Wednesday, November 28, 2007

Tax Abatement 101 for City Council

Well, they are at it again...

Please read Kevin Leininger's article in the NS:

I would like to discuss granting a tax abatement to "A $4.9 million, 60-unit apartment complex to be built at 6901 Huguenard Road by Keller Development Inc., which would create one full-time job. Fifty-seven of the units would be reserved for moderate- or low-income residents."

This apartment complex will be located at the very edge of Fort Wayne away from Downtown...

The apartment complex will create ONE full time job.

And our City Council has decided allow this company to pay less in taxes and City Council has decided to pass those taxes onto the backs of the rest of Fort Wayne's business owners.


Mike Sylvester


Parson said...

The city council loves those tax abatements it seems. They don't even seem to have a set of rules to follow. Do you think the new city council will do better or is it going to be the same?

Robert Enders said...

Wow. This city has a housing surplus, market property values are going down, and assessed values and taxes are going up. Yet they want to subsidize more housing?

Tim Zank said...

I guess on the positive side, at least it's not a Burger King, huh?

Eric Schansberg said...

I just posted on the same thing tonight with Kentucky and Ford...

Rachel said...

Fort Wayne tax abatements: Ask and ye shall receive.

Jeff Pruitt said...

Leininger is wrong. The city council did not approve an abatement for that project. All they did was introduce it so that it will be discussed in the finance committee. They also scheduled a public hearing for the project on 12/11 as well.

Anyone for or against the project is allowed to speak at that time...

LP Mike Sylvester said...


Thanks for the info. I assumed the article was correct...

I take it you are against this?


J Q Taxpayer said...

The PROPOSED tax abatement is 90-80-70-60-50-40-30-20-10% discount on improvements over ten years. The current tax for the property is not part of this discount.

I am not sure how this deal is assembled. But seeing what is happening in other states. To get the federal HUD financing nearly requirement in order for the rent numbers to work.

I read a real long story on this a couple of years ago and it was a real mix of nuts and bolts.

It does provide lower income families to have a nice safe area to raise a family.

Maybe Karen Goldner can jump in on this subject and explain this to us so we undeerstand. That is if she has ever worked on such a deal in her past.

My first thought is WHAT THE HECK IS GOING ON NOW but I also know how they work. When my wife and I was first married we lived in Terra Appartments off of Coldwater Road for three years. I was working and attending school and so was the wife. Hence, our income was pretty low. But it afforded a nice place to live based on our income.

So Karen if you can teach us little we would be all eyeballs in reading it.

Karen Goldner said...

Tax abatements on multi-family property are typically (but not always) associated with projects financed by the federal Low Income Housing Tax Credit. That is a very complicated system that I don't particularly like (the amount of money sucked out of those projects to pay the lawyers and accountants is, IMHO, appalling), but LIHTC is not the topic here. Plus whether I like it or not, it's just about the only game in town for financing affordable housing. And if the local jurisdiction doesn't kick in something, the tax credits will be awarded to other communities and we'll have zip. The "cheapest" way for the city to contribute to these projects is through tax abatement.

I agree with the public policy of supporting affordable housing by phasing in the increased taxes due to increased assessed value. JQ is correct in his description of how abatements work. In any abatement, the City agrees to receive less in NEW taxes than normally would be paid, for a period of time, in order to induce the creation of that new assessed value. And I believe encouraging affordable housing in all parts of the community is significantly better than a policy which directly or indirectly concentrates lower-income people in one part of town.

Given how soft the rental market is right now, I'm not sure there is a pressing need for more rental housing. I've not seen a market study for this project, however, so I am certainly willing to admit I could be wrong.

Bobby G. said...

Gee...with over 400 EMPTY houses on the south side, you'd think they could toss a lot less money into THEM and get people living THERE...nah, too simple and not costly enough to the working taxpayers.

OR...they could build up NORTH where all the higher income people could provide an example of how people CAN be productive...nah, it's the NIMBY syndrome.

What council SHOULD do is give ME an abatement...for all the "stuff" I have to live with daily while paying MY taxes...nah, to novel an idea for them.

The city's tax base is as eroded as a New Orleans levy (thanks to so many abatements and lazy people)...better call in the Army Corps of Engineers for this one.


steve said...

Thanks for the explanation, Karen. I did not know how the financing of middle-income housing worked. I agree, too, that affordable housing is important, and that the city should make it work.

Jeff Pruitt said...


Of course I'm against it. The city shouldn't be subsidizing the housing market - period. We're creating more and more housing in a city that simply doesn't need it and a big reason that's happening is because it's profitable ONLY due to government subsidies. What does an oversupply of housing do to prices? Check your own home's "appreciation" for the answer.

