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. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  2. If you only knew....

  3. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

  4. The facts contained in your post make your position so much more credible than those based on sheer emotion. Thanks for enlightening us.

  5. Please consider a couple of economic realities: First, retail is more consolidated now than it was when malls like this were built. There used to be many department stores. Now, in essence, there is one--Macy's. Right off, you've eliminated the need for multiple anchor stores in malls. And in-line retailers have consolidated or folded or have stopped building new stores because so much of their business is now online. The Limited, for example, Next, malls are closing all over the country, even some of the former gems are now derelict.Times change. And finally, as the income level of any particular area declines, so do the retail offerings. Sad, but true.

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