Bloomington’s city council asks for dollar amounts on active tax abatements, accepts report saying all are in “substantial compliance”

cropped tax abatement 2020-08-02 at 4.39.40 PM
Image links to dynamic version of the map, with clickable dots that reveal links to the resolutions on the tax abatements approved by the Bloomington city council, including vote tallies.

At last Wednesday’s regular meeting, Bloomington’s city council accepted a report about tax abatement activity over the last year, from the city’s five-member economic development commission (EDC).

The oldest tax abatement reviewed by the council dates back to 2013. The most recent one was last year.

By accepting the report, without taking further action, councilmembers were acknowledging that the companies are in “substantial compliance” with the commitments they made—related to jobs and affordable housing—that led the city council to grant them a tax abatement.

Councilmembers have requested that city staff provide some followup information, about the dollar amounts of tax abatements.

And the city council will likely soon be asked to approve revisions to the  guidelines on tax abatement compliance. The point of the revisions is to ensure that affordable housing projects don’t get analyzed as non-compliant due to a failure to create or retain the jobs they indicated in their applications.

Councilmembers chaffed a bit at the lack of some information they had wanted to see in the presentation, which was delivered to them by Jane Kupersmith, assistant director for director small business development.

Councilmembers want the city’s department of economic and sustainable development to follow up with some additional data—on the dollar amounts of the taxes that have been abated so far.

Generally, tax abatements are granted on a 10-year schedule, with full abatement the first year.  After that, the amount of the abatement decreases—about 10 percent less abatement each year. Over the course of 10 years, a company generally will have paid about the same amount in taxes as the total amount of taxes that have been abated.

The report delivered to the city council on Wednesday had been reviewed by the EDC two weeks earlier, on July 15. It covered nine different tax abatements that had been approved by the city council, at seven different locations. Three of the abatements were granted for the Cook Medical and Catalent facilities at 1300 Patterson Drive.

The aggregated number of proposed new jobs for all the tax abatements was 336 with total salaries of $18,635,104. According to the report, the actual number of jobs created was 1,119, paying a total of $69,248,917 in salaries.

Kupersmith said that much of the overachievement of the numbers was due to Catalent, but said the other tax abatement had also generated more jobs. Hoosier Energy said in its application that it expected to create zero new jobs, but has created 16.

Besides a lack of dollar figures for taxes abated, another point of some friction for councilmembers was a slide in Kupersmith’s deck showing details for the Urban Station development on Walnut Street. The estimated “retained employment” was 10 jobs, but the actual retained employment was recorded as “not applicable.”

The response, which came from economic and sustainable development director Alex Crowley, was to point to a possible need to revise the guidelines for judging compliance. “I think this is a good example of where the guidelines are perhaps not set up correctly,” Crowley said.

Crowley said that Urban Station’s tax abatement was granted based mostly on the commitment to provide affordable housing—five one-bedroom units and five two-bedroom units, for a 99-year term.

So Urban Station’s compliance with its commitment should be judged mostly on whether it has actually built the affordable housing units, which it has, Crowley said.

Councilmember Isabel Piedmont-Smith, who raised the issue, pointed out that the number of retained jobs was a part of the statement of benefits Urban Station had submitted. “I understand that the main benefit of project was the workforce housing. But still, shouldn’t we hold them to what they promised, even on the employment?”

Councilmember Jim Sims said he was looking for accountability on any non-compliance. “I’m looking for documentation or explanation.”

Based on the discussion Wednesday night, it sounds like the city council is likely to be asked to approve a change to the guidelines, so that affordable housing would be put on par with job creation, when it comes to granting and evaluating tax abatement proposals for compliance. Bloomington’s tax abatement program was last approved in 2011.

Geoff McKim, a county councilor who also serves on Bloomington’s EDC, which had reviewed the tax abatement report, said in a statement to The Square Beacon: “We fully discussed all of the cases where the abatement recipients were not in strict compliance, but reviewed and understood the reasons why they should still be found in substantial compliance.”

McKim also supports the revision of the abatement guidelines to put affordable housing on par with job creation: “I also want to encourage the council to move forward … to revamp the abatement guidelines to designate affordable housing as a goal of equal priority to job creation, not a subordinate or supporting priority.”

It’s not clear if Bloomington’s city council had an opportunity at Wednesday’s meeting to take action to rescind a tax abatement, if the council had found that a company was not in compliance.

The statute discussed at Wednesday’s meeting gives the city council a 45-day window to initiate action on non-compliance. The council’s deputy administrator/attorney Stephen Lucas said that the due date for companies to submit their documents this year was June 15.

Lucas said that the day of the meeting (Wednesday) was the next-to-last day before the 45-day window closed. “If the council wanted to pursue that option, we would need to mail a notice to any property owners tomorrow,” Lucas said.

The statute describes the 45-day window not as keyed to the due date, but rather to the date that the documents are received: “Not later than forty-five (45) days after receipt of the information described in section 5.1, 5.3(j), or 5.6 of this chapter, the designating body may determine whether the property owner has substantially complied with the statement of benefits approved under section…” IC 6-1.1-12.1-5.9

The Square Beacon has submitted a formal records request to find out when the relevant documents were received this year by the city council, which is the “designating body” for tax abatements.

One thought on “Bloomington’s city council asks for dollar amounts on active tax abatements, accepts report saying all are in “substantial compliance”

  1. Good article! However, I might disagree slightly with “The point of the revisions is to ensure that affordable housing projects don’t get analyzed as non-compliant due to a failure to create or retain the jobs they indicated in their applications.” More broadly, the purpose of the revisions would be to ensure that affordable housing projects don’t have to be justified on the basis of (as well as held accountable for) job creation (i.e., this is applicable to *future* applications even more than existing projects). Creation of affordable housing units is an independent policy goal expressed by both City administration and City Council, and the economic development tools available should be able to be deployed in service of that goal.

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