Carmel likely is competing against Indianapolis to land the coveted Chicago Mercantile Exchange and may be prepared to offer incentives of $150 million, IBJ has learned.
Indianapolis confirmed Friday that city officials have been discussing a possible move with Illinois-based CME Group Inc., the exchange's parent company, for months. But apparently so has Carmel.
A letter obtained by IBJ and dated Nov. 3 from Carmel Mayor James Brainard shows the Hamilton County suburb is making a strong push for a company that is highly likely CME, based on its description.
The letter is addressed to a company Carmel is courting. The company's name and address are blacked out in copies Brainard provided to city councilors.
Brainard said in the letter that he is “excited to know” the company anticipates creating approximately 1,700 full-time jobs with an average annual salary of $135,000.
CME Group, which operates the Chicago Mercantile Exchange, the Chicago Board of Trade, NYMEX Holdings, and a majority of the Dow Jones indexes, has 2,570 employees worldwide, most of them in Chicago. In 2010, it reported more than $3 billion in revenue and more than $950 million in earnings.
Brainard could not be reached for comment Monday morning. His spokeswoman, Nancy Heck, would not reveal the company's identity, but did not deny it was CME.
“We’re not going to discuss the ongoing negotiations,” she said.
Brainard's letter said the company anticipates leasing 800,000 square feet of office space for its headquarters and 425,000 square feet for its data center, with occupancy starting in 2013. To put that into perspective, the office requirements would be larger than every downtown Indianapolis office building except for Chase Tower, which has 1.1 million square feet of space.
“The City of Carmel welcomes the competition and believes we offer an excellent environment for [firm's name blacked out] to grow and prosper while supporting your company’s need to compete for the best possible talent available,” Brainard wrote to executives.
CME did not return phone calls Monday morning to confirm whether Carmel is vying for the company’s operations.
Brainard said in his letter that Carmel is prepared to offer it $150 million in incentives, including land at no cost in Carmel’s City Center, midtown redevelopment or other commercially zoned areas, according to the letter.
He also said in the letter that the city would use 75 percent of the first full year’s assessed real and personal property tax to issue non-taxable federal disaster bonds to build the data center. The letter says that incentive has a “substantially greater benefit" than a 10-year tax abatement.
“The City of Carmel greatly appreciates the opportunity to work with the State of Indiana in support of this exciting project,” Brainard said. “We are very pleased that [firm's name blacked out] is considering the construction of its new headquarters and data center in Carmel, Indiana.”
Indiana is among the states CME Group Inc. has been eyeing for months as it weighs a move from its longtime headquarters in Chicago. A heavy tax burden that has the exchange operator paying an estimated 6 percent of all corporate tax collected by Illinois is causing CME to explore alternatives.
Last week, the Illinois House rejected a $250 million package of tax breaks intended to keep businesses like the 163-year-old exchange and Sears Holding Corp. from leaving the state.
Illinois legislative leaders said they were determined to reach a deal in the coming days or weeks despite a rejection by the House.
IBJ first reported on the possibility of a move to Indiana in October.
Mark Lotter, a spokesman for Indianapolis Mayor Greg Ballard, said it’s not unusual for multiple cities in a region to vie for a company’s operations. If CME chooses to relocate to the metropolitan area, whether it’s Indianapolis or another city, the entire region would benefit, Lotter said.
“When you’re talking about a company with the stature of CME, it’s a win for the entire area and the state because of the impact it would have on the local, state and regional economy,” he said.
Typically, a city courting a large corporation such as CME has about a 20-percent chance of actually landing it, said Larry Gigerich, managing director of local economic development consultancy Ginovus LLC.
But the odds for Indianapolis or Carmel could be greater, he speculated, given Illinois’ tax climate.
“The situation in Illinois is very tenuous right now,” he said. “It’s a completely different world there now.”