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Tuesday, May 3, 2016

Business owners fired up about annexation

Wednesday, October 7, 2009

Ann Bradshaw
Amid concerns regarding the possible annexation of property into the City of Brazil, Mayor Ann Bradshaw called a special meeting Tuesday so issues could be addressed.

"There has been a lot of talk in the public about it and I felt it was important to meet to discuss concerns and try to figure out possible solutions," Bradshaw said at the opening of the Common Council of the City of Brazil meeting. "Truth is, I'm not even really sure this is the right time for annexation, which is another reason I called the meeting."

Area business owners, who would be included in the annexation, composed the bulk of those in attendance, and they openly voiced their concerns.

"I've been looking at the tax rates and being annexed into the city would be about a 38-percent increase in taxes," PDF, Inc. Owner Ken Maurer said. "This is a considerable increase, and it may cause some to go out of business."

Maurer, along with others in attendance, said they understood and are OK with the city wanting to grow and expand, but felt there may be a better way to handle the situation.

"Maybe the matter can be delayed until the economy improves, or the increased taxes could be phased in over the next 8-10 years," Maurer suggested.

Umbaugh and Associates, Indianapolis, CPA Manager Deen Rogers said the law does allow a phase-in of the additional property taxes, but only during a three-year period.

"The law lets the city abate taxes for 25 percent of the additional amount year one, 50 percent in year two and 75 percent in the third year," Rogers said.

A few of those in attendance disputed the validity of Rogers' statement because when businesses are granted tax abatements on new equipment or additional real estate, the term may be as long as 10 years.

"State code dictates how taxes are abated during annexation," Rogers responded. "Those on new infrastructure are based on tax abatement laws, and the city has already stated they would honor current abatements that have been approved."

Rogers added he would speak with his company's attorney to see if there are other options available, possibly for a longer term of phasing in additional taxes.

One of the other sticking points for business owners in attendance was the current infrastructure -- water, sewer, etc. -- that they are currently utilizing and had to install themselves.

"There are no hydrants in our area and until services are expanded, we will still have to pay high insurance rates," Maurer said.

Brazil City Fire Department Chief Jim Smith said by being in the city, businesses would fall under the city's Class 5 ISO rating, and the savings they would have over having fire protection from a volunteer fire department -- most of which have a Class 8 or 9 rating -- may offset the added taxes.

"The difference between a Class 5 and Class 8 or 9 rated department is a savings in insurance premiums of about 75-80 percent," Smith said.

City Engineer Brian Pohlar added, "With the new water system improvement projects, we have money budgeted for capital improvements to make some upgrades. It won't happen overnight, but there is funding available."

The amount of improvements the city has the capability of completing also played a role in why the city chose the selected areas for annexation.

"When we were first looking at annexation, I was asked to almost literally square off the city," City Planning Administrator Stacy Gibbens said. "After we did that, we looked at what we could financially do as far as utility additions, cut out some areas and came up with the proposal we have right now."

Timberland Lumber Company President Sam Emmert did not find solace in the explanation and felt the annexation was directed toward businesses only.

"I believe the city should expand and grow, but I feel this has been very selective, because there are other areas where services already exist as well," Emmert said. "As businesses, we are already paying double the taxes compared to residential areas, and we don't have the benefit of deductions. We don't have enough revenue to pay the taxes we do now."

Pohlar attempted to explain part of the reason why some residential areas with services were excluded was due to the damage to those utilities that the city could not afford to make repairs at this time.

"I'm sure at some point, they will be annexed in as well," he said. "They put in the utilities themselves and the city has some funds for improvements, but not enough to complete what would be needed to improve utility services in those areas."

Bradshaw added the city is taking everything into consideration, and reiterated the possibility of annexation may not necessarily happen.

Maurer claimed that by forcing an annexation on local business owners, it would eventually eliminate the entrepreneurial spirit.

"The area has a unique situation with entrepreneurs here," he said. "If you create a bad taste in the mouths of those currently here, they will spread the word and it will deter others from bringing businesses to the city."

Viewing this statement as a threat, council member Steve Lamb responded, "We are trying to do now what other administrations refused to do because of this conflict. If changes had been made along the way, the city wouldn't be in the predicament it is in, but we can't go beyond the law to do what needs to be done."

United Machine and Design, Inc. President Tim Callahan said himself and other business owners recognize the process is not going to be easy, but the best way to complete annexation needs to be found.

