Simplified tax abatement process fails 5-4 in lengthy county council debate

SOUTH BEND — A measure to eliminate St. Joseph County’s tax abatement ordinance and replace it with a simpler list of questions — similar to the way Mishawaka does it — failed in a 5-4 vote by the county council Tuesday.

A lengthy debate bounced between a few key points.

Business proponents argue there’s a need to simplify the current abatement process. South Bend Regional Chamber of Commerce CEO Jeff Rea said businesses complain that the process is cumbersome and confusing, though no one could point out specific examples of businesses that have turned away from the area for development.

The current process is about 37 pages, though a good portion of it is a workbook.

Critics argued that the proposal, drafted by Republican council members Amy Drake and Joe Thomas, didn’t involve input from the community or from Bill Schalliol, the county’s executive director of economic development. Drake, who’d consulted with Rea for the measure, said she’d reached out to Schalliol when she began working on it in October. But Schalliol said he didn’t see the October email, though he did see her more recent emails about it and apologized for not responding.

When asked if he could have improved the measure if he was consulted, Schalliol said yes. He said it’s important for staff to know where the county’s priorities, or its “guardrails,” are for the area, which the current process has.

In voting against it, Republican council member Dan Schaetzle felt the measure erred in not involving Schalliol and his team, who are the ones who screen applications for abatements and bring them to the council.

He also claimed that county commissioners and their attorney weren’t involved. He felt the new process would place more power with the council rather than with the professionals on the staff.

And he felt it didn’t give enough assurances that local labor would be hired.

“I will not agree to an abatement ordinance that gives tens of millions of dollars in tax breaks to the largest of America’s corporations while failing to incentivize those companies to use local labor and local contractors,” Schaetzle read from a written statement.

But at least one local businessman, Rick Slagle, who works in construction, said a simpler abatement process would most help small local businesses that have the hardest time with longer applications.

Drake said the point of the simpler process isn’t to give more tax abatements but to make them “more fair and to give the council more of a chance to be involved.”

Thomas pointed out that the council is always free to ignore the abatement process and make their own decision.

"We’re not giving up control,” he said of the revised process.

Council Democrat Diana Hess said she’s willing to examine the current process for possible revisions, but she’d want more time for discussion and to hear more voices.

Steve Francis said he was involved in shaping the county’s ordinance 15 years ago in what he called a “very open public process” with community members and a dozen organizations, including labor, civic and environmental. With a background as an economist, he was chairman of the state’s Sierra Club at the time.

After several months, they came up with a process in which those seeking abatements gained points for the benefits they’d provide to the community, for example through higher wages and environmental standards. The points would help to determine the extent of the abatement, but, Francis said, the county council has always had the option to disregard the points if they wanted.

By contrast, the council members would replace it with a list of questions for the developer to answer, but no point system.

Still, Francis criticized the measure to remove the ordinance, suggesting that it was done behind closed doors.

“It is not open to others who have expertise and knowledge,” he said.

Council Democrat Mark Catanzarite, who worked on the current process 15 years ago, felt it’s worth taking another look at it but didn’t feel it needed to be overhauled.

Murray Miller, a member of a local trades union, complained that there wasn’t more community input in the new measure, including from folks in labor.

All three county commissioners issued a statement earlier Tuesday in which they supported revamping the abatement process.

“Frankly we think it’s about time,” they wrote. “Companies have a choice when considering which counties to start or grow their businesses. The county’s current rules for an abatement are cumbersome. That’s a bad first impression of St. Joseph County.”

After talking with fellow council members recently, Drake added an amendment that would add questions for applicants about local labor, safety and employee training opportunities. The amendment itself passed narrowly by a 5-4 vote. Schaetzle said the amendment didn’t go far enough.

The final measure failed 5-4. Schaetzle voted against it along with all of the Democrats — Bryan Tanner, Rafael Morton, Diana Hess and Catanzarite. Drake and Thomas voted for it along with Republicans Mark Root and Randy Figg.

Because it was voted down, Root said, the matter cannot be brought back to the council for six months, per the council's rules.

South Bend Tribune reporter Joseph Dits can be reached at 574-235-6158 or jdits@sbtinfo.com.

This article originally appeared on South Bend Tribune: St. Joseph County property tax abatement fails vote to be simplified