By Any Other Name

Abatement:

When Airborne's parent company ATSG applied for a Tax Increment Financing (TIF) scheme, a form of tax abatement, for its new $15 million maintenance and paint, (JUMP) hangar. A senior representative of the company maintained that the TIF was not a tax abatement and that local governments were not putting any money into the project.

The representative did not mention that the City, County and CIC donated more than half a million dollars to get this project started. The financially troubled Port Authority is also chipping in $212,000 per year in lease reductions to ATSG.

While the TIF agreements are not considered abatement schemes like Enterprise Zones (EZ) or CRAs the effect is still the same.

ATSG will make service payments in lieu of taxes to the city. The city, in turn, will redirect that money, minus a small portion going to the schools, to help pay down ASTG’s 23 year loan obligation. It’s as if ATSG paid no property taxes (abatement) and paid down the loan with that money. Airborne Express used taxabatements to pay for the development of the airport. DHL also used abatements to support the construction of the huge sort “F” building that now sits empty.

While the TIF resembles an EZ the 25 year term of the TIF makes the 7 year EZ and CRA look like a bargain for the taxpayers.

The property tax revenue recipients will be sacrificing the same amount of dollars under TIF as they would have under other forms of abatement.

Assuming that the new hangar will be valued at $15 million, its construction cost, the following $273,000 annual tax distribution losses will be as affected as follows.

a. Schools net loss $106,000

b. County connected $60,000

c. City $44,000

d. Miscellaneous, including Laurel Oaks, Library and Senior citizens $22,000Multiply these values times 25 years to obtain the total loss.

Ff it looks like an abatement and it smells like an abatement it must be an abatement. We can only for the jobs that could generate $92,000 in annual city income tax revenue minus 33% for the schools, unknowable increase in school income taxes and county sales taxes.

Paul Hunter