Designating Tax Abatement - Vacant Land Adjacent to 3305 Lathrop Drive - Gateway Plaza Real Estate, LLC

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Your first point is a good one. Don Inks and I have discussed this issue many times. The real question is how can you tell in an objective way whether or not a company needs the tax abatement. You can try to look at their cost projections but those can be slanted various ways and, ultimately, you either accept their figures or complete a lengthy market review yourself. Currently, we do not even ask for cost data to be submitted and I am not proposing that we do so. However, this brings up a point I want to make and that is businesses hate uncertainty. The current credit crunch is a prime example as banks are now unwilling to lend, even to each other, because they are uncertain they wilt get paid back. The same thing applies when a business prepares to make an investment. If the business is not very certain that it will earn its investment back it is not going to make the investment. The system we currently have is objective. Basically it states that if you meet certain criteria as listed in our tax abatement ordinance you will receive at least a three year abatement and possibly more if you meet additional criteria. Our system requires quite a bit of investment in the form of several actions including the preparation of the construction plans, the identification of suppliers, the preparation of cost estimates and the collection of information from the various suppliers in order to meet the various criteria (such as provision for pensions and health insurance) for awarding points in our tax abatement system. If there is no certainty that a business will obtain a tax abatement after making the investment we require, it can very well move on to another location and bypass us. I agree with you that South Bend has numerous quality amenities and services but we do not stand out from the crowd in that respect. There are other communities with equal attributes and businesses can easily move on to them. We are clearly in competition with those communities and need to be able to offer incentives, including tax abatement, that business owners can easily understand and factor into their investment decisions. A specific case in point happened about six months ago. We worked hard to have Bauer Soft Water relocate to the Blackthorn Industrial Park from Granger. They instead ended up moving to Niles where they obtained more favorable financial incentives. In the case of Gateway I can only give them a 50-50 chance that they will build without the tax abatement incentive. Because of the warehouse issue I initially told them that they were not eligible for a tax abatement. The petitionePs representative, Jamie Ruiz at CB Richard Ellis, wrote back and stated "Thanks for the follow up. I spoke with the client and they can not make this project work without an abatement. At this juncture they have decided not build. Thanks for your help!" They did not complain or request additional consideration. Our discussion continued only because I did not want the City to lose the investment. I contacted them and in the process discovered what happened with the reference to warehouse operations in our ordinance. Regarding my paragraph two, I took a conservative, minimalist approach in estimating employment because I did not want to overstate the potential benefit of the project to South Bend. Also, because the proposed project involves a flex building that currently has just one potential tenant identified, it is difficult to precisely determine the impact on employment. I am unsure.what you are looking for in paragraph three of your last a-mail, in particular what do you mean in the statement "abatements given by South Bend must be negotiated to benefit South Bend residents." The abatements we have approved do increase the City's tax revenue which indirectly benefits all citizens. In more direct fashion those abatements have increased employment opportunities for the City's residents through the creation of new jobs and the retention of existing ones thereby helping to reduce the high unemployment that you mentioned. Also, through our system of awarding points, abatements encourage petitioners to use local firms for the construction of their proposed projects. I understand your desire to assist South Bend residents, that is all of our jobs, but putting additional requirements on tax abatement petitioners interested in investing in the City is not a good way to go about it. Outside of raising taxes, getting new investment into the City is the surest way of increasing tax revenue and at the same time it has the added benefit of increasing employment. The best way to sustain those benefits and employment gains over the long term is to assure the City has a reputation for offering incentives in a clear, fair and objective manner and that it is open to and welcomes new investment without undue restriction. I definitely agree with you that we should discuss this further (particularly your paragraph three). However, because of the significance, any discussion should include other members of the Council and the Mayors administration. Because this is well beyond my area for decision making t have taken the liberty to copy the Mayor and Jeff Gibney on this a-mail in the hopes of getting a discussion started soon. In the meantime I will inform the petitioner that their petition is on hold pending further discussion by the City. Bob Mathia Assistanf Director, Economic Development 574-235-5835