New Rules Project - Governance - Anti-Piracy Law, Gary, Indiana

Anti-Piracy Law - Gary Indiana

In late 1980s, the Calumet Project for Industrial Jobs, a coalition of labor unions, churches, and community groups began to demand changes in local and state policies governing tax abatements and subsidies for corporations. An investigation in the town of Hammond had revealed that sixteen companies had received $15 million in tax abatements in 1988. They had promised to create 804 jobs, but delivered only 75. In Gary, five firms received abatements in exchange for 106 new jobs, but created only 50. Moreover, many companies were playing one city against another, both to obtain the biggest subsidies and also to undermine labor unions and attempts to raise wages.

The Calumet Project succeeded in pushing for new rules in both Hammond and Gary. The coalition also convinced state lawmakers to pass legislation in 1991 that mandates that municipalities must cancel the remaining years of a tax abatement if the company fails to create the number of jobs promised.

The law enacted in Gary is considered to be among the strongest accountability and anti-piracy ordinances in the country. It requires companies seeking abatements to demonstrate a financial need and to disclose how many jobs will be created and how many will be lost as part of the relocation or expansion. Failure to meet job creation goals will result in a termination of the abatement. Only those companies that pay at or above the prevailing wage in their industry and provide complete health coverage are eligible for tax abatements.

Finally, the ordinance prohibits the city from giving incentives to any company relocating jobs into Gary from outside the city limits.

More:

For more information or a copy of the legislation, please contact: Gary City Clerk, (219) 881-1354
City of Gary, Indiana Home Page
See also the State Based Anti-Piracy Laws under the New Rules Project's Retail Sector

ORDINANCE AMENDING THE GARY TAX ABATEMENT

ACCOUNTABILITY AND ECONOMIC REVITALIZATION CRITERIA

ORDINANCE NO. 89-45 WHICH COMES TO RESOLUTION 2252

WHEREAS, the Gary Tax Abatement Campaign to date has shown numerous abuses in the current system which need to be addressed. This ordinance has the following provisions:

NOW THEREFORE BE IT ORDAINED by the Common Council of the City of Gary, Indiana, as follows:

Section 2: Entitled "Advance Notice of Intent to Apply for Tax Abatement" shall be amended as follows:

Company must notify union or employees when it applies for abatement. Notification shall be in writing and posted in a conspicuous place. This section applies only to companies already doing business in Gary, and does not apply to a construction site for a new facility or expansion project.

Section 3: Entitled "Application" shall be amended as follows:

Any company applying for designation of an economic revitalization area or approval of a statement of benefits pursuant to I.C. 6-1, 1-12-1 et seq. Shall provide to the Council and Mayor's Office of Economic Development the following supplemental information on forms which shall be prescribed by the Council:

The name, address, and telephone number of the applicant and any parent company.
The state of incorporation of the applicant and any parent company.
The names and titles of the officers and directors of the applicant and any parent company.
The name of each person who holds at least five per cent of the outstanding shares of stock of the applicant and any parent company.
A list of all divisions, subsidiaries, and facilities of any parent company.
A financial statement for both the applicant and any parent company for each of the preceding three (3) years prepared by a Certified Public Accountant in accordance with sound accounting practices, including the applicant's and parent's company:
(a) volume of sales;
(b) operating profits;
(c) book value of plant, land and equipment;
(d) net capitol investments;
(e) net assets;
(f) capacity utilization;
(g) debts, itemized by the following categories:
A list of all public subsidiaries received by the applicant or the applicant's parent company during the preceding ten (10) years on the facility that is owned by the applicant or the applicant's parent company and is located in Indiana. The list must include the following:
The type of subsidy received (such as property tax deduction, industrial revenue bonds, urban action grants, and job training funds)
The amount of the subsidy;
The term of the subsidy;
The public benefit that was promised when the subsidy was applied for, such as infra structure or the creation or retention of jobs;
The current number of jobs including wages and fringe benefits created or retained as a result of the subsidy.
A description of the construction jobs resulting from the proposed development, rehabilitation or installment of new manufacturing equipment , including the following:
(a)the estimated number and length of tenure of the jobs;
(b) the estimated total number of the jobs that will be held by Gary residents;
(c) the name, address and telephone of each contractor, sub-contractor, and the construction manager;
(d) the estimated wages and cost of fringe benefits to be provided;
(e) the estimated total number of the jobs that will be held by residents of residents of other cities.
A description of the permanent jobs resulting from the proposed development, rehabilitation, or installation of new manufacturing equipment, including the following:
(a) the number and category of full-time and part-time employees currently employed by the facility; (b) anticipated date for hiring to begin; (c) quarterly hiring projections from project completion date until hiring completion date.
A description of the jobs that will be lost as a result of the proposed redevelopment, rehabilitation, or installation of new manufacturing equipment, including the following:

the estimated number of jobs that will be lost; (b) the title and occupations skill levels of those jobs; (c) the wages and fringe benefits of those jobs.
A description of the jobs that will be temporarily restructured, reclassified, or reassigned as a result of the proposed redevelopment, rehabilitation, or installation of new manufacturing equipment, including the following:
the length of tenure and estimated number of jobs that will be restructured, re-classified or reassigned; (b) the titles and occupational skill levels of those jobs; (c) the wages and fringe benefits of those jobs.

