Saturday, December 6, 2014

Angie's List Agrees to Pay "Undetermined Amount" If It Reneges on Job Promises in Subsidy Deal

Only in Indianapolis would city officials have the chutzpah to put taxpayers on the hook for a multimillion dollar subsidy deal for a company, which has never made money in its nearly 20 year history, based on an assurance that the company will put an "undisclosed amount" in an escrow account if it fails to live up to promises.  Will Indianapolis council members at least demand to know the amount of the promise before they approve the the bond?  How is the public not entitled to know the amount?

In a lengthy story on the subject, the Indianapolis Business Journal reports:
If Angie’s List fails to live up to promises fueling a taxpayer-subsidized headquarters expansion, the company will pay an undetermined amount into an escrow account for the city’s benefit.

Angie’s List also agrees to donate up to $1 million to east-side not-for-profits if the company headquarters is relocated.

Those protections are built into a $17 million economic-development deal announced in October, two weeks after The Financial Times reported Angie’s List had hired investment bankers to explore a sale. A bond issue for the deal still requires City-County Council approval.
The company says it will employ 2,800 people in Indianapolis by the end of 2019, but the city sought extra protection of its incentives because of the sale “rumors,” said Larry Gigerich, managing director of the site-selection firm Ginovus, which represents Angie’s List in its dealings with the city.

...

Angie’s List would get $10 million from the city for its redevelopment effort, plus take title to the Ford building, which is currently owned by Indianapolis Public Schools.

The bond under consideration by the council would be backed by revenue to the downtown tax-increment financing district.

Angie’s List would receive $9.6 million of the bond proceeds to help pay for a new parking garage on an adjacent two-acre parcel, which the company bought early this year in anticipation of the deal, Gigerich said.

The company would also receive a $400,000 grant for infrastructure improvements. That money would come from existing Department of Public Works funds, through a deal to be worked out next year, said the city’s director of strategic initiatives, Kurt Fullbeck.

Another $6.75 million in bond proceeds would go to IPS, which uses the Ford building as a warehouse, for the district’s relocation expenses. Then the city would turn the building over to Angie’s List, which would invest an estimated $23 million in renovations, Gigerich said.
....
[Mayor] Ballard's office wouldn’t say how much could be recovered through escrow.

“There is no set amount that might be required,” Ballard spokesman Marc Lotter said. “It should be noted an escrow payment is not a penalty. It is a sign of commitment by the company to take the necessary steps to come into compliance with an agreement.”

The amount to be deposited in escrow would be determined through a formula that gives a 50-percent weight to the head count, 25 percent to the capital investment, and 25 percent to wages.
...
Readers should be reminded that Angie's List laid off nearly 100 salespeople last August, just two months before inking a multi-million dollar subsidy deal with Indianapolis and state officials.

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