By Jim Sack
Almost every month at council, economic development official Elissa McGauley comes down to the council table to testify as to why a certain given tax abatement is good for Fort Wayne. Last night she defended two and got a bit of push-back from council. The abatements in question were for IOM (Lutheran Hospital) and Midtowne Realty. Lutheran wants to add a floor to one of their buildings on west, west, West Jefferson and Midtowne wants an abatement to rehab the old Bonsib Building at Washington and Harrison.
The philosophy goes something like this: to help major projects along we, the citizens, will chip in a bit. In this case, in the form of a tax abatement. The theory is that applicant gets a bit off of taxes that would be generated on new projects that retain or create jobs in the city. Neither of these projects really qualify in that regard.
Lutheran stated on their application that the $34.5 million project would retain some 3,000 jobs. That is simply false. They are not going to pull their jobs if denied an abatement, no jobs will be lost. This is essentially a sweetener, at the cost of a few million to the rest of us, to help the project along. One of the council members made that point. But, it is really not taxes lost because the abatement encourages new construction and new equipment designed to strengthen a company and, therefore, solidify our local economic base. The abatements usually phase out over ten years. So, we give what we haven’t been getting in the hopes that it will add later to the tax base. ? That’s economic development.
Mrs. McGauley agreed that Lutheran will not take their 3,000 jobs to Ligonier if the abatement is not approved, but blamed the form for the misleading wording. Council members asked for a bit more clarity next time. This is not the first time an abatement, generally favored at the table by all by Mitch Harper, was called into question as misleading. He, by the way, supported the abatement after illustrating through a series of questions how important a source of current tax revenues the for-profit IOM system is compared to other local non-profit hospitals.
One councilman also noted that the abatements were initially designed to spur growth in the center of Fort Wayne, not the fringes.
The IOM discussion was followed by a similar untangling of an abatement request by Midtowne Realty which plans to refurbish the building at the corner of Washington and Harrison, formerly known as the Bonsib Building when that leading advertising agency held court there. Dick Bonsib is gone, so the Convention and Visitors Bureau wants to relocated to there from their current digs on Calhoun across from the entrance to the Hilton. Consequently, you and I are again asked to subsidize rehab of the building so the CVB can move. Again, the application noted the abatement would retain a number of jobs, which is technically accurate, but just so much hooey. The jobs would not be lost without the abatement. Midtowne would simply have to pay higher taxes a bit sooner on their improvements and the CVB might have to pay a bit higher rents in their new apartments. This project is not saving jobs, and it is not creating any new jobs, in fact, the CVB is a quasi-governmental organization, so the impact on local free enterprise is nil. We support them through a variety of fiscal entanglements.
This goes back to arguments against abatements. Why should government subsidize free enterprise? Should not the market determine the costs of goods and services, should not the market place be where the strongest survive and inefficient businesses fade. Apparently not. It seems a bit of corporate socialism at work. We compete with other communities for jobs, so abatement deals are made and companies see they can add a bit of sugar to their bottom line, so they play the abatement game. Council would like the explanations, in the future, from Mrs. McGauley, to at least by a bit clearer and more honest, even if the form stands in the way.
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I should add that Elissa is a stellar city employee. If there were forty more of her in the building we could all relax and go home, the community would truly be in good hands. Unfortunately, we find ourselves in the business of using tax dollars to improve the bottom line of private business. Many businesses are either too proud or too disgusted with this system to bother to participate or there would be many, many more companies at the trough. More than a few, however, see the program as there, as legal and their's for the asking, so they ask, and we subsidize their expansion, renovation or growth, whether jobs are actually and truly "retained" or "created." Recently, a study of a similar program on the state level showed very mixed results.