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A Property Tax Abatement Checklist

By Matt Eckerle, Principal, November 16, 2017

Property tax abatement is a widely used tool in the economic development incentive “toolbox” available to local governments in Indiana. Abatement differs from TIF, another local incentive tool, in that the incentive mechanism is driven by property tax savings rather than revenue generation. Here is a checklist of important questions that should be contemplated when considering requests for a tax abatement from a new business prospect or a company that exists within your community:

  • Does your community have an incentive policy?
  • How does the project “score” within the framework of the incentive policy?
  • What are the characteristics of the company?
  • Does the company have reputation or environmental issues that would not reflect the values of your community?
  • What is the incentive value to the prospect/recipient? How much money will it save?
  • Has the company presented a business case for this incentive? Does your community require the business case in the company’s application?
  • What will your community gain from the abatement recipient?
    • Number and quality of jobs? Community marketing advantage?
  • What is the amount of the investment?
    • How does this investment affect your property tax base?
  • Does the value generated by the long-term development justify the short-term “cost” of the abatement?
  • Will the abatement affect the overlapping taxing units, such as the school or library, or the budget of your community?

Considerations for new companies:

  • Will the company commit long term to your community?
  • Does the company’s business “fit” your community? That is, does its management philosophy, product or services reflect your community’s values?

Considerations for existing companies:

  • How long has the company operated in your community?
  • Has the company been a good corporate citizen?
  • Has the company met its prior commitments to the community? What is its track record?

Evaluation of a proposed economic development incentive should be based on the financial and non-financial aspects of a project.

Although they are a commonly used economic development tool, property tax abatements are complex. Umbaugh can assist you with evaluating potential and existing abatements to better understand their impact on your community. Please contact us at .(JavaScript must be enabled to view this email address).

Information in this article was believed current as of the date of publication. As you know, changes occur frequently. The information presented is of a general educational nature. Before applying to your specific circumstances, please contact us at vision@umbaugh.com.


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