County council to decide fate of EnerDel tax break

July 19, 2016

Hancock County officials are set to terminate a tax incentive agreement with EnerDel Inc., the once-heralded battery maker with big plans that since has vacated its facility in the county.

Meanwhile, EnerDel’s top executive says the company is focusing on its Indianapolis facility as it works to rebuild itself after several years of struggles.

EnerDel, a privately-held company founded in 2004, makes lithium-ion batteries and energy storage systems. In 2010, the company received approval for economic development incentives from the state, based on the company’s plans to supply batteries for electric cars and hire as many as 1,400 people for operations in central Indiana.

EnerDel already had agreed to a tax incentive deal from the city of Indianapolis in 2008 on plans to hire nearly 300 people. In January 2010, it announced that it would invest $237 million to lease and equip a building in a Mount Comfort business park in Hancock County, hiring as many as 1,100 workers.

In April 2010, Hancock County granted EnerDel a 10-year abatement worth $30 million in tax savings on personal property – equipment that the company moved into the county, and equipment it planned to purchase, in order to produce the car batteries.

“The [company’s] ideas were very large,” said Skip Kuker, executive director of the Hancock Economic Development Council.

But EnerDel’s business strategy didn’t pan out, and the company filed for bankruptcy protection. The company emerged from bankruptcy in 2012 with a new business strategy. It now focuses on the electric grid; on heavy-duty transportation like trains and trucks; and on industrial applications.

EnerDel never got much benefit from the Hancock County tax abatement, Kuker said, because it never did purchase the equipment that it had planned to.

At one time, EnerDel had 300 employees in Mount Comfort, according to CEO Michael Canada. The company failed to gain traction in the electric passenger-vehicle market, and those numbers dwindled.

“The market never took off,” Canada said.

EnerDel ceased operations in Mount Comfort last year, Canada said. The company now has just 45 U.S. employees, all of whom work at the company’s Indianapolis facility at 8740 Hague Road.

Canada said the company has added employees in Indianapolis this year, and he anticipates adding 20 to 25 more workers by year’s end.

Last week, EnerDel announced it had landed a contract to provide lithium-ion batteries to the Societe de Transport de Montreal, or STM, a public transit system in Canada. That contract has a value of about $520,870.

The STM contract is evidence that EnerDel is having success in the public transit market, Michael Canada said.

“We’ve been successful the last 18 months in really finding our niche,” Canada said.

In particular, Canada said, the STM contract should open the door for EnerDel to land future business with that transit system.

The company still hasn’t turned a profit, Canada said, although revenues are up. EnerDel should reach the break-even point in the first half of 2017, he said.

“We’re very, very close, and we’re developing a strong, reputable customer base," Canada said.

EnerDel does not plan to reopen the Mount Comfort facility. he said. For that reason, Hancock County officials are moving to terminate EnerDel’s economic incentives contract.

After an initial vote last month to end the deal, the Hancock County Council is expected to hold a public hearing Wednesday morning on whether to terminate EnerDel’s tax abatement. It then will hold a final vote on the matter following the public hearing.

The city of Indianapolis and the state of Indiana already have taken similar tacks.

Indianapolis awarded EnerDel 10-year tax abatements on both real property and personal property in 2008.

Based on the company’s projections at the time, EnerDel would have saved about $4 million on its personal property taxes and about $500,000 on its real property taxes if it had been able to take full advantage of the incentives, according to the city’s Department of Metropolitan Development.

When the company fell on hard times it ceased production in Indianapolis for a time, which put it out of compliance with its local incentives agreement, said Ryan Hunt, principal program manager for incentives at the DMD.

So city officials negotiated with EnerDel for a partial repayment of those incentives.

“We saw there was value in the company even though they didn’t meet their goals,” Hunt said. “They did ultimately move back here.”

EnerDel realized a tax savings of $2.32 million from the Indianapolis abatements. Under its agreement with the city, the company is repaying a total of $1.02 million, to be paid in twice-a-year installments that run through 2020.

So far, the company has made its first two payments as scheduled. Its next installment is due in September.

“We’re honoring that [repayment] commitment,” Canada said.

The repayment agreement requires EnerDel to hire and retain 40 employees by the end of 2016 and 60 employees by 2020.

“We’re still monitoring that,” Hunt said.

The state of Indiana initially pledged $21.1 million in economic development incentives for EnerDel. Those contracts were initially to run through 2018, but the state has since designated the contracts as “ended,” meaning that EnerDel is no longer eligible to claim those incentives.

Meanwhile, Canada said, EnerDel is focused on moving forward.

“We’re working on trying to rebuild our position here locally. We’re a local company and our intent is to remain a strong local viable corporate presence for many years to come.”



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