Cities across America often offer companies financial incentives to relocate to a particular area. These payments are made through tax breaks that help companies. In theory, those companies are generally located in areas that will eventually thrive because employees contribute to the neighborhoods, either by purchasing goods and services, or even homes in the area.
I get this concept, and generally, I support it.
While these business endeavors are not unusual, they should be carefully scrutinized because oftentimes the money cities use to fund certain businesses and corporations come from public subsidies.
Angie’s List, a national company headquartered in Indianapolis, was developed with the concept of providing consumer reviews of companies so subscribing members can make informed decisions on where to purchase select goods and services.
This week the online consumer review service had hoped to seek approval from the City-County Council on the approval of $18.3 million in public assistance to help expand the company’s headquarters on the Near-Eastside.
While leaders of both political parties like the proposal, the measure has been postponed until next month. Council officials said part of the reason for the postponement was to allow Angie’s List to enhance their sales pitch.
While the proposal sounds good in theory, there are clear realities that are cause for concern.
Perhaps the most glaring is the fact that in its 20-year history, Angie’s List has never turned a profit. In addition, the company’s stock has plummeted from its initial public offering of $15.80 to this week’s $5.14 per share.
While Angie’s List tempts and teases with the promise of expansion, including adding 1,000 new jobs and relocating 800 of its current employees; we can’t forget the company’s massive layoff just last year.
As previously stated, I do support tax incentives for companies, however, I can’t get on board with the deal Angie’s List currently has on the table.
Some $18 million is a tremendous sum of money to give to any company, especially one riddled with recent layoffs, lawsuits and distrust from its own investors.
The area Angie’s List is looking to relocate to is between downtown and the Irvington community. It’s an area that has been blighted over the years, but not nearly as bad as some other neighborhoods. The proposal currently states the city would designate $2 million on streets and other infrastructure work with the remaining $16.3 million going toward building a garage for employees and relocating an Indianapolis Public Schools’ warehouse from the former Ford assembly plant. But the city wouldn’t be alone in its giving. The state would provide $6.5 million in tax credits and $500,000 in training grants.
It is amazing to me how certain underserved neighborhoods like Martindale-Brightwood, where the Indianapolis Recorder Newspaper is headquartered, or Haughville that are not in close proximity to trendy locations such as downtown or Broad Ripple, get overlooked by the city and state when it’s time to allocate funds for important things like streets.
If the city and state invested even a small portion of the money they plan to give Angie’s List into other neighborhoods, to small businesses in the inner city, their efforts would make a substantial difference to the viability of Indianapolis in general and not just “it” locations. This strategy would positively impact more people with the city and state providing fewer resources. Since taxpayer dollars are used to provide these incentives, it’s only fair that a more diverse pool of taxpayers reap the benefits by subsidizing their businesses and improving their streets.
There is so much talk about middle class people and getting that demographic to move in the city, but there is another group that is constantly overlooked: those living at or below the poverty level. They deserve to live in areas that are vibrant and thriving. They deserve to have the opportunity to support local businesses within their neighborhoods.
I totally understand spending money to make money, which is why tax incentives for businesses are essential. However, those tax incentives and even the street and infrastructure funds need to be distributed in a more equitable way. That means businesses of various sizes, with owners of various ethnicities, and companies located in various neighborhoods should have an opportunity to obtain the same financial kick-backs majority-owned companies in “it” areas of the city have. Indianapolis is more than downtown, Meridian-Kessler, Broad Ripple and Fountain Square. There are other pockets in the community that deserve a piece of the pie. And I’m sure many of the businesses in those under-recognized areas of Indianapolis are turning profits, which is all the more reason for the city and state to invest. Given the facts, I have no choice but to give this deal a poor review.
