As city officials seek to bring high-speed internet to Columbus, developers are requesting certain incentives — namely, the creation of a citywide Economic Revitalization Area (ERA) to enable a 20-year tax deduction that could save the company $4.6 million.
The Columbus City Council will consider a resolution Tuesday that declares an ERA requested by Hoosier Networks, LLC, qualifies personal property for a tax abatement, and sets the time and place for a public hearing on the matter. The council meeting is set for 6 p.m. at city hall.
The actual tax abatement will not be voted on at this time. According to Assistant Director of Community Development Robin Hilber, a declaratory resolution for the ERA is what’s on the table for Tuesday. If it is approved, the council would then consider a confirmatory resolution on July 19, and a public hearing would be held. Assuming the confirmatory resolution is approved, the property tax abatement would be voted on that same night.
The proposed abatement is part of efforts to create a fiber-to-home network throughout the city of Columbus. The Columbus Board of Works approved a 30-year master development agreement with Meridiam Infrastructure North America Corp. for the project in late June. City officials have said that the network will reach at least 85% of the city, and the company will contract with an internet service provider rather than being the provider itself.
Bartholomew County also plans to work with the Meridiam and is contributing $4 million to its own project with the company. The sum comes from the county’s American Rescue Plan allotment.
While the city’s agreement did not come with a fee, officials have discussed making some contribution to the project, with a tax abatement mentioned as a method of doing so.
The proposed economic revitalization area in the company’s request encompasses the entire city. According to Meridiam Senior Investment Director Nick Phillips, Hoosier Networks is requesting a 20-year tax abatement on net new taxes for the installation of new, qualifying equipment. Hilber said that it is her understanding that Hoosier Networks is wholly owned by Meridiam.
Phillips said that the “fiber to the premise” network will support high-speed internet for both homes and businesses within the city. The project calls for the installation of new IT equipment, which turn necessitates an investment of approximately $28 million. According to the company’s application, this investment will take place over “a several-year period” starting this year.
According to city documents, the tax deduction — if approved — would be 95% on an annual basis. It’s calculated that this would allow Hoosier Networks to save almost $4.6 million in property taxes over 20 years, with the company paying a little over $240,000 in taxes during that same period.
“That is what I have calculated,” said Hilber. “However, this will actually be calculated by the state, and it’s dependent on the profitability of the company. So I’ve talked with Ginny Whipple who is the assessor, and we’ve both agreed that we think those numbers possibly could be overstated. … After they file the statement of benefits, they’ll actually file annual reports with the state. So we don’t really know what the taxes will be that will be collected, as well as what the savings will be.”
She said that the request to a declare a citywide ERA is unusual. It is being sought because the fiber will be installed in right-of-way throughout the city.
If the area is approved, any company seeking a personal property tax abatement within the ERA would still have to go through the application process.
“We’ve never been asked to do this before, but, of course, the benefit of this will be more that the entire city will be provided fiber, a fiber network that is hopefully going to make the internet much faster,” said Hilber.
She wrote in a memo to city council that while the abatement will not provide additional employment, Hoosier Networks will hire a community outreach specialist to market high-speed internet to households throughout the the city with a special emphasis on low-income families that are eligible for the Affordable Connectivity Program.
“This program will provide internet speed of up to 250mbps (megabits per second)/250mbps with a subsidy from the federal government covering the cost,” said Hilber. “Speeds up to 1gb (gigabits per second)/1gb can be purchased for an additional cost.”