In December 2009, local manufacturer Reliable Production Machining and Welding applied for a tax abatement on $400,000 worth of newer equipment they would be purchasing for their plant. The tax abatement application cited the need for this newer equipment due to older equipment being more difficult to maintain and not being as efficient as needed to keep up with production demands. The request asked for an abatement (relief or credit) of tax on the value of this newer equipment.What does this type abatement produce?
Well, on all tax abatement applications in the City of Kendallville there is a specific line item asking if the abatement would help to create jobs. Reliable did not guarantee new jobs, but did state that it could help increase their production capabilities, which may create new jobs. The key was that it would NOT remove any jobs by replacing personnel due to efficiencies.
Looking back a little more than a year after the abatement was granted, Reliable has, indeed, added more jobs and experienced an influx of new business which has required the hiring of enough workforce to nearly double the staff in their plant since early 2009 when the recession hit hard.
What does a tax abatement do?
Sure it is the granting of a waiving of property tax over a period of time on a graduating scale, but it is also a way to "STIMULATE" local business with a commonly used incentive by local governments around the United States.
To quantify the real dollar value saved in this instance, it would be over the life of their abatement. If the abatement were 5 years, let's guess that the tax savings over that time period would be $10,000.
For simplicity sake, that $10,000 is additional cash flow for Reliable to use toward operational costs, training expenses, more equipment or maintenance of equipment, etc. In reality and in this case, it is an ingredient in their being able to hire more skilled workers at higher salaries because the equipment requires skilled and experienced workers to operate it. Higher paying jobs means higher income levels for local citizens. Higher income levels means more potential for local citizens to spend their income at our local businesses, etc.
The economic impact of just one abatement is hard to truly measure, but in the case of Reliable it is easy to see that the equipment they purchased would required skilled laborers to operate and thus raise the bar of income for those laborers.
This is just one example of how important it is for the EDAC to continue to play a role in stimulating economic growth in and around Kendallville.
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Patrick Hess
