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Council approves second tax abatement for Kimura

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As part of the city’s downtown redevelopment plan, the Public Square will be restructured in 2020 and a plaza area will be created on the west side to facilitate more public events in downtown Shelbyville. Part of the funding for the redevelopment plan will come from combining TIF districts in Shelbyville, which was approved by the Shelby Common Council Monday at City Hall.
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Polka dancers enjoy Knauftoberfest in downtown Shelbyville during Knauf’s 40-year anniversary celebration in October 2018.

By JEFF BROWN - jbrown@shelbynews.com

Money was the root of discussion for the Shelbyville Common Council and the Shelbyville Redevelopment Commission Monday at City Hall.

The council approved funding for Blue River Foundation racino grants (see story to the right), approved a second reading of the 2020 budget, granted a tax abatement for Kimura Foundry America and approved a resolution for the establishment of the Downtown Economic Development Area.

Prior to the council meeting, the Redevelopment Commission approved a second round of payments to Genesis Property Development for the work it has completed in preparation for the downtown redevelopment project slated for 2020.

In just short of a year of operation, Kimura Foundry America, Inc. has found itself flush with work. So much so, the company is adding a second printing cell at a cost of $2,230,000, which in turn will add four new employees with an estimated salary of $50,000 each.

Kimura, which performs 3-D printings of prototype castings for all types of industry, currently has 23 full-time employees with estimated annual salaries of $1,129,000.

The tax abatement is set up over 10 years with 100 percent abatement in year one, 90 percent in year two, 80 percent in year three and so on.

Councilman Brad Ridgeway, who has been a strong opponent of the use of tax abatements, asked Kimura’s representative at the meeting why the company, if it is doing so well, needed a second tax abatement, separate from the first one the company already received.

“Any advancement you give an industry helps create an environment where they want you to grow,” said Steve Schrumpf. “I see this company as a 36,000-square-foot-facility. Ultimately, they could have 8 or 10 of these machines in place inside this facility.”

The resolution for the tax abatement, which was unanimously forwarded to the city council from the tax abatement committee, was approved 6-1 with Ridgeway voting “No.”

After the meeting, Shelbyville Mayor Tom DeBaun explained the need to grant Kimura’s second tax abatement.

“They are doing well ... no doubt about it but they are still what I would call a fledgling company,” said DeBaun. “This is their first venture in the United States ... in North America. They are still developing their base. They had performance goals and, admittedly tonight, they said they have exceeded those goals but they are still not out of that start-up period. They are growing and they are still looking at growth plans.”

Tax abatements are used to attract business and industry to a region. Shelbyville has used this business practice successfully in recent years and put together a total package of business and educational attributes to land the Japanese company.

“This was a highly competitive project that was down to us and Columbus, Ohio,” continued DeBaun. “They admitted to us that after they made the commitment to Shelbyville that their initial decision was Columbus, Ohio, until they met with us. We discussed not only the incentive package but also Mr. (Al) Parsons’ 3D printing class (at Shelbyville High School), and some of the other things we’ve made available to them through Rose-Hulman (Institute of Technology) and Advantage Shelby County.

“That resonated with them but they can expand. Their market will be wherever. It won’t just be central Indiana. We want them to grow here. As Mr. Schrumpf said, this is creating that environment and culture of business-friendly relations.”

One of the ways the city is paying for the 2020 downtown redevelopment project with with Tax Increment Finance funds. On Monday, the city council passed a resolution, 6-1, to establish a Downtown Economic Development Area that is funded by the city’s TIF districts.

“It is essentially a pooling of the money,” explained DeBaun when asked what advantage the city had by combining the districts. “If you look at the TIF district performance, some are performing better than others. The Fairland TIF, or the casino TIF, is performing very well. The Walmart TIF ... not so well. This gives us the opportunity to pool all those dollars together, meet our debt obligation, and then use any additional revenue that is available for the bonding for the downtown. 

“We’ve seen Valparaiso do it. We’ve seen Franklin do it. We’ve seen other communities do it. It’s a way for us to bond without having a tax impact on the general fund.”

The passing of the resolution sends the plan back to the Redevelopment Commission where it must have another public hearing.

At Monday’s Redevelopment Commission meeting, Tom Davis of Genesis Property Development provided an update on services rendered and answered questions about the downtown redevelopment project which has been going through several design phases to complete street and landscape design and the creation of a parking garage that will sit behind the Methodist Building on the Public Square. 

Construction is slated to start in 2020.