Genesys, city working toward deal on tax abatement issues

City of Indianapolis officials are continuing to work with a San Francisco-based technology company that has failed to comply with job-creation expectations associated with 12-year-old tax breaks for a local subsidiary.

Genesys Telecommunications Laboratories Inc. inherited multiple tax abatements in 2016 when it bought local company Interactive Intelligence Group Inc. for $1.4 billion, but two years ago was stripped of at least one of those deals after failing to meet work requirements. That deal, worth $780,000 over 10 years, was awarded to Interactive Intelligence in 2014.

Now, Genesys is looking to curb additional abatement losses, this time related to a 2007 deal that also dealt with hiring promises. The companies have received tax savings of $1.3 million since the deal began in 2010.

The 2007 abatement stemmed from Interactive Intelligence's agreement to hire 637 employees by the end of 2012, and included an abatement on personal and real property taxes up to $2.5 million over a 10-year period. Interactive was slow to reach its hiring goals, and was in compliance with the incentive requirements for two of the years: 2014 and 2015.

While Interactive hit the employment target by the time it was bought by Genesys—employing 970—the new owner made extensive cuts and saw employees voluntarily leave in droves.

Genesys now employs 800, short of the figure in the abatement agreement, which has continued to raise concerns from city officials that the company isn’t keeping up its end of the bargain.

Genesys representatives on Wednesday told the Metropolitan Development Commission’s Community Economic Development and Incentives Committee it hopes to make addition hires and add to its local $80 million payroll.

The company also proposed multiple changes to the terms of the 2007 agreement, including:

—Retention of at least 800 jobs with an average wage of $35 per hour;

—an agreement to maintain those jobs through at least the end of 2022;

—not filing for abatement after tax year 2019, foregoing the final two years of its eligibility;

—and acknowledging the city’s right to seek damages included in the original agreement for unmet expectations.

”We’ve been working with city staff over a number of months to … keep the company in compliance for the final year of the tax abatement and the two-year compliance period,” said Ginovus Sr. Principal Chad Sweeney, who represents Genesys.

Todd Pedersen, vice president of corporate affairs for the company, said the Genesys has “enjoyed a wonderful partnership with Indianapolis” for the past several years and indicated the compliance issues would not affect the Genesys’ future growth efforts locally.

“Every conversation I’ve been a part of internally is continuing to support what would be laid out in this agreement,” Pedersen said. "We are committed to Indianapolis."

He also said the company would be required to honor its debts if the city decided to pursue damages for compliance failures—about $178,237 over the life of the deal.

But city representatives indicated there was little appetite to claw back the incentives in this case.

John Dillon, president of the MDC, told Pedersen and Sweeney he would like to continue to see job growth for the company and that the city is willing to work with the company.

“However we can help you, keep us (involved),” Dillon said, indicating he is in support of the amending the deal.

The proposed amendment to the agreement is expected to be considered by the full MDC during its May 15 meeting.

In addition to compliance issues with the city, Genesys indicated it has reached an agreement to amend its 2014 tax credit deal with the Indiana Economic Development Corp., worth nearly $17 million.

The terms of that agreement, finalized in January, are similar to the commitments the company has offered the city, though it stipulates the company will have to maintain or exceed current employment levels through 2030.