Tuesday, February 26, 2008

From Council

A CONFIRMING RESOLUTION designating an “Economic Revitalization Area” under I.C. 6-1.1-12.1 for property commonly known as 301 West Jefferson Boulevard, Fort Wayne, Indiana 46802 (Barry Real Estate)
Total cost of $20,300,000

A number of people spoke during the public hearing in regards to the proposed tax abatement for The Harrison condo and retail building, including familiar Harrison Square faces Greg Leatherman, John Kalb, and Jeff Pruitt.

Both Pruitt and Kalb argued that the abatement should not be granted because it did not seem to meet the requirement of the wages created to be 150% of the the minimum wage. Pruitt also argued that a tax abatement would be better utilized if it were serving a different subset of the population and not potential luxury condominium buyers. Kalb pointed out that a package liquor store would not be eligible to receive a tax abatement, which is one of many property types not eligible to receive an abatement. Greg Leatherman later stated that a restaurant with a 3 way liquor license would not be prohibited from serving.

Council spent a good amount of time discussing the tax abatement and what exactly would be covered. It was stated that the abatement would be passed on to the owners of the condominiums and not the developers. The units would be assessed as commercial properties and the tax abatement would be taken into account first and then, if the owner is eligible, a homestead credit can also be used.

Councilman Smith took Pruitt's and Kalb's complaint about the jobs to be created not meeting the 150% wage criteria and asked why an abatement should be granted if not meeting the requirement. The explanation given was that the project would bring increased tax revenues, community benefit, and bring investment to a targeted area.

The last question of the Committee Session belonged to Councilman Harper, who asked if the question of condo owners receiving an abatement had been definitively answered. The answer was that the Auditors had been contacted and that Midtowne Crossing was used as an example, where each unit is examined individually. However, Midtowne Crossing had never applied for a tax abatement and the situation at The Harrison is said to be unique in Indiana.

If The Harrison building (including the condos) is receiving a tax abatement because it is a commercial property, then will each unit be labelled as a commercial property?

At Midtowne Crossing, property tax cards for residential units are clearly labelled as RESIDENTIAL. Commercial units within Midtowne Crossing such as Catalyst Marketing are clearly labelled as COMMERCIAL.

The unaswered question as a result of this is whether or not condo owners at The Harrison will have to apply for commercial loans as opposed to residential loans. Midtowne Crossing, until becoming majority owner-occupied, essentially required commercial loans to be acquired for those seeking residences.

I'm not sure if the type of loan would be based more on the percentage of owner occupancy or how the particular unit is labelled for tax purposes. What kind of loan will be required and how the units will be classified are interesting questions.

The Resolution eventually passed 8 to 1, with Councilman Mitch Harper voting against the abatement, citing likely changes to the tax structure at the Statehouse level.

Also, Tom Smith proposed using 5th Tuesdays as they occur to discuss Council's policy for tax abatements, which the other members seemed to agree with. A good portion of the discussion during the Committee Session was dedicated to what Council policy should be or the manner in which Council policy is understood.


City Council Approves Tax Abatement
Link (FWP)

FWPtv - City Council Tax Abatement
Link (FWP)

Vote: Harrison Square Developers Will Get Tax Break
Link (WANE)

Harrison Square Tax Break Approved
Link (INC)

Condo buyers get extra tax break
Council OKs deal for those at home in The Harrison
Link (JG)

Council OKs Harrison abatement
Link (NS)

Harrison Square condos will get tax abatement
Link (GFWBW)


John B. Kalb said...

Scott - Leatherman's comment on 3-way license for a restaurant not being covered by the prohibitions of Fort Wayne City Code 153.15 was a guess by him. It sure appears that his guess was wrong - see 153.15 which states under project types -(8) "....or any other entity required to operate under a license issued under Indiana Code 7.1, et seq" A 3-way license is issued under 7.1, as is a 2-way or a 1-way, so 153.15 prohibits the common council from declaring such property as being designated as an"Economic Revitalization Area". Barry Real Estate should be advised that our Common Council will be held to this prohibition, should a liquor retailer, a wine retailer or a restaurant apply for a license per IC 7.1 to be used in The Harrison. Council will be asked to repeal it's confirming resolution of last night if any of these prohibited uses occur at The Harrison. John B. Kalb

Scott B. said...

No wonder Indiana has a hard time with economic growth in downtowns. The state creates stupid laws like this one. Maybe they could sue under the 21st amendment and get this law struck down.

John B. Kalb said...

Scott B. - It is not a state code that is involved here - it's a Fort Wayne City Code! See my post,"Corporate Welfare- Fort Wayne Style" at FWP to see why we have problems in sustaining economic growth. John B. Kalb

John B. Kalb said...

So, per your latest poll, 31% of the votes went to uses which cannot be tax abated per city code. And I assume that percentage-wise, more than 50 % of the assessed value of the retail space will also fall into this category. So, maybe this will not be so bad as we thought. John B. kalb

Scott B. said...

My mistake, John. Thanks for pointing it out.

shannon said...

I own a "restaurant with lounge" in Terre Haute, and had to get a 3-way license before I could get my business loan.

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