August 6, 2020 | IBJ Alexandria Burris
Elanco Animal Health plans to establish its global operations in Indiana, constructing a $100 million headquarters at the former GM stamping plant site, just south of the Indianapolis Zoo. State, city, and company officials announced the deal Friday that will include as much as $170 million in taxpayer-funded incentives.
The new headquarters is part of a $300 million investment Elanco plans to make in Indiana, which will serve as the base for the company’s consolidated global operations.
The company will relocate its headquarters from Greenfield, about 25 miles east of Indianapolis. Friday’s announcement finalizes the company’s multi-state search to find a new site to call home.
Indiana won the project and secured the company’s future in the state by offering a massive incentive package valued at up to $106 million over a 10-year period. Additionally, Indianapolis is promising to chip in up to $64 million in tax increment financing and assist with connectivity through vehicular and pedestrian bridges. That brings the combined package of city and state incentives up to as much as $170 million.
The announcement also opens up a new chapter for the former industrial site, once slated to become a $1.4 billion mixed-used development called Waterside. The purchase agreement between the state and the site’s former owner Ambrose Property Group signals an end to a more than yearlong legal dispute between the developer and Indianapolis.
“We’re going to end up having the second largest animal health company in the world in a spot of downtown Indianapolis that has eluded development for the for the past few years,” said Luke Bosso, chief of staff for the Indiana Economic Development Corp.
The Elanco deal ranks among several massive incentive deals the state and city have used in recent years to lure and retain companies.
In 2018, the state and the city offered Infosys, an India-based information technology company, up to $101.8 million to establish a U.S. education center as part of $245 million campus at the old Indianapolis Airport terminal on the west side and to create 3,000 jobs by 2023.
Elanco, which produces animal vaccines, had been hunting for a new location for its headquarters, having earlier issued a request for proposals and embarking on a multi-state search, officials said in an interview Friday.
Currently headquartered in Greenfield, Elanco spun off from Indianapolis-based drug maker Eli Lilly & Co. a few years ago.
In August, it acquired Bayer Animal Health business unit for $6.89 billion in a cash-stock deal. The company has said in a news release that the acquisition expanded its scale and capabilities, allowing it to become a major player in the animal health industry.
Bosso said Indiana saw a pathway to purchasing the 91-acre former GM stamping plant site from Ambrose Property Group earlier this year. After a series of negotiations, the state bought the entire site for $25.5 million earlier this week.
Elanco will locate its headquarters on 45 acres — a portion valued at $12.6 million —of the site, said Erin Sweitzer, IEDC spokesperson. The company will have two years to exercise an option to expand on an additional 20 acres, a portion valued at $5.59 million.
In addition to the land buy, Indiana’s economic development package includes conditional incentives the company can claim if it meets certain expectations.
Those incentives include:
- Up to $21.75 million in conditional Economic Development For a Growing Economy tax credits. The IEDC says these credits are based on creation of up to 573 new, high-wage jobs by the end of 2030.
- Up to $51.25 million in conditional Economic Development For a Growing Economy Retention tax credits. These credits are based on the retention of 1,623 jobs across Indiana over a 10-year period. Retention tax credits are subject to review of the State Budge Committee
- Up to $4 million in conditional training grants to support future workforce development.
- The state will help support the relocation of employees to Indiana by offering up to $2,500 for each Bayer Animal Health employee (up to 573 employees) who move to the state.
- Up to $2 million in nonrefundable, conditional Hoosier Business Investment tax credits based on the planned capital investment at the new headquarters.
- Up to $7 million in assignable Redevelopment Tax Credits, which incentivize companies to invest in the redevelopment of vacant properties to improve communities in Indiana.
- Up to $500,000 for headquarters relocation expenses.
- Once the incentive contracts are finalized, the state will transfer ownership of the initial 45 acres to Elanco, a portion valued at $12.6 million. The 20-acre restricted option is valued at $5.59 million. The company has two years to exercise the option.
Thomas Cook, chief of staff for Mayor Joe Hogsett, said the city’s incentive offer is in line with what it offered to Ambrose for Waterside’s infrastructure needs.
“We always understood what the infrastructure needs were on this site, and we always kind of sensed what would be required from the city in order to catalyze development. In our minds, this is kind of always where we thought we would be,” Cook said.
Bosso called the state’s incentive package competitive. He could not answer how many other cities and states competed for the headquarters.
“We knew this was a competitive project. We knew there were other suitors for this company,” he said. “To get the second largest animal health company in the world to stay and expand and continue to invest in the state of Indiana, we were really excited that they accepted our offer.”