Subsidizing thy neighbor

May 14, 2008
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Should a city give incentives to companies that want to leave the city and expand in another town?

That question is dogging Muncie officials after they offered a $600,000 loan to a Spanish company that plans to move an auto-parts plant from Muncie to Yorktown.

Miasa Automotive LLC plans to create 40 jobs in Yorktown, which is on Muncieâ??s outskirts. The 17 existing jobs are in Muncie, which has been decimated by losses of manufacturing jobs.

None of the new employees added in Yorktown has to be a Muncie resident.

The loan in effect is bridge financing. Yorktown made a nonbinding commitment to permanently finance the loan by floating a bond of its own within six months.

Muncieâ??s newspaper, The Star Press, howled about the loan in an editorial today.

Accompanying the editorial is a picture of Lt. Gov. Becky Skillman announcing the expansion. Noting none of people on the platform with her were from Muncie, the caption says, â??Somethingâ??s wrong with this picture.â??

Yorktown should set up its own industrial loan fund if it wants to â??poachâ?? companies from other parts of Delaware County, the editorial contended.

Had you written the editorial, what would it have said?
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  • This is silly. Muncie and Yorktown should be working together. There is no public benefit to pay a company to move a couple of miles down the road. Without a doubt the state should not encourage such nonproductive activity by local communities. They should be concentrating there efforts and incentives on attracting NEW companies from Ohio, Illinois, Michigan, California, New York, Tokyo, Berlin, not fighting over a company already here.

    It's much better to make the pie bigger than fight over the crumbs.
  • Stupid turf wars and some folks that don't have enough to do.
  • This is from Muncie to Yorktown, litterally accross the creek from West Muncie. It seems we are missing something in this story. Were the original employees Muncie residents? Is there a reason the current employees are not continuing to work for the relocated business, or are they continuing to work for the company and were already not from Muncie? The reality is they are adding 13 NEW jobs to the Muncie area. Are these new jobs not going to generate revenue for Muncie businesses? Are there that many options for the employees of this company to spend all their hard-earned money in Yorktown? Have you SEEN Yorktown? No? Not suprising. If you've driven through Yourktonw you could very well have mistaked it for part of Muncie. Help me out here.

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  1. By Mr. Lee's own admission, he basically ran pro-bono ads on the billboard. Paying advertisers didn't want ads on a controversial, ugly billboard that turned off customers. At least one of Mr. Lee's free advertisers dropped out early because they found that Mr. Lee's advertising was having negative impact. So Mr. Lee is disingenous to say the city now owes him for lost revenue. Mr. Lee quickly realized his monstrosity had a dim future and is trying to get the city to bail him out. And that's why the billboard came down so quickly.

  2. Merchants Square is back. The small strip center to the south of 116th is 100% leased, McAlister’s is doing well in the outlot building. The former O’Charleys is leased but is going through permitting with the State and the town of Carmel. Mac Grill is closing all of their Indy locations (not just Merchants) and this will allow for a new restaurant concept to backfill both of their locations. As for the north side of 116th a new dinner movie theater and brewery is under construction to fill most of the vacancy left by Hobby Lobby and Old Navy.

  3. Yes it does have an ethics commission which enforce the law which prohibits 12 specific items. google it

  4. Thanks for reading and replying. If you want to see the differentiation for research, speaking and consulting, check out the spreadsheet I linked to at the bottom of the post; it is broken out exactly that way. I can only include so much detail in a blog post before it becomes something other than a blog post.

  5. 1. There is no allegation of corruption, Marty, to imply otherwise if false. 2. Is the "State Rule" a law? I suspect not. 3. Is Mr. Woodruff obligated via an employment agreement (contractual obligation) to not work with the engineering firm? 4. In many states a right to earn a living will trump non-competes and other contractual obligations, does Mr. Woodruff's personal right to earn a living trump any contractual obligations that might or might not be out there. 5. Lawyers in state government routinely go work for law firms they were formally working with in their regulatory actions. You can see a steady stream to firms like B&D from state government. It would be interesting for IBJ to do a review of current lawyers and find out how their past decisions affected the law firms clients. Since there is a buffer between regulated company and the regulator working for a law firm technically is not in violation of ethics but you have to wonder if decisions were made in favor of certain firms and quid pro quo jobs resulted. Start with the DOI in this review. Very interesting.

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