A massive incentive package totaling at least $150 million that the state of Indiana and the city of Indianapolis have offered to Elanco Animal Health Inc. for a new headquarters campus is possibly the largest amount of combined state and local tax breaks ever considered.
Elanco announced Friday morning that it will invest $300 million statewide to keep its global headquarters in Indianapolis and expand its operations. The investment will include building a $100 million headquarters campus at the former General Motors stamping plant west of downtown. The company, which spun off from Eli Lilly and Co. in 2018 and is currently headquartered in Greenfield, has committed to adding 573 new jobs and retaining 1,623.
The state’s tax incentive offer alone is worth up to $86.5 million.
That includes up to $73 million in conditional tax credits, up to $4 million in training grants, up to $7 million in assignable redevelopment tax credits, up to $2 million in conditional Hoosier Business Investment tax credits, and up to $500,000 for relocation expenses based on the company’s plans to invest in the campus.
The tax credits related to job retention still must be reviewed by the State Budget Committee.
Plus, the state is giving the company 45 acres of the 91-acre site that the Indiana Economic Development Corp. bought from Ambrose Property Group for $25.5 million.
Based on the cost per acre the state paid for the property, the value of the land the state is giving to Elanco is $12.6 million. That would bring the state’s incentive offer up to $99.1 million.
The city of Indianapolis is also kicking in $64 million in tax increment financing funding to help with redeveloping the site. The city is also planning vehicular and pedestrian bridges for the site.
Even without the cost of the land—which may not be valued at $12.6 million even though that figure represents what the state paid for it—the total incentive deal is worth as much as $150.5 million.
That’s more than the total amount state and city of Indianapolis offered to Infosys in 2018, when the India-based company committed to investing $245 million in an Indianapolis campus and creating 3,000 new jobs.
The combined incentive package for Infosys was worth $101.5 million.
The Infosys deal marked the largest jobs commitment the IEDC had received since the agency was established in 2005. The previous largest deal was Honda’s pledge to create 2,067 jobs when it opened a $550 million plant in Greensburg in 2006.
State and local incentives to Honda totaled $141.5 million in tax credits and abatements, training assistance, and an upgrade to the Interstate 74 interchange at Greensburg.
The Honda deal had been considered the largest deal ever offered to a company. It’s unclear how much of the incentives came directly from the state and from Greensburg, but the deal included redistributing some gambling tax revenue earmarked for other counties to the project.
Michael Hicks, economics professor and director of the Center for Business and Economic Research at Ball State University, described the Elanco deal as “eye-popping.”
“This could be a very good deal for the state, or this could be a very bad deal,” Hicks said.
Hick said the city and state will benefit from a redeveloped GM stamping plant site (it has been vacant for years). And that the deal the state struck to buy the land and then give much of it to Elanco might be what public officials had to make a project viable there. But Hicks said it’s also possible the cost is too high.
“Just for the Indianapolis plant, taxpayers are investing $150 million … and business owners are investing $100 million,” Hicks said. “That should cause every taxpayer in Indiana to pause.”
Hicks said the cost of the public investment is about $260,000 per new job being added, and that would be considered higher than average.
The public investment per job for Infosys, for example, was less than $34,000. For Honda, it was less than $69,000.
“What’s the ratio of government to private sector investment?” Hicks said. “This is a bad deal by that measure.”
Erin Sweitzer, spokesperson for the IEDC, said all of the incentive packages are based on a cost-benefit analysis and consider the new and retained job commitments and anticipated long-term impact.
Elanco has committed to retaining 1,623 jobs, in addition to the 573 new jobs it will create.
“The size of this incentive package makes sense given the long-term, transformational impact Elanco’s decision will have on the state, the downtown Indianapolis area, and Indiana’s leadership position in agbiosciences,” Sweitzer said in an email.