Chesterton Tribune

 
 

Economic development tool helping to bring Urschel Labs to Chesterton

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By KEVIN NEVERS

This is the main point which Chesterton Town Attorney Chuck Lukmann wants to make: “Not one dollar of Chesterton taxpayers’ dollars are being used” for Urschel Laboratories’ new corporate headquarters and manufacturing facility at Coffee Creek Center.

This is the secondary point: “The project does not involve any financial obligation or guarantee by the Town of Chesterton.”

As Lukmann told the Chesterton Tribune this morning, however, the town’s arrangement with Urschel Laboratories Inc. is a fairly complex one.

It will work in this way.

The newly reconstituted Economic Development Commis-sion will — per state law —issue up to $25,860,000 in tax-exempt bonds. Urschel Laboratories will then purchase the whole of that issue. For the 20 years following the completion of the project, the company will repay those bonds with 85 percent of the taxes on real and personal property which it would have paid to the town as a property owner in a tax increment financing (TIF) district.

In that sense, the arrangement is like tax abatement. Except it’s not. Because Urschel Laboratories will use a large portion of the $25.8 million to install infrastructure: $3 million for a bridge over Coffee Creek, to make the site accessible in the first place; some $2 million for sewer and water infrastructure; and an unknown amount for road improvements.

In other words, Lukmann said, a large portion of that $25.8 million will be used to install infrastructure which the town itself might have had to build to make that property developable.

Over those 20 years, Lukmann added, the town will nonetheless receive an estimated $4,566,455 in property tax revenues from Urschel Laboratories—that is, the 15-percent balance of the company’s tax obligation—which the town would not have received had that property remained fallow.

Although the property in question is located in a TIF district—under which the town alone normally captures the whole of the increment—under a relatively recent change in Indiana Code, the Duneland School Corporation will also receive its increment during the seven-year lifetime of the new property-tax referendum. Lukmann estimated that total amount at $822,000. “Those are moneys which would otherwise have been captured by TIF,” he said.

Lukmann made this point as well: while Urschel Laboratories is under contract to purchase a total of 160 acres in Coffee Creek Center, it will only be using 40 to 50 acres of that purchase for the HQ and manufacturing facility. It’s unclear what Urschel Laboratories will do with the other 120 acres but should, one day, it market that land itself, the buyers of those 120 acres will not be party to the company’s arrangement with the town. “The Town of Chesterton’s TIF district will receive all increment captures on that development,” Lukmann said.

Trickle-Down

“This is a world-renowned company locating in Chesterton that will undoubtedly lead to other high-quality economic development projects which will provide additional high-quality jobs to Chesterton and Northwest Indiana residents,” Lukmann noted.

What kind of trickle-down impact is Urschel Laboratories’ re-location to Coffee Creek Center likely to have?

For one thing, Lukmann said, “the town has asked of Urschel, when they do new hires in the future, and consistent with state and federal law, to give a preference to Chesterton residents.”

That’s well and good but Heather Ennis, executive director of the Chesterton/Duneland Chamber of Commerce, believes that she has some relatively hard numbers to put on the table. The “induced effect” of the company’s payroll alone—the “spending power” of its 300-plus employees—Ennis estimated at $10.9 million recycling into Porter County’s economy on an annual basis.

Now that “induced effect” is already in place, of course—Urschel Laboratories has been in business in Valparaiso for 100 years—but some of it could begin to flow northward into Duneland.

The “indirect effect” of the $65 million project, though, is enormous. Over the construction period, Ennis said, a projected $26.6 million, over and above that $65 million, will bubble into Porter County’s economy. And during that construction period, an estimated 109 jobs will be created: contractors, utility workers, fast-food employees, retail.

For these benefits, Lukmann emphasized, the town “is incurring no financial obligation and is not using $1 of property owners’ tax money as an incentive.”

At its meeting at 6:30 p.m. today, the newly reconstituted Chesterton Economic Development Commission will take the first steps to implementing the bond issue, with an “inducement resolution.”

 

 

Posted 1/14/2013