This has been my chief complaint with city council for years now - there's NO FOCUS. Their policies are all over the map and don't seem to promote any specific plan or vision. We want to redevelop the core so we subsidize housing on the outskirts of town? We give an abatement to Subway when their plans don't even follow the city's own design guidelines for downtown? We build a parking garage when the city's own study said it would be contrary to economic development? I could go on and on.

Revitalization will occur when we stop this haphazard approach to planning and development...

J Q Taxpayer said...


Thank you for explaining how it works. We may agree or disagree on if we need such but knowing how it works is a good starting point.

Bobby G.

Why not try talking the city into placing video cameras on your street. Put a small flashing blue light on them so everyone knows. I bet the number of problems on your street will go down. The drug dealers and the gangs sure will not be plying their trade on your street.

Having the cameras would be no diff then having a police car setting on your street (which we can not afford to do).

Phil Marx said...

This might be worth considering if it were actually designed to help the low income people, but I don't think that's the case. For $4.9 milllion you could give each of the sixty renters a $400 credit per month for seventeen years.

Now, when you consider that many of these renters will probably also bring federal subsidizizing dollars with them to the apartment owner, it becomes apparant that this scheme is really designed to financially assist the owner of the apartment complex, not the renters.

However, since you can't fight City Hall...I am very pleased with all these senseless subsidies. I think the time is right to remind the Council of my previous request that they buy me a new car.

Phil Marx said...

JQ Taxpayer,

I don't see where Bobby G mentioned crime in his neighborhood, but since you brought it up, I'll respond.

My neighborhood is an open-air drug market. It has been that way for longer than the twelve years I have lived here. For several years, I had offered to let FWPD place cameras and officers on my property and even inside of my home to get to the root of this problem. When it became apparent that FWPD was unable or unwilling to deal with the problem, I began looking elswhere for help. All other levels of government (County, State, Federal) referred me back to FWPD.

I do not mean this as a personal insult towards you, but I think your comment is naiive. I don't think FWPD or any one else in power really cares much about crime unless it directly poses a threat to them keeping their job.

(By FWPD, I am referring to the command structure and the beuracratic chiefs, not the individual patrol officers.)

J Q Taxpayer said...


See I can not fully understand your living condition as I have never lived it. So, since I have not walked in your shoes I can only GUESS what it would be like and it is not something I would like.

I know the FWPD Command offered to put some cameras in some crime areas within Fort Wayne and it was rejected by people living in the area.

Today camera systems are fairly cheap compared to the cost of one police officer (car, supplies, salary, gas and all the other items needed). Talk to your City Council person to see if they could use your street as a trail for such.

From my own viewpoint I would rather have a camera watching the street I live on then having gangs and drug dealers ruling it.

Phil, I am not offended by your comments as I only can guess what is going on in your neighborhood by your comments.

Rattle cages. Raise hell at open mikes at city council meetings. You yell long enough they will listen.

david said...

Jeff is right - one of the best ways for Ft Wayne to revitalize is to plan and target where we want to give incentives (like for infill development) rather than blindly giving incentives to anyone that comes to the door. Once you open that floodgate it never stops. I encourage city council to set guidelines and stick to them in all circumstances.

Bobby G. said...

I've suggested to my quadrant captain about camera installs, and like Phil, I have offered MY house and garage as a surveillance point for camera placement.
TO no avail (as yet).

It makes you wonder every day what "incentive" you have (on the south side) to remain,and then you realize you haven't the disposable income (like the city does) to effectively remove yourself from the problem area.
I still maintain that people like Phil and myself should be the ones receiving ANY abatements....simply due to our "willingness" to stick it out in an otherwise deteriorating situation.


Dave MacDonald said...

Bobby G.,

Have you considered running a McDonald's or Subway out of your home?

Bobby G. said...

No, I but I did give DUNKIN DONUTS a passing thought...
(for both the ABATEMENT as well as POLICE presence)
2 birds - 1 stone thing, eh?



Phil Marx said...

Bobby, I'm setting up a blog to tell my story. I'll be posting there soon.


Anyway, back to Mike's original story about the Council giveaways. Any bets on what's next? Maybe a tax abatement for Poor John's strip bar so they can afford to paint the building.

Robert Enders said...

Phil, would it be alright if I posted a link to your blog?

Phil Marx said...


Yes, please do post a link. But wait a little while. I'm busy with school now, but I'll start posting in a couple of weeks. I'll e-mail you as soon as I am active.

William Larsen said...

WE finance our infrastructure through property taxes. These apartments will house families and these families will send kids to school. As one person already stated, we have empty homes already. Why on earth does city council do this?

Tax abatements is an addiction. There is no free lunch, yet city council thinks that at the end of this abatement period, they will see tax revenues, wrong. At the end of the abatement period the developer will flip the complex and the city will give yet another abatement to attract a new buyer.

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