City rejects tax abatement request

Chevrolet of Columbus isn’t getting the tax abatement it wanted from the Columbus City Council. But after being offered a compromise, the 8-month-old dealership could end up with some things the company needs.

The council voted Tuesday to deny the dealership’s request to designate a four-acre building site in Columbus Crossing as an economic development target area.

That decision ended the dealership’s pursuit of a tax abatement for a new $4.2 million Chevrolet dealership on a Menards-owned lot there.

The request generated strong reactions about whether tax abatements should be considered for retail development in Columbus. It also sparked discussion about whether the city would be violating a state statute by granting a tax abatement for a retail business in a prime development area on the city’s west side.

At Mayor Kristen Brown’s suggestion, the council approved seeking a compromise that could give the dealership more options and cost savings for its project, while not opening the door to retail developments who could line up to seek tax abatements from the city.

The council directed the city’s planning department to put together a request to change the Columbus Crossing property’s zoning, currently governed by a restrictive planned development designation, to commercial zoning.

If approved by the plan commission and the council, that change could allow Chevrolet of Columbus to overcome obstacles it had encountered in developing the land, including strict restrictions on signage and the type of building that could be constructed on the property.

The area’s current zoning prohibits the large pedestal signs that most car dealerships have and would have required the building to be developed on all four sides, instead of allowing a designed front, and a more box-like plain facade on the sides and back.

Brown offered the compromise during the council meeting. She told council that if it granted the economic development target area designation and the tax abatement, it would completely open the floodgates for every retailer to seek the same opportunity.

During public comment, Columbus Economic Development Commission member Justin Hohn repeated his opposition to the designation and abatement, saying the city had to follow the law and by doing that, could not grant the dealership’s request. The commission voted 2-1 on May 26, with Hohn as the dissenting vote, to recommend that the council consider the dealership’s request.

Former Columbus Mayor Fred Armstrong, who now works for the dealership, pointed out that Kroger received the designation and a tax abatement for its new store on the former Dolly Madison site along Old National Road last year.

“According to your definition, it shouldn’t have been approved,” he said. “People were fighting over that property.”

He asked the mayor and council members to consider how far they were willing to stretch to help a business that wasn’t Kroger, Cummins or Faurecia but wants to be a part of Columbus and invest here.

Armstrong described Chevrolet of Columbus President Leo Portaluppi as a businessman who wants to make a difference in the community and the council had the opportunity to help him succeed in Columbus.

After the meeting, Brown said she wanted the company to invest in Columbus and the compromise of the zoning change could be a great solution and possibly benefit future development in the area.

Portaluppi said he was disappointed in the council’s decision against the economic development target area but that the zoning change did open a door of opportunity if his timing for building the dealership and the city’s zoning proposal can gel into a realistic plan.

“I still want to stay here,” he said of building the new Chevrolet dealership in Columbus. “If this had been an option before, I would have already started construction.”

In earlier interviews, Portaluppi said he had investigated locations outside the Columbus city limits where he could save about $1.5 million over the cost of building at Columbus Crossing.

Portaluppi and his attorney, Tim Coriden, gave a presentation to council before the vote explaining why the economic development target area designation was appropriate for the area.

They described obstacles that other developers encountered when presenting plans to purchase land there, including flooding and stormwater concerns that caused The Flats of Columbus to drop a development plan for an apartment complex last year.

They also mentioned concerns that the city might institute a moratorium against further development until the stormwater issues were addressed, citing minutes from public board meetings where the moratorium was mentioned.

Coriden and Portaluppi also pointed out that the property was generating only about $100 in property taxes now, but even with the abatement, the car dealership would have paid nearly $1 million in taxes by the end of a 10-year abatement.

However, the council had a problem with whether the property’s limitations rose to the level required in state law for cities to grant tax abatements to car dealerships. To declare an economic development target area, which is necessary for the tax abatement, the city must determine the area is undesirable or impossible for normal development and occupancy because of lack of development and growth, deterioration of improvements, character of occupancy, age, substandard buildings or other factors that have impaired values or prevented normal development.

The dealership’s request hinged on the zoning factors impairing value and preventing normal development.

Portaluppi was attracted to the land because of its proximity to large retailers Menards and Walmart and nearby Interstate 65. But after entering into negotiations for the property, he said he learned why other developers weren’t going after it and why it had not sold in more than a decade.

When he learned about the signage restrictions and the requirements for the building, Portaluppi said he began to see red flags and understood why other developers have shied away.

However, the mayor countered by saying the city’s zoning regulations cannot be a reason to declare property an economic development target area.

The dealership now operates out of a leased building at 3560 National Road, which is in the city limits. The tax abatement represented about $600,000 in property taxes the company would not have had to pay.

Councilmen voted for the compromise, with the exception of Jim Lienhoop, who was absent from the meeting.

The city began working on the rezoning request Wednesday, with Columbus and Bartholomew County Planning Director Jeff Bergman saying the proposal would require a hearing before the city planning commission and two readings before the city council, a process that could take at least two months.

What's next

The Columbus Planning Department is preparing paperwork for the city plan commission to consider rezoning a planned development designation for areas of Columbus Crossing to a commercial designation. The department expects to file the request this week, which means it could be heard by the plan commission July 8. Depending on the recommendation from the plan commission, the Columbus City Council would then consider the rezoning on two readings, July 21 and Aug. 4.

About the project

What: Chevrolet of Columbus dealership

Proposed building site: 400 Merchants Mile, on about four acres of property owned by Menards in Columbus Crossing.

Building: Chevrolet of Columbus is proposing constructing a 21,652-square-foot building, with sales, service, parts and accessories departments and a partial two-story area for offices and administration  representing a $4.2 million investment. It would be the first new car dealership contracted in the city of Columbus in almost 30 years. The service area would have 11 service bays, three preparation bays, two photo bays and a full-service automatic car wash.

Employment: The company proposes to add seven full-time workers and four part-time workers to its staff of 28 full-timers and four part-timers. Average salaries are listed at $40,000.

For more information: chevyofcolumbus.com or call 812-375-2900.

Author photo
Julie McClure is assistant managing editor of The Republic. She can be reached at jmcclure@therepublic.com or (812) 379-5631.