GOP gubernatorial candidates discuss IEDC, LEAP and how to create jobs

Indiana’s strategy for economic development and job creation has emerged as a key issue in the Republican gubernatorial primary—and the future of the state’s still-developing LEAP district in Boone County could be at stake in the outcome.

Four of the candidates in the race—U.S. Sen. Mike Braun, Lt. Gov. Suzanne Crouch, former state economic development executive Eric Doden and former Attorney General Curtis Hill—say they want to modify Indiana’s approach to pursuing jobs, starting with changes to the agency that oversees those efforts and including a reevaluation of the LEAP Research and Innovation District in Lebanon. Those four candidates said the Indiana Economic Development Corp. has been overzealous in how it’s lured or tried to lure development projects.

“Quite honestly, we’ve had a very state-driven, top-down approach for the past 25 years, and we need to have a significant change if we’re going to be successful with these innovation districts in the future,” Crouch told IBJ.

But another leading candidate—former Indiana Commerce Secretary Brad Chambers—is an architect of some of those efforts, including LEAP, which stands for Limitless Exploration Advanced Pace. And Chambers said he would lean into LEAP and similar projects in an effort to ensure that Indiana can compete with other states in attracting the highest-paying jobs for Hoosiers.

In fact, Chambers’ two years with the agency were marked by an effort to help the state win so-called mega-deals—those with investment commitments of more than $1 billion. Those projects are often related to high-tech manufacturing of microelectronics or electric batteries.

His work led to several wins, including an announcement by General Motors and Samsung SDI to invest $3 billion in battery manufacturing in New Carlisle, a project pursued by several states. And in the first quarter of 2024—about six months after Chambers left the agency—the IEDC reported it had secured $20 billion in development commitments, a record quarter for the state. That included a $4 billion deal with semiconductor manufacturer SK Hynix for a new facility in West Lafayette.

But other GOP gubernatorial hopefuls told IBJ they would shift the focus of the IEDC and state policy to deemphasize megadeals. The goal wouldn’t be to dismantle the IEDC but to change its strategy—including its focus on LEAP.

Doden, who was president of the IEDC from 2013 to 2015, said the state’s goal shouldn’t be to determine the future economy of Indiana but instead “create conditions where talent comes into our communities and the private sector decides how businesses grow, what businesses get started and how they expand.”

“LEAP is a one-county strategy—billions of dollars of taxpayer money put in one county,” Doden said. “And we’re saying, ‘No, we’re going to have a 92-county strategy.’ So, it’s quite a different approach.”

In addition to reevaluating LEAP, several GOP candidates said they would focus more state resources on small business and entrepreneurship, increase collaboration between local and state governments and expand the IEDC’s attention on regionalism, with hopes of building on Gov. Eric Holcomb’s Regional Economic Acceleration and Development Initiative grant program, known as READI.

They also share an appetite for foreign travel as governor, an approach Holcomb has made a cornerstone of his economic development strategy. Since coming into office, Holcomb has taken 21 trips—most recently to Mexico and Brazil—and said he plans to conduct a few more before his tenure ends.

But most candidates said more oversight and transparency should be required of the state’s development efforts.

The winner of the primary, which also includes long shot Jamie Reitenour, will be the favorite to become the next governor. In the Democratic primary, former Indiana Superintendent of Public Instruction Jennifer McCormick is running uncontested. The Libertarian Party has nominated Donald Rainwater as its candidate.

‘Ahead of our skis’

Chambers was leading the IEDC in late 2021 when it started quietly contracting to buy thousands of acres of farms and rural land near Lebanon, just off Interstate 65 between Indianapolis and Lafayette. The plans weren’t made public until the following year, and the state began allocating millions—eventually hundreds of millions—of dollars for land acquisition.

Chambers, Holcomb and other state officials say the goal is to create an advanced manufacturing district similar to the Research Triangle Park in North Carolina as part of a larger hard-tech corridor between Indianapolis and Purdue University. The state has identified a total of 11,000 acres for the district; 7,200 of those have been annexed into Lebanon.

Eli Lilly and Co. has a $4 billion manufacturing campus under construction in the LEAP district, with plans for 12 buildings over 600 acres and more than 700 new jobs. State officials have said other companies are considering LEAP for big projects. The state has pledged up to $371 million in incentives. But the project has been controversial. Some critics say the state is spending too much and gobbling up too much prime farmland. Other critics are concerned about a proposal to pump water from an aquifer along the Wabash River in Tippecanoe County to the LEAP district, which doesn’t have enough water nearby to support some high-tech manufacturing.

Braun, who polls show has a significant lead in the race, said he supports Lilly’s investment in the LEAP district, but that the state acted rashly in mapping out such expansive plans for Boone County. He said if elected, his administration would reevaluate the state’s approach to LEAP—and particularly any plan to develop similar districts elsewhere, which the IEDC has said it is considering.

Braun said while there’s “validity” to having land available for development, the state should have done more work to determine the all-in cost for such a project, including the state’s return on investment for such large-scale developments.

In addition to the land acquisitions, the IEDC has also pledged millions of dollars to make the sprawling district “shovel ready” by installing utilities and conducting necessary environmental work. The agency could be on the hook for hundreds of millions more just to provide water service at the site.

The Holcomb administration developed LEAP to compete for the biggest economic development deals, which Indiana had been losing to other states. Shortly before the state began securing Boone County land, Intel announced it would build a $20 billion semiconductor plant near Columbus, Ohio. Indiana officials have said they couldn’t adequately compete for that project because they didn’t have land ready for immediate development.