"Additional taxes will hurt, but that added expense could end up on the customers or make us have to make a staffing decision and none of us want to lay anyone off," he said. "What needs to be done is to find the easiest and most economic way to do it."

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So when is a good time to annex? It doesn't matter. Remember, the businesses don't pay taxes, the private individual pay the taxes. That is the people they sell their product to. Most are not in this area. The prices of their goods will have to go up to pay the taxes. Be harder for them to compete. But, do they all drive on Brazil City streets? Would the fire departments and police departments respond to their facilities? Yes. Sorry, but the time to start paying their fair share is now. Sure we get trickle down tax money from their employees, but look at the conditions of the city streets. If the territory was annexed, and the money were spent with accountability, then maybe, the streets would be in a little better shape.

Annex today, or next year, it will still not be a good time for these businesses. Sorry, but that is the way it goes. Someday, the fresh water lines in the city will have to be replaced. When is a good time to do that?

-- Posted by Conservative Dad on Thu, Oct 8, 2009, at 8:17 AM

What do you mean businesses don't pay taxes! Surely you are not a business owner! Most small business owners eke out a living, some pay taxes that will never benefit their business. These taxes are for the large mega corporations to retain employees in Indiana and keep them trained.

Most of the business owners in and around Brazil live and breath Clay County. Wake up!

-- Posted by ccc on Thu, Oct 8, 2009, at 10:11 AM

All taxes are paid by the individual consumer. You own a business. Thank you. You contribute to our community, and I am sure you are very generous with your profits. But ALL taxes are passed on to the consumer.

If McDonalds takes on a minimum wage, they have to increase their prices to cover that.

When we go into a retail store, and purchase, we have to pay sales tax. They put it right on the bill so we know how much goes to the state (really much more of that cost is taxes, we just don't get to see the break down).

If "Fedzilla" comes in and increase your taxes as a business, and you don't have it, what do you do? You increase the price of your product to the individual consumer.

Anytime "Fedzilla" says they are going to tax "Big Oil", or the big polluters (Coal fired power plants), they dont' just eat that, they pass it on to the individual consumer.

Sorry, but business don't pay taxes. You as a private individual do. Sure it comes out of your business bank account, but where did you get it? From the individual who does business with you.

-- Posted by Conservative Dad on Thu, Oct 8, 2009, at 11:47 AM

You are correct that business can just raise the consumer pricing. The problem is every price increase will cause a consumer decrease or business will loose the ability to compete with anyone outside of Brazil. We also could make the local burden so high we loose manufacturing or the possibility of future manufacturing moving to Brazil. We then start to loose and never increase the working consumer. That job or future job as you point out is paying the tax anyway.

-- Posted by brazilworker on Thu, Oct 8, 2009, at 2:17 PM

Why now? Most of Clay Co. is unemployed or struggling to make ends meet. If prices go up locally to cover a new tax then people will just go to another county to make purchases. How is that going to help? Menards, for example, is not that far away.

-- Posted by houseofhate on Thu, Oct 8, 2009, at 4:24 PM

My husband owns a small business in the city limits of Brazil and we also own a small 2 bedroom house. When they governor put the tax cap on propery taxes our home taxes stayed the same and the taxes on our small building downtown tripled. We DID NOT raise our prices because we could not afford to lose business to surrounding towns. The school tax alone on the business was more than the entire tax on the house. To me this explains why the City of Brazil wants to only annex businesses and is not concerned with the home owners. They dont make a killing off the houses. So just to clarify, NO not all customers absorb the tax increases. I just hope that the citizens of Brazil will appreciate the small businesses in this towm and try to patronize to them when possible so that they can continue to remain open.

-- Posted by opininated on Thu, Oct 8, 2009, at 5:23 PM

Opininated, I couldn't agree with you more.

-- Posted by houseofhate on Thu, Oct 8, 2009, at 8:04 PM

Brazil need to fix alot of other problems before starting new ones!!!!!!

-- Posted by max23 on Fri, Oct 9, 2009, at 9:36 AM

It is not the time for annexation. Brazil City Council- Stop spending money you have now in exchange for money you may get in the future from the businesses who will move out of the area or have to lay staff off because people can no longer afford to shop there or do business.

A bird in one hand is better than two in a bush.

-- Posted by Claycountian on Mon, Oct 12, 2009, at 8:44 PM

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