News From Terre Haute, Indiana

June 28, 2013

City Council lets most firms’ tax breaks stand

Notes effects of 2007’s economic downturn

Arthur Foulkes
The Tribune-Star

TERRE HAUTE — Terre Haute business leaders made their cases before the Terre Haute City Council Thursday evening concerning their tax abatements that had been found to be out of compliance with their original terms.

The council reviewed about one dozen abatements, many of which were “out of compliance” only because of paperwork errors. But a few were out of compliance because companies had promised to create or maintain a certain number of jobs when the abatements were granted and since have failed to do so.

Formal council review of abatement compliance is rather new and is a result of tighter city budgets, said Council President Norm Loudermilk. “We are actually the watch dogs for the taxpayers,” Loudermilk said during the approximately 90-minute hearing in City Hall.

Despite some firms not reaching or maintaining employment targets — in many cases targets set before the economic downturn of 2007 — the council in nearly every case permitted abatements to stand in light of economic hardships.

In most cases, the abatements, which are typically phased out over 10 years, had only one or two years remaining.

“If they’re trying to be compliant, I’m absolutely going to be lenient,” said Councilman Jim Chalos, D-at large, one of six council members present for Thursday evening’s hearing in City Hall.

Only a few of the non-compliant abatements were canceled or “denied” by the council. In each of those cases, the companies affected had failed to file the required paperwork and had made no effort to communicate with city officials to keep their abatements alive. One such was Black Dog Ranch LLC, a company that took over the former Standard Register property on Fruitridge Avenue.

On the other hand, companies struggling to meet employment goals that were allowed to retain their abatements included Bemis, DMS Real Estate, Gartland Foundry, Lenex Steel, Newspaper Holdings (The Tribune-Star) and Stone House Farms LLC.

In most of these cases, the recession of 2007-2009 was cited as a reason for the failure of companies to reach or maintain the number of employees promised when their abatements were granted by the City Council. In the case of Stone House Farms, the failure of Pfizer’s Exubera diabetes medicine also a reason for a smaller-than-expected workforce, a company official told the council.

In most cases, each of the firms coming before the council also indicated they have continued to invest in their Terre Haute operations despite operating with smaller numbers of employees than hoped. Bemis, for example, has transferred production to Terre Haute from closed facilities in other parts of the country and has recently added several dozen workers to its payroll in Terre Haute, said Sam Weatherford, who spoke on behalf of the plastic packaging manufacturer before the council.

Bemis is in a “recovery mode,” Weatherford said.

Some companies chose not to file annual paperwork for their abatements because they believed the abatements had expired. In other cases, they chose not to file because the abated property has worn out or is of little current value, company officials said. Abatements can be granted for real estate or for equipment investments.

Property tax abatements are designed to encourage new business investment by reducing property tax burdens. In most cases, they are granted for 10-year periods and forgive approximately one half of the property taxes due during that time.

Because the revenue that must be raised to pay for local government is fixed before taxes are collected, tax abatements do result in higher tax rates for owners of non-abated property. However, proponents of abatements argue they encourage investments that otherwise would not happen and – especially in the long run – add new revenue to local government that would otherwise be lacking.

Reporter Arthur Foulkes can be reached at 812-231-4232 or