Elkhart City Councilman questions tax abatement policy
Posted: 07/19/2012 at 1:15 am
By: Dan Spalding
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Votes on tax abatements are often unanimous and debates don’t normally look at whether it is fair to local competing companies. Opposition to companies seeking tax abatement is about as rare as snow in July as it has evolved into a standard recruiting tool eagerly embraced by local communties even though approving requests results in a loss of new tax revenue for sometimes up to 10 years.
But Henke, clearly one of the more outspoken members of the Elkhart City Council, raised that issue Monday during the council’s discussion prior to a final vote on a request by Kiel North America LLC for tax breaks on $3.8 million in manufacturing equipment.
Kiel manufactures mass transit seating systems and already has a strong presence in Europe.
Henke said a local competitor of Kiel contacted him and questioned the fairness of offering Kiel tax breaks.
Kiel has two employees currently in Elkhart and plans to hire 62 people for its future manufacturing facility at 4519 Wyland Drive.
“I’m concerned that the 62 jobs we’re pushing for, we may actually push another company out of business that has successfully been here for some time,” Henke said.
Henke said the company representative he spoke with had worked with the city nearly a dozen times over the years and has never been offered incentives or tax abatement.
Henke did not identify the company.
“Why was one offered abatement and not the other?” Henke asked council members.
From a philosophical standpoint, he added, “We owe our business partners some reasonable discussion on this topic.”
Henke cast the lone vote of opposition when council passed the request, 7-1, Monday. He supported an initial vote two week ago for Kiel’s request.
Barkley Garrett, director of economic development, said the city, as a matter of policy, does not offer tax abatement to existing companies and that companies need to make the request.
Garrett said the city normally makes out-reach efforts to existing companies and pointed out that the Economic Development Corporation of Elkhart County specializes in business retention.
Henke on Monday also questioned whether tax abatement could “destabilize the playing field.”
Garrett said he’s never heard that argument and that he’s not had any existing companies complain about incentives being offered to new competing companies.
Mayor Dick Moore warned the council against making such judgements about competition, saying that the city spends a sizeable amount of money on business recruitment and economic development.
City Councilman Kyle Hannon who works as vice president of public policy for the Greater Elkhart Chamber of Commerce, said he’s suggested in the past the need to hold a workshop on tax abatement issues, but didn’t agree with Henke’s concern.
“If we’re going to offer abatements, we can’t really be selective on what we’re going to do because there is competition,” Hannon said.
Garrett said it’s not the job of government to pick winners and losers, but instead “should create an environment that is conducive to businesses being able to thrive.”
A representative of Kiel did not attend Monday’s meeting but did make a presentation to council two weeks earlier.