Excuse the title of this post, but I just read the lead story in the Indianapolis Star about Litebox–the company that was showered with praise and promises of tax breaks just yesterday by both Mayor Ballard and Governor Daniels.
In my post yesterday, I questioned whether the obviously strange owner had been adequately vetted. Today’s news makes it abundantly clear that the answer is no. In fact, today’s story makes it clear that the company and its proprietor had not been vetted at all.
What sort of process awards tax incentives to a man who not only has no history of entrepreneurial or business success, but who also has multiple unpaid tax liens and judgements against him in his home state? As a policy matter, I have qualms about the practice of “helping” businesses financially in order to lure them to one’s city. But if we are going to play that game–and it is a game–the least we can do is insure that the businesses favored by state and local government are real, and that they pay their bills. If the rationale for these programs is job creation, the least we can do is ensure that the companies that benefit are capable of producing jobs.
This fiasco is a good example of why I keep harping on the issue of competence.
Didn’t anyone bother to check on this charlatan? Or were they so anxious to announce “jobs” that they didn’t bother?
I admit that I have zero experience in manufacturing… but 1,000 people to build a big TV screen on the side of an already-built truck? Really?!?
From the “Star” article: “…Stephen Isenberg, president of Impact Audio Visual Inc. of Las Vegas, which has supplied mobile video screens for high-profile events, including the Academy Awards, said he finds Yanagihara’s plans unrealistic.
The $20 million that Yanagihara plans to spend to build an assembly factory for truck-mounted media screens in Indianapolis is enough money, Isenberg said, “to buy all of the competitors in the industry.”
This thing stinks.
You know I have already been told by many of my Repub friends – that this deal has cost the state and city zero dollars and I am forced to agree.
BUT there is larger issue here – it’s called hope. Hope that there maybe new jobs coming to the northwest side – hope that there maybe new jobs downtown. There appears to be little REAL hope for either.
The fact that this deal or Yanagihara were not vetted tells me that Daniels and Ballard are ALL about making headlines and not real hope that 1,100 jobs are coming to Indy. I can only assume that the state and city staff personel required to check out this type of “Give away” tax breaks have either been laid off or their positions have been sold.
I agree with Joe S. this thing stinks!
“As a policy matter, I have qualms about the practice of “helping” businesses financially in order to lure them to one’s city.”
Amen. It is a dangerous road to go down when you have government picking who should be the winners in our free market economy and trying to help them out. If I have a company why would I now located to Indy without money being thrown my way?
FYI, I used the word “fiasco” before reading your column in which you used the same word.
My understanding of the jobs thing is that Melina Kennedy also “threw” money at businesses during her tenure as Deputy Mayor of Economic Development. Amazing that she’s complaining about something she’s just as guilty.
I think you miss the point. Whether I think it’s good policy or not, both parties play the “come to Indy and we’ll give you incentives” game. But if you are going to offer companies inducements to come, you have an obligation to see to it that they are able to fulfill their part of the bargain. To my knowledge, the Peterson Administration did adequately “vet” those to whom incentives were offered. We checked people out way back in the Hudnut Administration–before Google made vetting so simple.
“But if you are going to offer companies inducements to come, you have an obligation to see to it that they are able to fulfill their part of the bargain.”
They absolutely did require the fulfill job requirements to receive the funds. This was noted in the article. The worst that comes from this is Ballard and Daniels look silly for being at the announcement. If the company does not meet the requirements, there is not a penny lost by the city.
I agree that the company looks questionable, but so do many start-ups. Yanagihara may have exaggerated his claims about how many jobs he could provide, in fact, it seems as if he undoubtedly did.
Personally, I think the Kennedy campaign made a mistake by coming out against this. If they had issues, they should have privately spoken with the media and encouraged them to investigate. She has now given Ballard a great rebuttal to criticism of this. All he has to say is “I want to support business growth in this city, not block them from building in our city.” True or not, this will be a good talking point for him in the final days before the election.
Logic, I disagree. Ballard screwed up and she has an obligation to point it out. I don’t agree that they only get the incentives if they fill the jobs. The City often fails to monitors job committments and even more rarely takes away incentives. Remember Navistar…we took them away and gave them back.
As far as Kennedy making a mistake bringing up the issue, giving Ballard an opening to talk about Litebox some more. I think any political adviser would tell Ballard to run the hell away from Litebox and never mention it in public again. No use further publicizing your screwup by talking about it some more.
Paul,
I think we both agree that the whole deal seems too good to be true. However, I don’t think there is enough time before the election to turn this into a negative for Ballard. The announcement got a lot more attention than the scrutiny is receiving. I think the average voter will remember the job announcement, but not the issues behind them.
I don’t think Ballard is going to be talking about this a lot in the next week and a half, but I’m sure he will comment if asked about it. The timing of this was strategic. The promise of more than 1,000 jobs in manufacturing and in downtown offices is a bright spot in an otherwise dull economic climate (pun intended).
This reminds me a bit of Carbon Motors. Remember all the attention and praise the state received for bringing this to Indiana? Well, nothing has happened, but very few people are aware of that.
What an amazing cluster*! Looking at the information on the Web and You Tube about Litebox — it’s just so obvious that nobody could have checked this guy out, even minimally.
Those who say that there’s no harm because this business does not get the tax incentives without jobs — sorry, but you are wrong. By definition, we are preferring new, unproven businesses over old, established businesses. It’s an insidious business, giving away taxpayer money.
Plus, as with the United deal — and the other deals that went sour in the Northwest sector of this City — the buildings can end up empty, and a drain on the tax base. Clawbacks did not work with United — the city’s investments have not been recouped. Due diligence is essential to avoid more blight, and we citizens should demand it.
One other thing — as my husband says, after
M(onday) and T(uesday), even my calendar says WTF.
@ Logic: The point really isn’t that incentives won’t be claimed if the jobs aren’t created… the real issue is the games Ballard plays with “job commitment”-announcements, claiming that he is “creating jobs.” While it is incumbent on mayors to try to create the conditions for job-creation (which may involve getting out of the way), Ballard’s claims that he is creating jobs — and lots of them — with NO vetting of the companies or individuals seeking incentives and where NO-ONE in their right mind would legitimately believe that jobs are going to be created is cynical and misleading the public you are trying to convince. This would be so much less damaging if Ballard didn’t rely so heavily on these announcements as “evidence” of his leadership on job-creation. Sadly, LiTEBOX serves as a good example of his entire approach to the jobs issue.