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It was roughly a year ago that Wanda Garst was approached about selling her 92-acre family farm just north of Lebanon.
The attorney wouldn’t say whom he was representing, but the mystery buyer was offering about $30,000 per acre—roughly three times the market value for farmland at the time.
Garst declined the offer, but the buyer came back and asked what price would make her willing to sell. She didn’t have one.
“Money doesn’t buy everything,” she said. “God isn’t making more land. Farmland should be preserved.”
While the Garst family didn’t bite on the offer, many others have. And, on average, those who have closed the sale of their farmland have received more than six times the average market value.
The Indiana Economic Development Corp., the quasi-government entity that wanted to purchase Garst’s property, has secured roughly 9,000 acres of land in Boone County for its LEAP Lebanon Innovation and Research District, a planned advanced manufacturing district that state officials have compared to the Research Triangle Park in North Carolina.
The IEDC spent more than $125 million to acquire 1,577 acres of land in Boone County in 2022 alone, according to sales disclosure forms filed with the Indiana Department of Local Government Finance.
The agency spent about $73,000 per acre for parcels of solely agricultural parcels, some with farm buildings and silos. That’s more than six times the market value for average-quality, vacant farmland.
Residential properties with farmland attached sold for an average of $800,000 per purchase.
The remaining 7,400 or so acres under contract are tied up in purchase agreements that have not yet closed.
IEDC officials noted that several properties it has purchased include existing buildings or operations such as grain bins, which further increase the properties’ value. The new Interstate 65 interchange being built just north of Lebanon, as well as overall utility upgrades to the site, also increase property values.
The average acre of Indiana farmland was valued at $10,598 in 2022, a roughly 30% increase from the previous year, according to the Purdue University Farmland Value Survey, which bases its findings on input from appraisers, lenders, farm managers and farmers.
“What we saw in 2022 was record growth rates,” said Todd Kuethe, Purdue professor of farmland economics.
Many landowners in Boone County who chose to sell are also taking advantage of a tax break known as a 1031 land exchange that allows them to use the proceeds from the sale of their land to purchase similar property elsewhere to defer paying capital gains taxes.
Johnny Klemme, a farmland broker for Geswein Farm & Land, said increased development in rural parts of the state, including Boone County, is one factor contributing to an increase in the price of farmland.
“We certainly have land buyers that are selling land in Boone County and then purchasing land in other parts of the state,” Klemme said. “They’re selling 80 acres in Boone County and turning around and buying 160 acres in a different county.”
Because the LEAP district is not a public works project, the IEDC cannot use eminent domain to purchase the land, which could explain why the organization is paying well above market value, said Mark Levin, a professor at the Indiana University O’Neill School of Public and Environmental Affairs.
“If people are aware of the project, it’s going to drive the price up,” Levin said.
IBJ attempted to speak with property owners who sold their land but were told they signed non-disclosure agreements to not to speak publicly about the sale.
‘In the real estate business’
The IEDC is doubling down on its strategy of buying land for economic development.
In its biennial budget request last month to the House Ways and Means Committee, the agency asked for $150 million for a revolving land acquisition fund. It includes a stipulation that, if the IEDC sells property it acquired with those funds, the sale proceeds will be deposited into the general fund.
Last year, the State Budget Committee approved the IEDC’s request for $164 million to purchase 1,400 acres of land for the LEAP District.
Rep. Ed DeLaney, a Democrat from Indianapolis, questioned whether the IEDC had diverged significantly from its original mission and moved into the real estate business.
IEDC President and Indiana Commerce Secretary Brad Chambers said the speed and pace of industry today requires states to offer shovel-ready projects for companies interested in expanding in or moving to Indiana.
“If we want to be competitive globally as well as nationally, we should be in the real estate business,” Chambers told the House Ways and Means Committee. “I think it’s a good return on investment, or we wouldn’t have done it.”
Rep. Jack Jordan, a Republican from northwestern Indiana on the House Ways and Means, said he had difficulty reconciling free-market economics with the IEDC’s practices.
“In my mind, being a private-sector fiscal conservative, I do feel a bit uncomfortable to say we’re in the real estate business,” Jordan said. “How I’ve tried to frame it in my own mind is, we’re in the infrastructure business, and you could argue that this is part of building that core infrastructure.”
