Economy and Utilities and Government and Economic Development and Manufacturing & Technology

Incentive search shot down: University Loft eyes Tennessee after Hancock County spurns request to create a TIF district

November 14, 2005

Hancock County Commissioners' unwillingness to consider creating a Tax Increment Financing district has sent a growing Indianapolis-based manufacturer looking for a new expansion site, possibly out of state.

University Loft Co. CEO James N. Jannetides said he was continually rebuffed over a months-long process to get the tax incentives his company needed to bring 200-plus jobs to the county directly east of Marion County. Now Jannetides said he might look to consolidate manufacturing in Tennessee where he opened a plant this spring.

Hancock County Commissioners Oct. 31 said a TIF district for University Loft's project would cost taxpayers too much to justify the types of jobs the Indianapolis firm would bring to the county.

State law allows counties, cities or towns to establish TIF districts, where increased property taxes due to development within the designated area are captured and used for upgrades such as roads, sewers and other utilities, often to support the development within the district. Hancock County commissioners have never established a TIF district, but Greenfield and Fortville officials within Hancock County have.

The commissioners voted 2-1 against establishing a five-member redevelopment commission to further study the effects of a TIF district. State law requires a redevelopment commission to be established before a local government agency can create a TIF district.

University Loft, which employs 200 of its 250 workers at Hillside Avenue and East Washington Street plants in Indianapolis, had planned a three-phase project on 1,100 acres of farmland. Jannetides said the project would have brought Hancock County more than $54 million in taxes from his company over 10 years.

Phase one, the construction of ULC's $17 million, 500,000-square-foot manufacturing facility southwest of county roads 400W and 300N, was to begin early next year. A multitenant business park on 340 adjacent acres made up the second phase. Phase three would have expanded the business park, which Jannetides' company planned to develop. At 1,100 acres, it would've rivaled the size of Park 100 on Indianapolis' northwest side. Jannetides said the development would have allowed his company to grow revenue and employment exponentially.

If history is any indicator, Jannetides would have little trouble delivering on his promise of growth. Founded in 1986, ULC has become one of the nation's largest manufacturers of college dormitory furniture. The company's revenue grew to $8 million by 1996. As he has expanded ULC to supply furniture for one-third of the nation's colleges and added a line of furniture for military installations, Jannetides said, revenue has topped $50 million. A line developed in the last two years to be sold through retailers such as Kittle's Furniture promises to push sales higher, Jannetides said.

ULC's expansion seemed on track when the Hancock County Council approved a 10-year tax abatement for the project and county commissioners signed off on rezoning of the land earlier this year. The Indiana Economic Development Corp. awarded a $1.3 million incentive for infrastructure for the project near Mount Comfort.

But when Jannetides requested a TIF district be established to pay for another $1.2 million in infrastructure upgrades, County Commissioners Armin Apple and Brian Kleiman, both Republicans, didn't even want to study it. Commissioner Jack Heiden, also a Republican, was in favor of considering the request.

"I thought University Loft had a strong proposal," Heiden said. "I thought this project would be a catalyst for this area. The TIF district was certainly worth studying. Now, I don't know what this says to other businesses about Hancock County."

"A TIF district needs to benefit all involved," said Apple, a Hancock County farmer who is finishing his 11th year as commissioner. "We didn't feel it benefited the taxpayers. If this was a real hightech situation, we might have looked at it a little harder."

Apple's suggestion that high-tech operations would have a better chance of landing tax incentives didn't sit well with Jannetides-or the Indiana Manufacturers Association.

"I would have to put that comment in the naïve category," said IMA President Pat Kiely. "Many manufacturers use hightech processes and machinery."

ULC's local annual payroll, Jannetides said, exceeds $5 million. While ULC's manufacturing jobs begin at $7 an hour, he said the average wage for his Indianapolis employees is $19.30 an hour. According to the National Association of Manufacturers, the average manufacturing wage nationwide is $16.50 an hour.

Kiely finds Apple's comment especially odd at a time when Indiana is bleeding manufacturing jobs.

"From 2000 to 2005, Indiana has lost 20 percent of its manufacturing work force," Kiely said. "I'm glad to hear they're doing so well in Hancock County that they don't need to worry about that."

Jannetides is amazed at the resistance he encountered in Hancock County while Gov. Mitch Daniels is making efforts to bring jobs home.

"This sends a horrible message for Hancock County and really the entire state, especially to manufacturers," Jannetides said. "Our governor is traveling overseas looking for manufacturers, and you've got a company in our own back yard government officials are throwing rotten eggs at."

Kleiman said there's plenty of development in Hancock County that shows local officials are business-friendly.

Weston Sedgwick, spokesman for the IEDC, the governor's economic development arm, said state officials have done all they can to encourage ULC's local expansion. Still, some local manufacturing industry insiders said state officials' emphasis on attracting high-tech and biotech jobs has sent the wrong message about traditional manufacturing jobs.

"We're trying to diversify our economy, but retaining and attracting manufacturing jobs are still a high priority," Sedgwick said. "The state and IEDC absolutely want to support manufacturers."

While attracting new jobs is a high priority for Daniels, Sedgwick said a costbenefit analysis must be done on a caseby-case basis by local officials closest to the project.

"In the end, these are local decisions that have to be made by local officials," he said.

Apple said Hancock County would be forced to provide services for the new development and its employees and not see any property tax revenue from it for many years.

"A TIF district is a shift in the burden of taxes to the county's other citizens and businesses," he said. "I have not heard from any of my constituents that they are for this."

Kleiman said granting ULC's development as a TIF district might have made sense if Hancock County owned its own utility company, and could use the increased utility revenue coming in from the new development to offset other utility customer rates.

"I'm not sure this is the time or the place for a TIF district," Kleiman said. "We don't need taxpayers on the hook for bringing these jobs here."

Jannetides' anger was not allayed by the commissioners' rationale.

"When an Indiana manufacturer has to face the kind of obstacles we have and not get support from our own state, it makes it hard to want to continue to look in Indiana for a new location," Jannetides said. "We are back at square one."
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