Succinctly, the company must show financial need for the abatement by providing specific plant and corporate data. Company must outline the number and type of temporary and permanent jobs which will be created as a result of the investment period. Company must outline the number of temporary and permanent jobs which will be lost as a result of the investment.

Section 4: Shall not be amended.

Section 5: Entitled "Prevailing Wage Required For New Employment " shall be amended to read as follows:

Tax abatements shall be granted for the purpose of, and to those applicants, creating full-time and/or part-time job at/or above the prevailing wage for those job classifications as determined by the current U.S. Dept. of Labor Bureau of Labor Statistics Area Wage Survey. For new business start ups with fewer than fifty employees, the prevailing wage standard may be waived by the Council for a one year period. After the first year, the prevailing wage provision is required unless financial records documenting the employer's inability to comply or submit it to the Council. After two years, the prevailing wage provision is required. But under no circumstances must the wage go below minimum wage.

Section 6: Entitled "Employee Health/Medical Insurance Availability Required" shall be amended as follows:

No tax abatement shall be granted to applicants who do not provide a complete healthcare package to all employees working an average of twenty-five (25) or more hours per week.

The above stated paragraph is waived for an employer with less than 10 employees for a period of two (2) years.

Section 7: Entitled " Relocation of Existing Jobs Prohibited" shall be amended to read as follows:

No abatement shall be granted for the relocation of existing employment opportunities within the corporate limits of the City of Gary unless all existing employees are given the right to transfer. No abatement shall be granted for the relocation of existing jobs from outside the corporate limits of the City of Gary.

Section 8: Entitled "Penalties" shall be amended to read as follows:

Any person who falsifies information on an annual report as required by the Ordinance shall be subject to a civil penalty of not more than Two Thousand Five Hundred Dollars ($2,500) for each occurrence plus any reasonable legal costs, recoverable by the Council through a civil action. This action shall be initiated by the Gary Physical and Economic Development Department, shall require City Council approval, and shall be litigated by the corporate counsel for the City of Gary.

Section 9: Entitled "Termination of Abatement" shall be amended to read as follows:

Council may terminate a deduction if the company:

(1) fails to meet job creation goals; (2) substantially reduces or ceases operation; (3) moves equipment for which deduction was granted; (4) fails to meet the City's development objectives; (5) fail to meet commitments made in this application or acts not in accordance with this Ordinance;

House Bill 1155 gives Council right to repeal the abatement for failure to comply with the agreements and criteria application or in accordance with this Ordinance and the process as it follows:

If the designating body determines that the property owner has not made reasonable efforts to comply with the statement of benefits, the designating body shall adopt a resolution terminating the property owners' deduction under Section 3 or 4.5 of this chapter. If the designating body adopts such a resolution, the deduction does not apply to the next installment of property taxes owed by the property owner or to any subsequent installment of property taxes.

(d) if the designating body adopts a resolution terminating a deduction under subsection (c), the designating body shall immediately mail a certified copy of the resolution to:

(1) the property owners;

(2) the county auditor; and

(3) the state board of tax commissioners if the deduction was granted under section 4.5 of this chapter.

The county auditor shall remove the deduction from the tax duplicate and shall notify the county treasurer of the termination of deduction. If the designating body's resolution is adopted after the county treasurer has mailed the statement required by IC 6-1, 1-22-8, the county treasurer shall immediately mail the property owner a revised statement that reflects the termination of the deduction.

(e) A property owner whose deduction is terminated by the designating body under this section may appeal the designating body's decision by filling a complaint in the office of the clerk of the circuit or superior court together with a bond conditioned to pay he costs of the appeal if the appeal is determined against the property owner. An appeal under this subsection shall be promptly heard by the court without a jury and determined within thirty (30) days after the time of the filing of the appeal. The court shall hear evidence on the appeal and may confirm the action of the designating body or sustain the appeal. The judgment of the court is final and conclusive unless an appeal is taken as in other civil actions.

(f) If an appeal under subsection (e) is pending, the taxes resulting from the termination of the deduction are not due until after the appeal is finally adjudicated and the termination of the deduction is finally determined.

SECTION 7. IC 6-1.1.12.1-5.8 AS ADDED BY P.L. 47-1990, SECTION 3, IS AMENDED TO READ AS FOLLOWS: Sec. 5.8. In lieu of providing the statement of benefits required by section 3 or 4.5 of this chapter and the additional information required by section 5.1 or 5.6 of this chapter, the designating body may, by resolution, waive the statement of benefits if the designating body finds that the purposes of this chapter are served by allowing the deduction and the property owner has, during the thirty-six (36) months preceding the first assessment date to which the waiver would apply, installed new manufacturing equipment or developed or rehabilitated property at a cost of at least ten million dollars ($10,000,000) as determined by the state board of tax commissioners.

Section 10: Shall not be amended.

Section 11: The provisions of this amended ordinance are additions to the original ordinance and not intended to replace provisions of Ordinance 89-45 and this ordinance shall be effective upon passage.

Section 12: Severability If any provision or term of this ordinance, or any application thereof, is held to be invalid or unconstitutional by decision, same shall not affect the validity of the remaining portions of this ordinance.

Passed and adopted by the Common Council of the City of Gary, Indiana, on the 3^rd day of Sept., 1991