Democrats critical of cryptic IEDC spending requests

By: - December 20, 2023 6:30 am

Rep. Ed DeLaney, D-Indianapolis, asks about a $713 million shortfall in Medicaid funding at a State Budget Committee meeting on Tuesday, Dec. 19, 2023. (Leslie Bonilla Muñiz/Indiana Capital Chronicle)

The Indiana Economic Development Corporation (IEDC), a quasi-public state agency tasked with recruiting companies and bolstering the state’s economic growth, outlined nearly $300 million in spending requests before the State Budget Committee Tuesday but continued to hedge when asked directly about state dollars spent on often secretive deals. 

The $294 million total ask covers six separate projects with scarce details. The IEDC cannot sign contracts with incoming entities until receiving approval from the committee — individual Republican members have indicated they signed non-disclosure agreements to learn more about the deals but Democrats in the super-minority have frequently bemoaned their exclusion.

Brock Herr, a senior vice president at the Indiana Economic Development Corporation, responds to questions from Democratic lawmakers on Tuesday, Dec. 19, 2023. (Leslie Bonilla Muñiz/Indiana Capital Chronicle)

“… I did lose trust in the agency because that is the same exact statement we always hear: ‘We will follow up back with you.’ ‘We will let you know,’” said Sen. Fady Qaddoura, of Indianapolis. “We are not legislative partners because we did not deserve the respect to be reached out to (and) to be given that information.”

“… the lack of transparency and communication with us really created that cloud of questions on some of these deals,” he continued. 

Brock Herr, the IEDC’s senior vice president of business development, described the IEDC’s process for calculating incentives, including cost-benefit analyses, job commitments and investment returns. 

“We do have an internal target that — I would say, competitive reasons — we don’t disclose publicly,” Herr said. “We look to have a blended target of all projects that reach that, which gives us the ability to have some discretion to be a little bit more aggressive on some of those more competitive projects that may warrant a slightly more aggressive deal.”

The budget committee approved the requests Tuesday by voice vote, in one lump adoption of an amended agenda. There were no  votes against, despite Democrat objections to the IEDC’s approach.

The deals

Several of the deals had code names, such as $100 million in a performance-based incentive to be distributed over the course of eight to ten years for “Project Nora.” That company could invest $4.1 billion in the advanced manufacturing sector and create 2,700 jobs.

Project Mars involved $80 million for an advanced technology components center that promised to create 800 jobs and invest $3.1 billion — and had already accepted an offer and planned to come to Indiana. 

The combined $180 million request comes from the IEDC’s $500 million deal closing fund and don’t include any incentives from local units of government.

The remaining four projects — worth $114 million — are related to potential site acquisitions for companies, with three of those projects located in Boone County.

Sen. Fady Qaddoura, D-Indianapolis, asks about IEDC LEAP expenditures on Tuesday, Dec. 19, 2023. (Leslie Bonilla Muñiz/Indiana Capital Chronicle)

Ongoing infrastructure investment would receive $26 million for the LEAP Lebanon Innovation District, including road construction and improvements, fiber extension and utility needs. 

IEDC Vice President of Innovation & Strategic Initiatives Mark Wasky said the IEDC had spent $290 million in taxpayer dollars on the controversial LEAP project so far. As for concerns related to a pipeline transferring millions of gallons from Tippecanoe County to Lebanon, Wasky said the IEDC was “evaluating the specifics” and waiting for answers before moving forward on other investments unrelated to those presented Tuesday.

Wasky also had no total project cost estimate for the Boone County LEAP project.

Another $27 million would be used to purchase roughly 330 acres in Boone County “needed to support a multibillion-dollar information technology campus,” which will be sold by the IEDC to the unnamed company. Wasky said the properties are a mix of farmland and housing at $70,000-75,000 per acre. 

The last $45 million spent in Boone County would purchase approximately 415 acres to support a second, multibillion-dollar information technology campus, Wasky said. Both information technology companies would invest an estimated $800 million in the first phase but more details about jobs or wage commitments weren’t shared at Tuesday’s meeting.

The final request would spend nearly $16 million to purchase 257 acres in Howard County for an unnamed advanced auto manufacturing company with the promise of multibillion-dollar investment and more than 4,000 jobs. 

Criticism from Democrats

For Qaddoura, continued IEDC funding came at the expense of other state priorities, including education. He noted that the number of third graders passing reading assessments was declining statewide, threatening the workforce needed for these companies. 

“When third graders can’t read in the state of Indiana, how can you even find the workforce to sustain these jobs?” Qaddoura asked. “The $300 million investments today that we’re supporting could have been (used) to expand a statewide, fully funded pre-K so that ten years from today, these kids can apply for these jobs and we can fill them.”

“I think this is a missed opportunity, missed priority from an investment perspective,” he said.

In a post-meeting statement, Rep. Ed DeLaney critiqued the state’s “blank check” to IEDC as costs mount on the LEAP project with only one announced tenant and ongoing water concerns.

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“It’s absurd. They’re presenting the taxpayers with a blank check and they’re asking the legislators to sign it. They haven’t identified the total cost of the LEAP project. I’m not in the business of buying something when I haven’t seen the price tag,” DeLaney, D-Indianapolis, said. 

Qaddoura, DeLaney and Rep. Greg Porter all expressed their frustration at being excluded from backdoor negotiations and made up the bulk of questions during IEDC’s hour-long presentation on Tuesday. 

In his own statement, Porter asked whether taxpayer dollars paying incentives were “unnecessarily putting icing on the cake … to build up corporate bottom line profits.”

He called for a slowdown of the IEDC LEAP project, advising that ‘haste makes waste,’ which DeLaney echoed.

“We cannot afford to make billion-dollar mistakes when it comes to economic development. Let’s set a new tone and encourage, if not mandate, IEDC to be more forthcoming with the specifics of what they intend to spend these billions on. Transparency has been proven to be the best way to go when it comes to the expenditures of public dollars,” Porter concluded.

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Whitney Downard
Whitney Downard

A native of upstate New York, Whitney previously covered statehouse politics for CNHI’s nine Indiana papers, focusing on long-term healthcare facilities and local government. Prior to her foray into Indiana politics, she worked as a general assignment reporter for The Meridian Star in Meridian, Mississippi. Whitney is a graduate of St. Bonaventure University (#GoBonnies!), a community theater enthusiast and cat mom.

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