A tax abatement for Lebanon’s second speculative building was officially approved by the Lebanon City Council meeting Monday, which will bring the 40,000-square-foot building to the city by fall.
The project's abatement was preliminarily approved last month, but a public hearing was required since an economic revitalization area was established for the tax abatement. The project is a 40,000-square-foot speculative building, constructed by United Development LLC, a company owned by Lebanon resident Tom Merritt, located at the southwest corner of the intersection of Ind. 39 and Enterprise Drive. Merritt said the building will be complete by this fall.
This project is an important investment for Lebanon because these spec buildings are necessary for new business growth, said Molly Whitehead, executive director of the Boone County Economic Development Corp. In 2014, she said 104 companies expressed interest in coming to Lebanon. Of those 104 companies, 63 percent of them requested an already existing building. Only 8 percent requested land on which to build.
The council approved a 10-year tax abatement for this project, saving United Development an estimated $240,000 in abated taxes during those 10 years. It will pay $245,000 in taxes in that time. The project will bring $2.2 million in capital investment. And once occupied, the city will receive additional tax revenue.
At the public hearing held at the meeting, Lebanon resident Aaron Smith urged the council to reconsider the tax abatement, saying it is poor public policy to award a tax abatement to a developer that does not promise to create a significant number of new jobs that pay a living wage.
“No new jobs that pay a living wage are promised by United Development,” Smith said. “Awarding the tax abatement will undermine our free market system.”
Smith suggested the council deny this abatement but later consider a tax abatement for the company that occupies the building. Local attorney Kent Frandsen, who is representing United Development, said that by law, a real property tax abatement has to be approved before construction begins. He also said the law states a tax abatement can be awarded due to the investment in the tax base or the expansion of the job base. And this project will provide both, he said.
“This will be a building that will be on the tax rolls of this community for the long term,” Frandsen said. “It will generate significant property taxes long after the abatement has worn off.”
Smith also questioned the length of tax abatements “routinely awarded to every developer who shows up at the front door of the Lebanon Municipal Building,” he said. This year, 12 companies will receive 22 property tax abatements that total more than $62.3 million in assessed value. Each one of these abatements was initially a 10-year abatement. It makes sense to award 10-year abatements to companies that provide the greatest benefit to the city, while offering shorter abatements to companies that provide a lesser benefit.
“No developer offers a lesser identified benefit than United Development with its spec building and no guarantee of any new jobs that pay a living wage,” Smith said.