Some houses that were bought by the Indiana Economic Development Corporation in Boone County are already boarded up for future development. (Niki Kelly/Indiana Capital Chronicle)
What can $126 million buy you in Boone County? More than 1,500 acres, if you’re the Indiana Economic Development Corporation (IEDC).
The LEAP Innovation District is Indiana’s attempt to compete with the North Carolina Research Triangle, deliberately crafting a “high-tech” corridor along I-65 in Boone County, roughly halfway between Indianapolis and Purdue University.
IEDC has spent just over three-quarters of their funding thus far — though more projects are planned for the future – and sales disclosures show the state is paying around $80,000 per acre.
Ultimately the plan is for an 11,000-acre, high-tech innovation park.
Leaders with the IEDC, including Chief Operating Officer and Chief of Staff David Rosenberg, have emphasized how companies want shovel-ready sites that will quickly return their investment. A December presentation to the State Budget Committee emphasized the need for speed when it came to landing large investments, saying deals took a fraction of the time to be approved.
This site would allow Indiana “to go get the economies of the future,” Rosenberg said.
“This upfront investment that we’re working on is necessary to achieve that ambitious goal,” Rosenberg told the Indiana Capital Chronicle.
“So while the initiative overall is maybe bigger and bolder than any the IEDC has undertaken in the past, the results we’ve secured over the last 18 months are also unprecedented.”
Farmer apprehension about the LEAP district
But the IEDC, a quasi-public agency, is taking on an unusual role in recruiting business investment throughout the state: the role of the developer. Tax dollars spent in other public agencies are subject to intense scrutiny that’s unheard of in the world of business.
Some farmers in Boone County are alarmed by the rapid growth, especially with the use of tax dollars.
“Instead of repurposing industrially blighted areas from the past, we’re coming out here and destroying farm ground that’s productive,” said Jim B. Love, a third-generation Boone County farmer. “If this was a regular developer that didn’t have unlimited taxpayer’s funds, you’d have to probably think about limiting your grip to what you can control.”
The 200-acre Love farm sits in the middle of the proposed development, near I-65 and Highway 52. It’s home to four generations of the Love family, four of whom share the same name: Jim B. Love. The 58-year-old said his grandparents bought the farm in the 1940s with the intention of giving their descendants economic security.
“We were realistic enough to realize that (development) was somewhat predictable but we thought we would see it come in a metered fashion,” Love said. “We never thought about the state deciding it would be a great idea to buy everything up and then go out and shop it to industry.”
As their neighbors sell, “strong armed” by the IEDC, Love says, many sign non-disclosure agreements barring them from discussing the terms publicly — hurting public transparency.
“We knew (development) would come, we just didn’t think it would come in this fashion,” Love said. “Quite honestly, we didn’t think it would come this quickly.”
What do we know about the land sold so far?
To determine how the preliminary appropriation of $164 million to the IEDC for the LEAP project was spent, the Indiana Capital Chronicle analyzed a list of 61 sales disclosure forms posted on a public database managed by the Indiana Department of Local Government Finance. According to those forms, 29 Hoosiers have sold a combined 1,578 acres to the IEDC for nearly $126 million since September of last year.
The remaining $38 million or so will be spent on infrastructure improvements to the area, specifically road and drainage projects along a stretch of Witt Road from W 450 North to W 300 North.
According to a February IEDC map, roughly 600 acres of that area will serve as the site for a $2.1 billion Eli Lilly manufacturing expansion. Thus far, Lilly is the only announced private investment in the LEAP district.
The largest transaction, 565 acres, sold for $29.6 million but the most expensive purchase was $35.6 million for 254 acres which contained improvements – usually a house, a pole barn, a swimming pool or another structure – valued at $1.2 million.
The vast majority of the land sold, 1,170 acres, was classified as vacant agricultural land. Of the remaining 284 acres of agricultural land, just 82 acres were utilized as general farmland.
Of the roughly 123 acres of land left, nearly all were residential, one-family homes. Slightly fewer than 20 individual homes were purchased in the time span studied.
Many of the sellers overlapped with the list of Boone County residents who petitioned to be annexed into Lebanon and then rezoned for industrial use.
Of the sales, just ten parcel addresses matched addresses provided for the seller. Nearly all of the sellers’ addresses were located in Boone County, with just five sellers living in another Indiana county.
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But how much was it worth?
Calculating the worth of farmland can get a little tricky, because assessed values are far below market values – for a reason.
Larry DeBoer, who retired as a professor of agricultural economics at Purdue University in 2021, explains that farmland is assessed under what is known as “market value in use.”
“What that means, is that the property is assessed based on its value as it is currently being used, not based on a value of potential other use,” DeBoer said. “If you’ve got a house on a street that has been developed into restaurants and hotels, your house is not based on the value that it could have if it were sold off… but rather based on its value as a house.”
Under this system, farmers adjacent to a large development won’t see their property assessments increase because they still operate as a farm, not as a development. This protects landowners who otherwise could be pressured to sell their land.
“Farmers get tax breaks (like) homeowners get tax breaks, they just come in different ways,” DeBoer said. “Homes are assessed at their selling prices but then we subtract so many deductions that the actual assessed value of homes that gets taxed is statewide, on average, less than half the total value of the home.”
Being a historically agricultural state, Indiana has long had a system that benefits farmers when it comes to land assessments. Rather than assessing land as what it could sell for, similar to how houses are assessed, farmland is evaluated at a base rate of $1,500 per acre.
The base rate does increase slightly every year, but falls far behind the average selling price – which is more than $10,000 per acre.
Purdue University releases an annual report detailing the state’s farmland prices, including those sold for development. The latest analysis, which covers June 2021 to June 2022, found that appreciation rates for farmland sold to developers was increasing.
“Transitional” land in the release refers to agricultural land being sold for another, typical higher-paying, use. Per acre, the average price for transitional land in Indiana was $24,240 per acre – an increase of 36.5% over the last 12 months.
In comparison, the IEDC paid roughly $79,823 per acre. But the land purchased by the IEDC does include several homes and other improvements, valued at $7.7 million across more than two dozen parcels.
What’s next for the district?
Rosenberg, with the IEDC, said that all purchased land had a purpose. Though the IEDC and General Assembly are still discussing whether the profits from the re-sold land should return to the corporation or the General Fund.
“We’re not just buying land and sitting on it. We will put land under option as it fits the needs of the companies in the pipeline,” Rosenberg said. “The legislature has been very supportive of our efforts and we will continue to work closely with them to determine what the market demand is.”
Rosenberg said the IEDC, though it is a quasi-public agency, “does not use eminent domain for economic development purposes.”
“This is bigger and bolder than a lot of what the state has seen in the past and it seems like everything is coming down the pike now, but it is a long-term investment that will be built out over the next decade and have implications for the next several decades,” Rosenberg said.
DeBoer said that while farmland aesthetics and future employment could all be reasons to consider whether or not the LEAP development was the right idea – one consideration didn’t weigh in much at all: food production.
According to the agricultural land census of 2017, the most recent available, roughly 15 million acres of Indiana is dedicated to farmland, an 8% decrease, or 1.3 million acres, from 1982. Also in 2017, fewer than 100,000 Hoosiers were working as farmers.
Over that same 35-year period, while the amount of farmland decreased by 8%, the amount of corn harvested increased by 38% and the amount of soybeans harvested increased by 98%. Farmers continue to be innovative, growing far more with less land.
“Farmland is becoming so much more productive; every year we produce way more food on less farmland,” DeBoer said. “So we will make up this loss of farmland in added productivity yield per acre within a few years.”
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