Chambers said the strategy is necessary to compete with states like North Carolina, Ohio and Tennessee that also buy land for strategic sites to lure high-wage industries to their states.
“It’s just the way the game is run today,” he said. “You’ve got to be in the infrastructure business, you have to have credits, and you have to have incentive plans.”
IEDC Chief Operating Officer David Rosenberg said the state doesn’t intend to be a long-term landowner in Boone County.
“As companies come in, if they want to purchase that site, they would either close on the land themselves or we would close on it and transfer it to them,” he said.
Phil Powell, a business economics professor at the Indiana University Kelley School of Business, said the IEDC’s practice of acquiring land is sound economic policy. He pointed to countries like Singapore, South Korea and Taiwan that made investments in infrastructure to spur economic growth.
“When you build a road, it helps the private sector flourish,” Powell said. “This is not the state going into the real estate business. This is the state creating an environment where the free market can flourish.”
House Republicans included the IEDC’s fully requested amount of $150 million in their budget proposal that passed the House last week. Senate lawmakers will consider their own amendments to the budget starting next week.
Lawmakers have until April 29 to pass a two-year budget.
‘A hard tech corridor’
Proponents of the LEAP project say its location, along I-65 between Purdue University and Indianapolis, will allow companies that locate there to tap into two of the state’s largest workforce pools.
Together, the route will comprise a roughly 63-mile “hard tech corridor,” said Purdue University President Mung Chiang.
“We’re going to have first-class available land and infrastructure to attract companies, such as Eli Lilly, to continue to invest, or new ones—companies large and small—to invest in our state,” Chiang told an audience at IBJ’s 2023 Technology Power Breakfast last month.
Eli Lilly and Co. announced last May that it would invest $2.1 billion in two manufacturing sites in the LEAP district, which is expected to result in the creation of 500 permanent jobs and 1,500 construction jobs. The IEDC is working to recruit other companies in advanced manufacturing, biosciences, microelectronics and other cutting-edge industries.
The Discovery Park District at Purdue University—which includes research centers, labs, housing and a technology park—will also be the location of Minnesota-based SkyWater Technology’s $1.8 billion semiconductor manufacturing facility.•
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The idea that farmland is sacred and “needs to be preserved” is backwards. We have too much of it. That’s partially why farmers make such thin margins and need such big subsidies. And the razing of Indiana’s forests for farms has done a ton of ecological harm.
At the same time, private companies should be buying up farmland instead of the government. The IEDC trying to pull a China and build a planned tech district is a little much. I thought that we weren’t a country of planned economies?
A tech corridor is going to happen whether the IEDC buys Boone County land or not. I’d rather them not and let industry decide where it wants to go. In the meantime, focus on increasing QOL.
Robert, you know the corollary to those thin margins for farmers is having reasonable prices for food at the grocery store, right?
Are these really farmers? Take another good look at the photograph of Ms. Garst. That certainly doesn’t look like hogs standing behind her. A better description of some of these “farms” is country estates. We should all be very clear about what is really going on in exurbia around Indianapolis.
Horse farm, hog farm, who cares what kind of ‘farm’ it is. Some of this farm and land likely have been in families for hundred of years possibly. There really are some things not for sale, such as legacy.
Wow, you can a person, her property, her wealth and her entire lifestyle from one photograph?
It’s hard for me to comprehend how people see millions of dollars in there face and just say no. Ms. Garst can literally set any $$$ amount and be set for life. Her children or extending family set for life. Situations like these don’t last forever.
The whole thing is nonsense on all sides. It’s not adding a dense tech hub, and it’s not destroying efficient food-producing farms.
Also, freeway proximity doesn’t make it as attractive as they seem to think… There’s no transit from Indy to Lebanon to Lafayette. They will not have the “diverse high-quality pool drawn by an array of living options” they are claiming when the options are daily hourlong freeway commutes or living in Lebanon, a town with zero meaningful cultural experiences.
Unless I am mistaken about IEDC funding, I would suggest the headline on this article should read, “Indiana Taxpayers Paying Premium for Boone County Tech Park”…….just sayin’
The IEDC nor any other organization should be able to purchase property (especially that much property) behind the cloak of an attorney who doesn’t have to disclose the actual buyer. That is total BS! The property owners and Hoosier tax payers should be made aware of any project like this well before 9,000 acres of land has been puchased. What happened to public hearings and transparency??
This practice skews land values.