Aspire Discusses Use of Economic Development Incentives

As cities and towns in Johnson County and South Indy work to expand their economic development efforts, Aspire Economic Development + Chamber Alliance stands ready to assist them with the tax and training tools needed for success.

“Aspire is encouraging municipalities to use these tools very strategically,” said Vice President of Economic Development Amanda Rubadue. “It’s important to develop the most aggressive package for projects and companies that will have the greatest impact on raising our community’s average wage and growing diversified, sustainable jobs.”

Why are these tools needed? Rubadue explained that they are vital to the success of any economic development program. “These are foundational tools that are used by virtually every state and many municipalities,” she said. “When we compete with other states or counties, for instance, it’s important to put our best foot forward to help incentivize – or win – a company to our community.”

In fact, Rubadue said, Aspire exists to drive economic development and business success. “Our new five-year strategy is designed to position the region for this success. It is a blueprint for collaboration among the public, private, not-for-profit and education sectors, and it offers clear targets to achieve by 2025.”

A brief synopsis of incentives is available on the Aspire website. Here is a quick summary of the common ones:

Property Tax Abatement

This local incentive is available both new and existing companies making an investment in qualifying real and/or personal property. The length of an abatement can be up to 10 years. Incentive evaluation is done on a case-by-case basis, with primary consideration given to capital investment, wages, and job creation.

Tax Increment Financing (TIF)

This tool is used by local governments to promote economic development in a specific geographic area. TIF monies also can be used for private projects related to building or land improvements and equipment purchases. Incentive evaluation is done on a case-by-case basis, with primary consideration given to capital investment, wages, and job creation.

Economic Development for a Growing Economy (EDGE)

These state tax credits are based on the additional employee payroll withholdings for net new job creation in Indiana. The grant may be up to 10 years. Credits are applied against the company’s Indiana income tax liability and are refundable.

Skills Enhancement Fund (SEF)

This state program provides financial assistance to new and/or expanding companies interested in training their Indiana resident workforce. Eligible companies can receive reimbursement of up to 50 percent of eligible training costs.

While these incentives are fairly straightforward, some confusion and misperception persist. “For example, some people believe tax abatement is free money from the government, while in reality it is performance-based – that is, unless the promised improvements are made, benefits will be withheld,” Rubadue explained. “And there is some confusion about what tax abatements are: they are based on taxes paid and are time-bound, unlike a resident’s homestead property tax deduction which is filed once and lives on in perpetuity.”

Rubadue added that sometimes there is confusion about the advantages of tax abatement. “The benefits of incentivizing a company are bigger than leaving the land undeveloped. Improving the land by building a usable structure benefits the community as the company creates jobs and phases in its tax responsibility.”

Some of the many common business events or transitions that should trigger a company’s inquiry about these incentives might include a change in workforce or wages or leadership, Rubadue noted, or addition of a new manufacturing line or equipment and the related training required to bring it online. “A company that finds itself outgrowing its current facility or paying for offsite storage also might want to look into these incentives,” she added.

“Expansion projects which create new assessed real and business personal property, and new jobs, might qualify for one or more of these incentives,” Rubadue commented. “We want businesses to locate here and to stay and grow locally! We can connect businesses with the right incentive resources and help shepherd them through the process with municipalities.” Businesses with questions about incentives are encouraged to contact Amanda Rubadue at arubadue@AspireJohnsonCounty.com or 317.537.0037.

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