Indianapolis Int'l Airport Blamed for Small Business Slump

Dec. 25--The Apple Tree Restaurant in Wayne Township is a few blocks from the runways at Indianapolis International Airport, so anyone sitting at one of its window booths can watch planes coming in for a landing or just after takeoff.

Yet that proximity to the airport's 8 million yearly travelers and 12,000 employees has not shielded the Apple Tree's co-owners -- Bill Birch and his uncle, Alex Birtsas -- from an economic slump that has turned this corner of Marion County into a collection of decaying storefronts and empty parking lots.

To township leaders, one of the biggest culprits in the decline is the airport itself. They contend the airport's land policies and its tax-exempt status are placing an unfair burden on the community, including small businesses like the Apple Tree.

In response, Wayne Township is lobbying for a number of changes, including one that returns to the tax rolls a number of businesses at the airport that are now exempt from taxes. It also is pushing the airport to sell some of its excess parcels to private, tax-paying businesses.

In addition, state Rep. Phil Hinkle, R-Indianapolis, plans to propose an idea in the upcoming General Assembly that would expand the airport authority's taxing powers by allowing it to collect property taxes on airport-owned land in any Central Indiana county. Hinkle envisions an arrangement similar to the multi-county levies being used to finance the new Colts stadium. Hinkle, who represents the township, said doing so would allow "everyone who benefits from the airport in the region to pay their fair share."

The proposal, however, could run into trouble with lawmakers as they try to keep taxes in check.

The issue reflects a larger debate about tax exemptions for airports that is playing out across the nation.

Wayne Township's hardship comes at a time when the airport is undergoing a $1.07 billion expansion that will move its main entrance west. That shift is expected to spur a wave of new development in neighboring Hendricks County, further throwing into question the fate of Wayne Township businesses near the present entrance.

Airport officials are mindful of Wayne Township's concerns. But they point out the airport doesn't rely on the township for services. The airport, they say, sustains itself mainly through airline fees, maintaining its own roads and paying for its police and fire operations.

"The airport is providing an essential public service on its own revenue," said Patzetta Trice, an airport spokeswoman.

Wayne Township's immediate outlook is less than promising.

Assessed property values within the township have declined from $7.5 billion in 2002 to $6.4 billion this year, according to local officials.

The recent closings of two local manufacturing plants -- Olin Brass and a Chrysler foundry -- shaved about 1,300 jobs and cost the township tens of thousands of dollars in property taxes. The township's population of 133,000 has remained virtually level since 2000, according to the latest U.S. census data.

Next year's statewide repeal of the so-called inventory tax -- a fee on warehoused goods -- is expected to cost Wayne Township about $1 million in lost revenue.

Those figures, coupled with a recent wave of hiring to bolster the ranks of the local Fire Department, have strained the township's nearly $20 million annual budget.

"When places like Olin Brass get torn down and when things like the inventory tax go away, then homeowners have to pick that up" through higher property tax rates, Township Trustee Dan Gammon said.

Hinkle and others argue the airport should be doing more to help.

Township officials have identified 30 businesses on airport land that they think should not be exempt from taxes. If taxed, these businesses would generate $1.6 million in tax revenue annually, they said.

State law allows tax exemptions on property that is necessary to operate the airport. But township officials think the airport authority has improperly granted exemptions on properties that do not "provide basic facilities for the traveling public."

Rental car companies, some warehouse buildings and private hangars at the airport should all be taxed, the township contends.

The township, meanwhile, laments another point: the 7,700-acre airport's purchase of an estimated $24 million in surrounding land since 1992 as part of a federal program to cut down on jet noise in residential communities.

While the ultimate goal is to redevelop that land into commercial and industrial use, township officials say the airport has lagged in its efforts to do so. As a result, the parcels remain off area tax rolls.

Wayne Township may have an ally in its push to see that land sold. The federal Department of Transportation recently issued a report criticizing airports across the nation for failing to dispose of excess land, said Richard Marchi, a technical and environmental affairs expert for Airports Council International, an airport advocacy group.

Indianapolis airport officials say they are reluctant to sell their land without a cohesive development plan. And much of their property is in small parcels, not large swaths that would be attractive to sizable commercial or industrial building. They also say demand for much of the land has been somewhat meager.

"It's not like I get calls every day from developers asking: 'Will you sell us all this property?' " said Robert Duncan, general legal counsel for BAA Indianapolis, the private firm that runs the airport. "That's the reality of the market."

Similar debates have emerged elsewhere as communities across the nation have looked toward neighboring tax-exempt airports for financial relief in an era of tight public coffers.

Earlier this month, after more than a year of negotiations, Logan International Airport near Boston agreed to pay its hometown of Winthrop, Mass., $900,000 a year to compensate for lost tax revenues. Elsewhere, the city of Norfolk, Va., collects about $1.5 million a year from Norfolk International Airport for the same reason.

The rules governing how the Indianapolis airport manages its land and revenue prohibit the airport from entering into a similar payment-in-lieu-of-taxes agreement.

Meanwhile, Senate President Pro Tempore Robert Garton, R-Columbus, said it would be difficult to get Hinkle's tax idea passed in light of a bigger overall push by state leaders to control taxes. Local leaders in neighboring counties, such as Hamilton, where the airport authority owns land, said they would give the idea some thought.

"It's one of those things where you have to see what the extent of the tax is, where exactly the money is going and what the overall purpose of it is," said Fishers Town Council President Scott Faultless. "I'm not saying yes, and I'm not saying no, but I'd like to take a close look at that bill."

The Apple Tree's Birch is hoping relief, in whatever form, comes soon.

"There are a lot of problems here. It's not just the airport," the Wayne Township resident said. "It's becoming less feasible to live or to run a business here."

INCREASING TAX REVENUES

Wayne Township officials are pushing several proposals to offset declining property tax rolls. Among them:

-- Push Indianapolis International Airport to sell excess land for development.

-- Collect property taxes from businesses at the airport that, in the township's view, are wrongly granted tax-exempt status.

-- Extend the airport authority's taxing power so it can begin to collect taxes from businesses that lease airport property in all of the region's counties. Some of those new tax revenues would go to Wayne Township.

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