NewsPublic Affairs / September 10, 2018

Company Got Indianapolis Tax Break Despite Pending Appeals

Company Got Indianapolis Tax Break Despite Pending Appeals

Drug maker Eli Lilly and Co. sought a 10-year tax abatement in exchange for the company investing $159 million to boost its insulin manufacturing operations at its Indianapolis technical center.

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INDIANAPOLIS (AP) — Drug maker Eli Lilly and Co. won approval last year for a $9.3 million tax break despite the Indianapolis controller's concerns that the company was appealing more than $20 million in property taxes at the same time, according to a published report.

Lilly sought the 10-year abatement in exchange for the company investing $159 million to boost its insulin manufacturing operations at its Indianapolis technical center.

Emails obtained by the Indianapolis Business Journal show Controller Fady Qaddoura told city officials he opposed giving Lilly abatements while the property tax appeals were pending.

If Indianapolis loses the appeals, the cash-strapped city may have to refund Lilly millions.

"We need to resolve the appeals issue with Lilly before we commit to any new tax abatements," Qaddoura wrote in an Oct. 4 email. He said the company's appeals were the largest amount by any employer in Marion County.

City officials responded that Mayor Joe Hogsett approved of the tax break. But the controller, who manages the city's $1.1 billion budget, said he might not be able to control Indianapolis' finances and budgets if his office isn't consulted before the city approves such matters.

Lilly employs about 12,000 people in the city and had been appealing its annual tax bill every year since 2012. Marion County Assessor Joseph O'Connor said the appeals are slowly making their way through his department's review process, but none have been resolved.

The City-County Council unanimously approved the tax break in November.

Taylor Schaffer, a spokeswoman for Hogsett, said the decision was "in the best interest of taxpayers." She said the city will bring in $7.7 million annually in net new taxes as a result of the agreement.

"Every economic deal, regardless of size, involves thoughtful discussion between City officials," she said. "In this instance, we were excited that the city's continued partnership with Lilly resulted in a $159 million capital investment in Indianapolis and the company's commitment to further innovation and growth of our city's workforce."

Some tax experts have called Lilly's simultaneous tax appeals and tax break requests unusual.

"I just find it a little odd, pushing the envelope a little," said Kurt Zorn, professor of public and environmental affairs at Indiana University in Bloomington.

Zorn said cities have a right to know whether their tax base is at risk before approving new abatements.

"If I were looking at the overall total assessed value of the tax base of Indianapolis, I'd want to have some certainty before I granted a tax abatement," he said.

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