Fort Wayne. 

“We also wanted to make sure that we don’t require them to make wild guesstimates on the number of jobs created and the salaries that will be created,” Jehl said. “It’s just asking for something that with a spec building you just can’t do and was creating an unnecessary barrier to the development that we want.”

The policy changes will affect any new shell buildings constructed in the future and will not affect any structures with existing abatements.

Referencing the existing abatement review guidelines, Barranda said he does not plan to necessarily adhere to the existing policy and would make his own decisions based on each individual project. 

“If there’s a vote in favor of this particular amendment for a policy that I don’t particularly plan on adhering to, will it be helpful to allow you to bring spec buildings proposals forward? Sure, but I plan on making my own assessments outside of the previous phase-in policy,” Barranda said.

John Urbahns, executive vice president of economic development at Greater Fort Wayne Inc., said he understands the councilman’s position but that it’s important the council have some kind of a policy so economic development officials can provide interested companies with an idea of what the council looks for in a successful abatement application.

Urbahns and Elissa McGauley, the city’s economic development specialist, appeared before the council Tuesday to explain the proposed amendment.

“Without council having a policy, we’re shooting in the dark and when we’re talking about people who want to make investments in our community, want to bring jobs to our community, I don’t want to shoot in the dark as to what’s going to happen to them at the end of this table,” Urbahns said. “I want to be able to give them some surety as to what council believes, no matter what the policy is, I think it would be good to outline what the policy is.”

Urbahns said he would be open to meet with council members to help develop the policy moving forward.

After the meeting, Jehl acknowledged that with four new City Council members at the table with differing opinions, it’s likely the council will have deeper discussions regarding the city’s tax abatement structure in the future.

The amendment approved Tuesday will be voted on for final passage at the council’s meeting next Tuesday.