What can $18 million really buy?

According to the Indianapolis Business Journal the Metropolitan Development Commission is slated to approve more tax payer money to subsidize Dow AgroSciences on the northwest side of Indianapolis.

The Metropolitan Development Commission is slated to approve $5 million in TIF funds to help Dow AgroSciences defer $20 million in project costs related to a $340 million expansion expected to create 577 high-paying jobs over the next five years.

The huge investment will greatly expand the company’s research and development capacity and is a major win for Indiana’s life sciences industry. Most of the created positions will pay between $65,000 and $95,000 annually.

Dow AgroSciences, a subsidiary of Midland, Mich.-based giant Dow Chemical Co., produces agricultural products, such as seeds and pesticides. In recent years, it has moved heavily into biotechnology, and plans to roll out five products by 2012 that could generate $800 million annually in new sales.

The first phase of Dow AgroSciences’ expansion will be the addition of a 14,000-square-foot greenhouse and a 175,000-square-foot research and development facility at its corporate campus on the city’s northwest side. The greenhouse should be finished by year’s end, according to the company, while the R&D facility is slated to open in early 2012.

The Indiana Economic Development Corp. gave the company $12.5 million in performance-based tax credits and another $205,000 in training grants to encourage the expansion. The city of Indianapolis will kick in another $500,000 from its Industrial Development Grant Fund to help pay for road, sewer and water improvements related to the project.

By our calculations, that totals $18.205 Million for 577 jobs at Dow.  That is roughly $31,000 per job.  What will we get in return for our $18Million+ investment?  It will take a lot of calculating to figure it out exactly, but here's a quick set of questions that could make this a really really good deal, or a really really bad deal for the tax payers of Indiana and Indianapolis.

• It is unclear from this information if the property taxes will go up on the new development, so that could be additional revenue.
• The $340 million expansion will no doubt create and sustain some construction related jobs; hopefully there is a prevailing wage agreement???
• If their new products will generate $800 million in sales, do they collect sales tax from their customers or are these wholesale transactions?
• The jobs are projected to earn up to $95,000 so that will be additional income tax revenue for the county and state, and those folks will hopefully contribute to their communities financially.
• If they are going to generate an ADDITIONALLY $800 million in sales annually, what are their current annual sales, and can't they access a line of credit?
• Finally, if Dow will generate an ADDITIONAL $800 million in sales annually, could the tax payers get their $18 million back? 

Our $18 million investment equals less than 3% of their projected revenue from the project FOR ONE YEAR, but equals more like 600% of the projected money needed to save things like the libraries or IndyGo.

Even though the members of the Metropolitan Development Commission are not directly accountable to the public, and get to make these decisions essentially behind closed doors, the members are overwhelmingly appointed by the Mayor of Indianapolis.  Maybe he can ask Dow to grant us our money back after they pad their bottom line.

Canadian Corporate Welfare to Watch

In late 2009, Windsor Machine Group from Ontario, Canada, committed to bringing $4 million of its own money and 130 jobs to the Gibson County area (Evansville).  The Indiana Economic Development Corporation gave them $275,000 in performance based tax credits and they also received $39,000 to train the new hires.  They were also promised additional property tax abatement (the exact amount is unknown at the time of this post).

Just last month, the Economic Development Coalition of Southwest Indiana requested and was awarded a grant from the Indiana Office of Community & Rural Affairs (that they get from US Housing and Urban Development) on Windsor's behalf for an expansion.  A grant of $500,000 was awarded to assist Windsor in purchasing equipment to produce head rests for the Toyota Plant and potentially a Ford project, too.  This grant promised 50 new jobs, of which 42 are reserved for low-to-moderate income families in the Gibson County area.  They will pay $10.00 per hour, with an added $5 per hour in benefits (health insurance and holiday pay). 

This essentially means that we've given Windsor Machine, a Canadian company, $875,000 in tax payer money over the last few months in exchange for more than 150 low wage jobs (some of the 180 new jobs are supervisory at $15+ per hour).  Plus, they will have additional money given to them in the form of tax abatement - which hurts the local economy by giving away money that would have been spent on schools, public services and public safety.

There is an added twist:  The recent grant that they received requires them to hire workers from low to moderate income families for at least 51% of the jobs.  They have to pay back some of the money if they do not meet this performance indicator.  That seems like an easy incentive for the company- why pay the workers higher wages which could pull them out of poverty and make them ineligible for the grant? 

This is something the tax payers in Gibson County should watch - and all across Indiana for that matter, because your tax payer dollars from the state went into this project, too.  Everyday we give away millions of dollars to companies in exchange for jobs - and we should care about the types of jobs our tax dollars are creating; especially if the families then have to apply for public assistance to make ends meet.

Do you have more questions about this?  Contact Debbie Bennett Stearsman, Grant Administrator at (812) 423-2020 or dbennett@southwestindiana.org

Some things in the works...

