City considering abatement terminations, continuances

The city of Indianapolis is in the process of rescinding or continuing property tax abatements granted to several companies, including a local business later purchased by 3M Co. for $1.2 billion.

The Metropolitan Development Commission met Wednesday afternoon and preliminarily approved rescinding three abatements and continuing two others while those companies work to meet the requirements of the tax benefits.

The five companies were approved for the abatements between 2005 and 2007 and have collected as little as nothing to more than $140,000 in benefits.

Abatements are an economic development incentive awarded to offset property tax costs in exchange for adding jobs and purchasing equipment. They’re typically awarded to companies over several years. Property taxes typically increase annually during the life of the abatement.

Aearo Co., now a 3M division on the northwest side, has received tax breaks worth $143,76, but has yet to satisfy job-creation requirements, prompting MDC to preliminarily rescind the abatement. But the city continues to discuss the issue with company executives and likely will recommend MDC continue the abatement at its April 20 meeting, when decisions on all the abatements will be finalized.

The maker of earplugs and specialty composites said in March 2007 that it planned to add an earplug manufacturing line that would create 48 jobs, and spend $6.7 million to add office space and a 12,000-square-foot acoustical test facility.

Aearo, 5457 W. 79th St., has more than 300 employees in Indianapolis. Minneapolis-based 3M purchased the company for $1.2 billion in November 2007.

3M has spent $1.7 million on equipment and invested $15.6 million in land and buildings, nearly double the amount it agreed to spend. The company is just six jobs short of fulfilling the 48 it said it would add, according to the city.

MDC also agreed to continue abatements for manufacturers Hoosier Gasket Corp. and The Mitchel Group Inc. due to “circumstances beyond their control” related to the recession, MDC spokesman John Bartholomew said.

Hoosier Gasket, located in Keystone Enterprise Park, agreed in May 2006 to invest $2.5 million in a 135,000-square-foot manufacturing and office facility at the park, and create 90 jobs.

Ben Jackson, executive vice president and an owner of the company, said it made the promised investment in 2007 but has yet to create the expected jobs. Hoosier Gasket, which has 140 employees, has added jobs but lost others by attrition, making it difficult to pinpoint just how many jobs the company has created, Jackson said. The company had 178 employees before the recession.

Even so, he expects Hoosier Gasket to ramp up hiring and meet abatement requirements by this time next year.

The company makes gaskets for Chrysler Group LLC, Ford Motor Co. and General Motors Corp., as well as for Columbus-based Cummins Inc.

“Our business is very reliant on the automotive and heavy-duty [truck] markets,” Jackson said. “We were absolutely turned upside down by [the recession].”
 
Hoosier Gasket has received $21,748 in tax benefits, according to city records.

Meanwhile, contract manufacturer Mitchel Group on the city’s near-east side agreed to retain 238 employees and invest $1.3 million in a 20,000-square-foot addition to its building.

The company made the promised investment but cut its headcount to a low of 105 before rebounding to the current 160, Mitchel Group CEO Brad Smith said.

Mitchel Group was hit particularly hard during the recession by a lack of business from one of its largest customers, engine maker Cummins Inc.

“We hit a bottom like everyone else, and we’re charging back,” Smith said. “We’re not up to the number [of employees] we were when we got the abatement, but I think we’ll get back up there in the next couple of years.”

Mitchel Group received its six-year abatement in October 2006, though the addition was first recorded on 2008 property taxes, giving the company until 2013 to meet abatement requirements, Smith said.

The company has received $44,695.11 in benefits, according to city records.

Companies set to have their abatements terminated are Kyler Brothers Services Inc. at 4355 Lafayette Blvd. on the city’s northwest side and Super Port Holdings Inc. at 7051 Pierson Drive on the city’s far west side.  

Neither company claimed any tax benefits, Bartholomew said.

Kyler, a heating, ventilation and air-conditioning company, made a $1.1 million investment but did not fulfill an agreement to create 10 jobs and retain 50 others.

Super Port, which no longer operates, didn’t hire 251 employees nor did it make a required $3.1 million investment.