"IEDC Lists Reasons Businesses Don’t Want to Come Here"

John Phair has an important ViewPoint article in the South Bend Tribune today in which he explains why businesses are afraid to locate in St. Joseph County.  His two main reasons are anti-business policies and one-party domination.  Excerpt:

During this same period, we were zero for 20 in our responses to RFPs from the IEDC, and St. Joseph County was zero for 150 for investments made by the state of Indiana in new entities or companies coming to the state. None came to St. Joseph County, or even just expanded within the county.

What’s wrong with us? Apparently, plenty!

I contacted the IEDC and was able to get a meeting with their leadership team within a few days to try to figure out why we were zero for 20. Because they were headed for an Elkhart opening, again, they agreed to meet in South Bend. At this meeting we inquired as to why our area is an economic failure compared to others around the state. They gave us three answers.

First, South Bend/St. Joseph County has the highest real estate taxes in the state (actually tied with Lake County).

They specifically mentioned the additional 0.5 percent charge to the allowed real estate value that happens only in St. Joseph and Lakes counties for real estate taxes, but affects all property owners in our county (a 16 percent difference over the other 90 Indiana counties).

This has the effect, of course, of making it more expensive to do business here. And any company wishing to build, relocate or expand here will be subject to that higher tax. It was hailed by many

local government officials as necessary for our local agencies to avoid layoffs, salary cuts or downsizing. At the same time, nearly all businesses that have faced cutbacks or layoffs are now paying the premium tax. So why would business want to come here?

Their second reason was the perception of South Bend/St. Joseph County as being a “high cost-of-doing-business” area.

Remember, this is the leading economic development agency in Indiana, a government agency that has made 150 investments across the state in wind energy, electric cars, biotechnology and many other fields.

Is this perception a reality? The answer is probably yes. Our firm is the landlord to more than 150 companies, the majority of which are in South Bend or St. Joseph County. We are a community that is run by a single political party, with little or no business participation in the political process allowed, resulting in a market that is perceived as anti-growth and anti-development.

Our South Bend Common Council listens to University of Notre Dame economics professor Marty Wolfson and his sycophants who operate the Community Economic Development label. Local acceptance of their economic unreality receives widespread reading on a statewide basis. This perception — no, reality — added to the fact that we have the highest real estate taxes in the state, permeates the local government.

The third area mentioned by the IEDC is the perception that operating businesses in South Bend/St. Joseph County have a difficult job dealing with union labor in our area.

Ironically, we have a lower percentage of union employees than in many other areas of the state because we have seen so many companies leave, cut back or shut down. But the fact is, the construction trades have brought up, year after year, proposals to add unreasonable conditions to any business that wants to expand and build in our area, and apply for a local tax abatement.

These union-sponsored ordinances have been proposed in either South Bend, Mishawaka or St. Joseph County every year for the last decade and the ubiquitous Wolfson is always there. The St. Joseph County Council passed a version last year. South Bend is once again reviewing one submitted by our mayor.

This promotes the image that we have a real “union problem.” This is the view that the IEDC hears time after time, not my view.

Cities have only a couple of tools at their disposal to attract or retain new companies or accommodate expansion from existing companies. Tax abatement is one. And yet we have those rules being challenged, year after year, somewhere in St. Joseph County. Do we really believe companies from outside the area don’t notice this kind of treatment?

The IEDC made it clear that nearly all companies that approach them for state assistance, including help finding a location that is suitable, have already done considerable research. They typically come prepared to identify areas in the state that they will consider. St. Joseph County, typically, is excluded. We never even get a look at them.

We have a continuing population erosion and a one-party political system that looks the other way. I think we are getting what the party breeds. When our leading development agency in the state is pointing out both the perception and reality I hope we will start to listen, and it had better be soon.

John Phair is president of Holladay Properties in South Bend.