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Carmel also likely competing for CME Group

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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.”
 

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  • Hmmm...
    According to the U.S. Labor Department, from October 2010 to October 2011, Indiana lost 12,400 jobs, a 0.4 percent decline in employment. Illinois added 60,500 jobs in that same time period. Illinois added 30,000 jobs in October, more than any other state. Since January 2010, Illinois has added 108,100 jobs ranking Illinois first in the Midwest in job creation. Illinois is home to 10 companies in the Fortune 100, 19 in the top 250 and 31 in the top 500. Indiana, by contrast, has five in the top 500. While Illinois’ corporate tax rate is at 7 percent, Indiana’s corporate rate is 8.5 percent - 20 percent higher than Illinois).
  • other factors
    Factor in all the other taxes, like Chicago's 10.5 city sales tax, income tax rates (5% vs 3.4%), etc. etc. It adds up. Most of the time also it's not these high profile ones, its the "little companies" with 25-50 jobs that trickle out...
  • Incentives?
    And, who supports these Carmel incentives? Right! The Carmel taxpayers!
  • Corporate tax rates?
    Can someone explain how the tax rates are so much more favorable in Indiana? Previous stories reported that Illinois just raised its corporate income tax rate to 7%, but Indiana's rate is currently 8.5% although it is slated to drop to 6.5% by 2016. I don't see how that's any kind of game changer. What am I missing? I know some other taxes are higher in Illinois, but why are the stories focused on the burden of the corporate income tax? What I am missing here?
    • What about empty buildings?
      While everyone is pulling for downtown, I'm honestly hoping that the CME group will consider occupying the many empty giant football sized buildings that are sitting vacant in every side of the city. I'm so tired of seeing brand new construction when it would be better for the environment to use what we currently have. Either way, I hope they make the move. Indiana and especially the city of Indianapolis needs jobs and we need them now!
    • Work together
      If Indy and Carmel would work together to set up a transit line Indy can be home to the new jobs and Carmel to many of the residences. Then the employees can get the best of both worlds (many may rather live downtown though, they are from chicago) and downtown would finally be able to truly redefine itself and a flood of jobs may come for decades. It would be dumb for either of these cities to assume this is a bluff (whether it is or not) because with high risk there is high reward, and when it comes to things such as the Super Bowl we see it is worth the investment.
      One this is for certain. If CME moves to Indianapolis, there will have to be mass transit between the airport, downtown, and northeast Indy. There will be the tax base and positive outlook for city growth for the city to pour funds into mass transit.
    • A win/win
      Indianapolis or Carmel, I would be excited to have this organization in either community. Given the tax structure in Illinois, I rate CME's move as more than simple posturing. However, losing CME would be a significant blow to the Chicago area and we shouldn't expect Chicago's leadership to simply say "so long" if CME is serious about moving. Very, very exciting stuff. Thank you, IBJ for keeping us up to speed.
    • downtown Carmel?
      Stretch for them to move at all, but moving from the Loop to downtown Carmel is a real stretch.
    • Go for it Ballard
      I agree with Marcus and Joegoalguy and Steve R. It is probably postering by CME to put pressure on Illinois, BUT I would still expect our Mayor to take Carmel's challenge seriously and make a seriously competitive pitch for it.
    • Posturing
      I am willing to bet these discussions are just posturing on the part of CME to put pressure on Illinois to come up with some incentives. At the end of it, there be no move...
    • Unity
      So much for regional unity! I agree that Downtown Indianapolis would be a better overall solution for the region -- not including the benefits of existing infrastructure, curbing suburban sprawl, etc.
    • Really? Carmel? No, Really?
      I really hope that CME doesn't even consider relocating to Carmel. I'm sure many of its employees would live there, but we need to focus on developing downtown Indianapolis as a business hub. Imagine what downtown would look like if all the five-story suburban office parks were instead consolidated into towers downtown. A move by CME to downtown would change the skyline of our city and that's not a bad thing. I don't put much hope in CME moving out of Chicago, but if they do, I really hope they don't locate to suburbia. They should respect themselves more than that.

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