This blog is about facts - not political gain or corporate bashing just for bashings sake.  It is about the facts and where our money is going.  To that end, we are doing some extensive research on our next blog posts.  Here's what is in the works:

• Our tax dollars go to many private companies who contract with the state for a variety of services - janitorial being one of them.  What kind of jobs are being created with that $12 million?  Are our tax dollars also going to subsidize these workers in the form of food stamps, medicaid or housing assistance because their employer doesn't pay wages in line with the self-sufficiency standards in Indianapolis?
• Our tax dollars also subsidize private companies through the State Home Health Care and Medicaid funds to provide home health care services.  The companies then categorize the workers as independent contractors for $8.00 per hour, which means they are not covered by the company's liability insurance, they are not offered health insurance, and they are responsible for paying their own payroll taxes - which are higher for independent contractors than a regular employee. 
• Indianapolis designated some stimulus money to go toward weatherization of houses - about $14,000 went to the Indiana Builders Association, some $400 has been spent. 
• WTHR reported last week that the Governor inflated numbers about jobs created across the state.  Also, in 2007, Indianapolis Economic Development, Inc. received $300 million for job creation which resulted in only 400 jobs.  That equals $750,000 per job, and we're sure the 400 workers didn't get that much in salary.
• Our public education system is in a crisis.  Rather than fix the problem, the Indiana State Legislature increased the funding for charter schools by 19.6% when other school districts were forced to make cuts.  This is not a criticism of charter schools, but most of them are non-profit corporations headquartered in other states, with no accountability to the public.  This also sounds like shifting the resources from one hole to another rather than fixing the cause of holes.
• At a City County Council committee meeting this week, charged as the CIB budget taskforce (or something like that), took "testimony" from the Indiana Convention and Visitors Association about the various sources of tax revenue that are generated downtown, like the innkeepers tax, food and beverage tax and sales tax.  Also, they reported on the money tourists spend in downtown Indianapolis and where that money goes regarding debt on Lucas Oil Stadium and the Convention Center.  They provided a copy of their power point, and the data were from 2006!  No wonder the CIB can't balance its budget.

We will post full blog posts about these issues as we gather more information, documentation, and proposed solutions. 

Who needs a China Town when we have a Marriott Town?

Unfortunately, we didn’t know about the February 17th committee hearing on Proposal 35 before the City County Council. Fortunately, they opened the floor to public comment on Monday night, but it was pretty clear that all minds had been made up ahead of time.


The Council voted 23-4 in favor of the proposal that allocated $5 million of tax payer clawback money from Raytheon to Indiana Convention & Visitors Association (ICVA) and Indianapolis Economic Development, Inc. Specifically, $1.5 million was designated to ICVA and drew Councilor support because the White Family, of White Lodging (read Marriott hotels), agreed to match the $1.5 million 4 to 1.

ICVA has more than 60 employees, and the CEO’s reported salary in 2007 was $320,522 according to their IRS Form 990. According to the testimony from Deputy Mayor Nick Webber on Monday night, ICVA will use the $7.5 million to market downtown Indianapolis to draw larger conventions. This money will be on top of the tax payer dollars that already fund this non-profit corporation’s budget (Capital Improvement Board and Innkeepers tax).

This also means that White Lodging bought $1.5 million of our tax payer dollars on Monday night, to put with its own money, to increase its bottom line through marketing of downtown and its hotels. Marriott has a voice at the state level, because Bruce White is appointed to the Indiana Economic Development Corporation (IEDC) by the Governor. IEDC “focuses its efforts on growing and retaining businesses in Indiana and attracting new business to the State of Indiana.” The Marriott already has a voice at the local level, hence the giant JW Marriot under construction, and the other hotels. Who needs a China Town in Indianapolis, when we have a Marriott Town already?

Cities need economic development, no doubt. But is it justified at the expense of neighborhood residents in Indianapolis who self-reportedly never use these amenities? Or the backbreaking work of hotel housekeepers who don’t earn enough to afford housing and groceries, let alone a hotel room?

Councilors Brown, Coleman, Evans and Minton-McNeill voted against the proposal.  We have a chance to impact an additional $500,000 being sought by the City.

City County Council Meeting Tonight

As a follow up to our first post, the City County Council meets tonight to hear about the Navistar tax abatement claw backs.  We missed the committee meeting, so who knows if there will be an opportunity for public input, but please turn out if you can, or call you Council representative at 327-4242.  See more about this issue on another local blog.  The City County Council meets tonight at 7:00 in the City County building on the 2nd floor.  Hope to see you there.

Where's the Money

In a casual conversation in a neighborhood on the city's southeast side, the question, "Where's the Money?" was stated quite a bit.  Then today, it was stated one too many times and drove us to start making public statements (a blog).  A few people in Indianapolis and a few more in Indiana make deals with corporations every day that harm the residents.  This blog will identify those deals as we learn about them - often long after they've happened - and hopefully identify what the People can do about it.

Some examples: 

the $5 million in clawback money the city is getting from Navistar closing is proposed to go to IDEI and ICVA instead of the people and groups it would have gone to as actual property tax payments (i.e. schools, parks...)

the money taxpayers are still paying for arenas in downtown Indianapolis that have been torn down, in the name of building new buildings that will bring additional tourism and revenue and jobs, when in reality we've gotten below poverty wage jobs and the revenue from tourism goes to corporate headquarters not located in Indianapolis.

these are just to name a few...