GREENFIELD — A new fee being considered by the Greenfield City Council and the Hancock County Council would mean companies that receive tax abatements would contribute more financially to the city.
The fee would be paid annually. Companies would pay either 5% of the tax revenue they would have paid during the year if not receiving an abatement or $100,000, whichever is lower.
The fee would be paid toward the operations of the Hancock Economic Development Council. Randy Sorrell, executive director of the council, said the move is intended to make businesses that receive substantial tax abatements participate more directly in giving back to the community.
“When I stepped in here, we were talking about how we can engage (businesses) more to participate in what we’re doing,” Sorrell said at the city council’s meeting on Wednesday, Jan. 22.
Sorrell said a 2006 state statute allows cities to collect fees of up to 15% of the tax revenue they are missing out on by granting an abatement. The funds are to be used for economic development purposes. While that would be a substantial amount of money, he found that several cities, like Valparaiso, imposes smaller fees of 4% to 5%.
Sorrell said Johnson County and cities in Boone County have recently moved to enact similar fees.
Businesses that receive tax abatements file a form with the county every year, Form CF-1, that lists information about the business, enumerating things like how many employees they have and how much they are paid. These forms are often used to demonstrate the value a business has contributed to the county. Sorrell said Hancock County businesses submit their CF-1 forms on time — but that may not mean much.
“What we don’t know is if they’re worth the paper they’re written on,” Sorrell said. “That is, are the numbers true? You can always drive by and see if a building is there or if they’ve made an addition to it, but we don’t know how many employees they have. We don’t know what their wages are. We haven’t had the resources to validate and verify these things. So we thought that we would like to do our jobs and do them better, and this would be a way that basically, they could pay for their own policing.”
Council members said it would be helpful to have more verified information about the businesses that receive tax abatements.
If the fee were to be enacted, it would apply only to new tax abatements, not to anything already in place. Entities that did not pay could lose their abatements.
The city council was also asked to consider a new standardized application for the tax abatement process, which would require a $500 application fee.
Sorrell said the vast majority of tax abatements in Hancock County are granted by either the county government or by the Greenfield City Council. The Hancock County Council also is considering the fee.
“Obviously it’s going to take years for this to start generating any meaningful fees,” Sorrell said. “But I would like to think that as companies that are receiving abatement are paying fees in, maybe the requests that my organization makes to the city and county go down somewhat. Right now, I appreciate a lot the generosity of the city toward our organization. I appreciate that the city’s always seen the value in what HEDC does. But ultimately, you are giving my organization taxpayer funds when we have big taxpayers that aren’t participating. I’d like to see those scales get balanced.”
Both the county council and the city council plan to vote on the proposal at Feb. 12 meetings.