Indiana House gives local authorities more control over economic development bill

Local government officials worried that state economic development leaders are overstepping their bounds with the creation of new innovation development districts won some concessions from Indiana House Republicans.

House Ways and Means Chairman Tim Brown, R-Crawfordsville, said the reworked Senate Bill 361 now does much more to ensure local stakeholders are involved in decisions made by the Indiana Economic Development Corp.

“It enshrines in law this negotiation and this collaboration that IEDC has to do,” Brown said. “That’s what people were all of a sudden afraid [the IEDC is] go in and boom, we have this in our backyard and we don’t know anything about it.

Amendments to the bill were made last week at the House Ways and Means Committee. They were created in response to concerns raised about the degree of control the state would have over local tax money generated by proposed innovation development districts that could be created anywhere in the state to attract large-scale economic development projects.

As originally proposed in legislation approved by Governor Eric Holcomb, local and state taxes generated in each district would have been placed into a statewide economic development fund.

The revised bill, eligible for action Monday by the Plenary Assembly, now creates a separate fund for each district and stipulates that revenue can only be used in the district where it was generated. The amendment removed local revenue from captured taxes.

Money from the local fund could then be transferred to the now separate statewide fund, which would still be managed by IEDC to distribute grants, loans and investments for a project in a district. The General Assembly could also allocate funds to the fund.

The local fund could be used for the acquisition of land, the improvement of public services and infrastructure, the recruitment of new businesses and new employees in the district and the training of district employees.

District Innovation Development Councils appointed by IEDC and local governments in each district would oversee local funds. Each council would be made up of six area residents. Three would be chosen by the Secretary of State for Commerce and three by a local governing body.

Brown’s amendment also struck down the proposed statewide remote worker program, which would have provided cash grants of up to $5,000 per year over three years to incentivize remote workers out of state to move to Indiana.

Instead, language from Senate Bill 4 was added to allow local governments to use their remaining or unused general funds to create their own incentive programs for remote workers.

Brown said the change was a better approach to putting remote worker attraction in the hands of local officials who can better market their communities and unique incentives.

“Would you rather go, you know, Muncie, Indiana, or Indiana? I mean, there will be a much better selling aspect locally,” Brown said.

The amendment also added a cap for IEDC to only establish up to five Innovation Development Districts from 2023 to 2025, although more may be created with the approval of the Budget Committee of the state.

Overall, local government groups said the amendments improved the bill, but still did not do enough in some areas.

Ryan Hoff of the Indiana Counties Association asked that a threshold be added for the magnitude of projects that would go into districts. Mark Shublak, representing the Indiana Economic Development Association, called for the addition of a “mutual operation” clause to clarify the relationship between IEDC and local officials.

IEDC officials have insisted from the start that local partnerships should be maintained in innovation development districts for big developments to happen, but some local officials felt that the original bill did not guarantee this.

Gov. Holcomb told reporters last week that local governments have always been involved in the deals from the start, and SB 361 wouldn’t change that.

“Local authorization doesn’t happen if the local community doesn’t want it,” Holcomb said. “It’s a win-win scenario. This is also how we win in the future with deals of the size that are beginning to interest us.

House Speaker Todd Huston, R-Fishers, said discussions will continue with the Senate, IEDC and local governments to make further changes to the bill in the final weeks of the session to to land in the ‘right place’ to balance local interests while giving the IEDC more flexibility.

“The IEDC is doing everything they should be doing appropriately, which is pushing us to give them as much flexibility as possible,” Huston said. “We’re trying to strike that balance between giving them the flexibility they need to operate and adapt quickly, and making local communities feel impacted by these projects.”