NEW ALBANY —
About $11.5 million in advances have been borrowed by business owners in the New Albany Urban Enterprise Zone over the past five years through the zone’s loan interest credit.
The program is one of the UEZ incentives that would be suspended next year if a bill introduced last week in the Statehouse passes the General Assembly.
As a way for the state to eliminate some tax credits in order to receive more revenue, House Bill 1466 — authored by Rep. Scott Reske, D-Pendleton — calls for several abatements to be shelved beginning in 2012 until 2020.
Urban enterprise zones would lose the ability to offer loan interest and investment cost credits. The investment cost credit is rarely used by zone associations and wouldn’t be a great loss, New Albany UEZ Executive Director Mike Ladd said Monday.
But the loan interest credit generates quite a bit of money for the zones statewide — as much as 90 percent of the New Albany UEZ’s revenue — he added.
“In effect, [losing the loan interest credit] would technically kill this enterprise zone,” Ladd said.
A bank lending a zone business money can claim tax exempt status on 5 percent of the annual interest it receives on the debt through the loan interest credit.
Of that 5 percent, the bank keeps about half and pays the local UEZ and state the remainder. In New Albany, the UEZ keeps 48 percent of the tax-exempt sum, the state receives 1 percent and the bank takes 51 percent.
New Albany’s largest creditor is Fifth Third Bank.
Jeffersonville Redevelopment Director Paul Wheatley said about 25 percent of the city’s UEZ income comes through loan interest credits.
If the bill passed suspending the incentive, “it would certainly affect our yearly income,” he said.
“I suppose that it could negatively impact lending within the zone as well.”
New Albany’s UEZ — which stretches from downtown out Grant Line Road to encompass Wal-Mart — is the only zone in Floyd County.
Jeffersonville has two in its riverfront UEZ supervised by Wheatley as well as the River Ridge Commerce Center.
Ladd said he agrees with other portions of HB 1466. The house measure calls for the formation of a study committee on economic development, requires the state to track promises such as job creation made by companies receiving tax abatements and lowers the corporate state income tax from 8 to 5 percent.
“I think that’s a really good piece of legislation,” Ladd said in reference to the bill’s stipulations not affecting zone credits.
After being introduced, HB 1466 was referred to the house Committee on Commerce, Small Business and Economic Development.
A measure last year that would have also curbed UEZ credits passed the Senate before stalling in the house.
Ladd and Wheatley said they plan to meet with other UEZ leaders from around the state next month in Indianapolis to discuss ways the organizations will protest the legislation.
“At least now we know how to concentrate our actions,” Ladd said.
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Bill introduced to suspend UEZ credits
Zone directors say revenue would be sliced by legislation
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