State approves $50M in bond financing for new LEAP pipeline proposal
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Indiana’s State Budget Committee gave the financial greenlight Thursday morning to use $50 million to secure bonds for a new pipeline that would send 25 million gallons of water per day to the LEAP Lebanon Innovation District and other Boone County developments.
The Citizens Energy and Lebanon Utilities project—which would supply the Eli Lilly and Co. manufacturing complex expansion, additional park tenants and new development in the city—was first reported by IBJ last week when the Indiana Finance Authority took the first step toward financing upwards of $100 million.
This funding would be used by the finance authority to support bonds and provide debt service coverage during the first five years of the project. The money would be used as needed, and any amount remaining would be returned to the general fund.
The potential project would serve as a water source to support the LEAP district, which is the IEDC’s major effort to draw giant tech manufacturing facilities to the state (LEAP stands for Limitless Exploration/Advanced Pace). The pipeline is expected to serve the water needs of the park for the next 15 to 20 years, but the development would ultimately need additional water supplies to reach its projected scale.
The Citizens Energy proposal would tap into Whiteland and Westfield utility infrastructure. Citizens is evaluating the best way to tap into and expand its infrastructure in that area, said James McGoff, chief operating officer and director of environmental programs at the Indiana Finance Authority, at the committee meeting.
Long-term pipeline costs would not affect existing ratepayers, but would be paid for by new LEAP tenants, said Mark Wasky, IEDC senior vice president and special counsel to the secretary of commerce.
The new pipeline is a separate endeavor from the IEDC’s exploration of possibly pumping up to 100 million gallons of water per day through a 35-mile pipeline to the LEAP district from Wabash River aquifers near Lafayette. The Wabash pipeline is on hold while officials await the results of the IFA water study to be released later this year.
While no additional authorization for the bonds is needed, financing for the project would still need to be approved for funding through the State Revolving Fund Loan Program, finance authority officials told IBJ in an email last week.
When asked about the total projected cost of LEAP, Wasky said the IEDC has spent more than $200 million on land acquisitions and infrastructure so far—though a total cost estimate is more elusive at this point.
The money would be paid back as land is purchased by tenants, he said. Eli Lilly and Co. has already bought its land at a 40% premium at $100,000 an acre, Wasky said, and that money has been returned to the state’s general fund.
The committee’s Democratic members and non-voting alternates questioned Wasky at length about the agency’s transparency regarding its spending of allocated funds and its proof of return on investment. They pushed for more disclosure about job creation, itemized spending and how often companies fulfill the requirements of their performance-based tax incentives.
Rep. Greg Porter (D-Indianapolis) sought to remove three IEDC funding items from the agenda, but his motion failed to be seconded. The entire agenda was approved 4-0.
“I’m very concerned, as a lot of us are in here, even those who may vote for this agenda, about where we are in regards to IEDC and what is transpiring with taxpayer dollars,” he said.
Wasky deferred several financial questions, saying confidentiality is necessary to negotiate with companies.
The conversation navigated to LEAP’s water needs and what a state policy could look like. Wasky deferred those opinions to the legislature.
Other economic development requests
The Samsung SDI/Stellantis battery plant project in Kokomo, nicknamed Project Fusion, will receive $101 million of the $245 million promised by the IEDC and fulfilled through a budget agency augmentation request. The company is making a $5.9 billion investment in two plants and thus would receive a pricier-than-average performance incentive. The companies expect to create 4,000 jobs.
The job-creation agency only pays out incentives when companies meet their job-creation and investment commitments.
The IEDC will also acquire about 1,850 acres of land within the LEAP District using $36 million approved by the committee. Three companies dealing in advanced computing, information technology and biopharmaceutical manufacturing are targeted for the space, the IEDC said. Wasky said the IEDC is in “advanced negotiations” with those companies.
Once secured, the IEDC will then sell the land to the companies and return the sale cost back to the state’s general fund.
“We’re investing dollars to ensure that we are able to realize investments from companies that would like to locate there,” Wasky said. “Closing on these properties will be necessary.”
The budget committee also approved $15 million for ongoing LEAP District infrastructure development, including roadwork, roundabout construction and utility installation for the park’s tenants. In June, $29 million was approved for similar district infrastructure improvements.