City Eyes Unique Tax Abatement Program

(posted 7.22.09)

A new type of tax abatement plan is expected to be heard at the August 5 Metropolitan Development Commission meeting. At that time, the MDC will review a proposal that will make speculative tax abatements accessible to Holladay Properties.

The speculative abatements are now in the negotiation stages between Nick Weber, Deputy Mayor, Economic and Workforce Development, and Chris Wilkes of Holladay Properties. Holladay Properties is the owner of the 1,500 acre Ameriplex Industrial Park in Decatur Township, but the program is designed to spark interest in Ameriplex's ten sites, dubbed World Connect. The sites are located by the proposed airport runway south of I-70. "This is just to get the structure in the ground before the tenants" Weber said.

Weber is excited about the unique program because it provides "a true numerical benefit" to the city. The city will receive guarantees of $4.9 million in property taxes and $1.5 million in county option income taxes if the developer's commitments are not realized. The program also includes the city receiving one percent equity in the buildings. The city will receive a cash out once the abatement "burns off", or the real estate is sold or refinanced. He said the numbers were developed based on no further incentives being granted by the city.

Weber called Ameriplex environmentally friendly with its certified wildlife habitat. The developer is pushing other environmental standards by making the future buildings LEED certified. Weber thinks the LEED certification is a pretty exciting feature because it will be the first planned industrial development with that rating. "We think that is a pretty neat calling card, quite honestly, for our city," Weber said. "It breaks the mold of what has been happening before."

No payments are required if the developer never starts the development. The city would probably dismantle the program if the land remains grass.

Weber said the city is willing to talk to other developers about creative economic tools because the city recognizes that each project differs, depending on its location.

Personal property abatements are still available for tenants when locating at the site, but they are not automatic like the speculative abatement.