“It’s a strategy of making sure Indiana is ready when these large, future-focused industries are looking for a home and a workforce. Indiana is a great state to do business,” Chambers said. “But it takes more than just being a great state to do business. You’ve got to be ready to do business, so that’s what LEAP does—it puts us in a position to be ready for these large, high-wage industries of the future.”

But Braun said that, instead of constantly competing with other states for the biggest economic development deals, Indiana should focus its efforts on building up new and existing small businesses statewide.

“I understand better than anyone … how you build a little business into a larger company, and that is a lot less money than trying to rope all the whales across the country that might want to come into your state, because you clearly have to pay a lot to get them in,” he said, pointing to his experience leading Meyer Distributing Co., which was Meyer Body Co. when he and a partner purchased it in 1986. Braun later bought out his partner, renamed the company and moved it from Haysville to Jasper.

“Turn to a place like LEAP—the main beneficiary of that is Eli Lilly, and I don’t have anything against that,” he said. “But the marginal return that you’re going to get from benefiting anyone large is probably not going to be as good is what it would be percentage-wise by having eight to 10 smaller companies that you focus on—see their potential, look at what markets they are trying to build.”

And Braun said he disagrees with the state’s and Chamber’s assessment that the project has been a success.

“I’m just saying that it looks like we got ahead of our skis on a couple [of] components as it relates to LEAP,” he said. “And I don’t think Brad [Chambers] can get by with saying that it’s a home run or they’ve knocked it out of the park. I think it remains to be seen how that’s going to work out.”

Doden also said the IEDC has placed too much emphasis on landing big companies. In fact, he has proposed reserving 30% to 40% of IEDC funding for community development.

Both Braun and Doden have campaigned on helping small businesses grow through an increased focus on regional development, rather than what they say is the current state-led approach.

The LEAP approach “is not appropriate,” Doden said, because it puts too much focus on a singular part of the state. He said his administration would evaluate how much land in Boone County is under control of the IEDC and would decide what to do with that land from there.

“We’re not going to have the IEDC buying land under my leadership,” he said. “We’re going to go back to a model where we’re working at being good at customer service, being good at helping businesses navigate agencies. I know there’s a lot of emphasis on the attraction of projects, but there’s thousands of businesses that are already here that need help every day.”

The ‘READI’ approach

Chambers said Doden’s description is a misrepresentation of the state’s current economic development strategy. In fact, many of the biggest jobs and investment announcements of the past several years have been outside the LEAP district, including a planned $4 billion investment by SK Hynix to package microchips in West Lafayette, a $1.5 billion investment by Entek to make batteries in Terre Haute and more than $6 billion in investments planned by StarPlus Energy in Kokomo.

In addition, the state has boosted its investments in other parts of the state.

The state on April 11 awarded $500 million in a second round of READI grants to communities and regions across Indiana—with another $250 million set to come from Lilly Endowment Inc. in the coming months.

Indiana launched its first $500 million in READI grants in 2021 with the goal of creating regional coalitions promoting quality of life, quality of place and quality of opportunity. The $500 million has been matched by additional public, private and not-for-profit dollars, resulting in—according to the state—a combined $12.6 billion investment in 361 unique projects and programs.

READI is a successor to the Regional Cities Initiative—crafted during Doden’s time at the IEDC under then-Gov. Mike Pence—that focused on quality-of-place projects and numerous initiatives to help the state retain and attract workers.

Doden said the state should make that kind of regionalism with extensive private-sector involvement the model for more of its economic development work. In the case of the Regional Cities Initiative, about 80% of project funding was private, with the state and region each splitting the remaining costs. If elected, Doden said, he’ll earmark $200 million toward those efforts annually.

Doden and Braun each said the IEDC needs to be more transparent about how it spends its money, as well as what role incentives play in luring business to the state, particularly with the LEAP development and the state’s interest in acquiring land and water for the project.

“I understand that sometimes you have to sign non-disclosure agreements with companies, and that is part of their process,” Doden said. “There’s always a balance here. But there are areas that I felt very strongly that could have been done better, as it relates to a project of this size and magnitude in one county.”

Economic offense

For his part, Chambers said he disagrees with his opponents’ positions that the IEDC has taken on too large a role in development across the state and that it hasn’t been transparent in its dealings. He added that he considers the LEAP project a crucial part of his strategy for growing the state’s gross domestic product and increasing wages.

“You’ve got to play offense—economic offense—to grow industry in the state and keep it, and I think the LEAP innovation district is one of the ways [Indiana does that] in this multi-front war,” he said.

But he acknowledged challenges tied to water concerns at LEAP that have made it more controversial—a fact he says has created an opportunity for the state to better evaluate the standing of its natural resources.

The Indiana Finance Authority is conducting a study of water demand and supply in 28 counties that touch the Wabash River headwaters. The IEDC had launched its own water study, which preliminarily showed the state could pump water from the Wabash River area without hurting area wells, but Holcomb last year reassigned the responsibility for that study to the finance authority.

At least one company that’s considering the LEAP district is believed to need water for its manufacturing that exceeds Boone County’s supply, leading to a proposal to pump millions of gallons of water daily from Tippecanoe County, 35 miles away.

“We were mapping out a strategy to solve [that challenge], dependent upon the study results, using revenue from new companies versus taxpayer dollars,” Chambers said. “It was a very businesslike approach to the problem, and it was solving the problem. I’m a problem solver; that’s what business guys do. And I think we have a framework for it, depending on the results of the water study.”

Keeping some distance

Crouch said having districts like LEAP Lebanon is important—particularly the innovation development district designation, which essentially captures all taxes from the property to a given project—but the IEDC needs to do a better job of collaborating with local governments.

Doing so, she said, could create more opportunities for districts of different sizes across the state and allow the state to expand its toolbox of incentives.

“We have to foster capacity-building with [regional development] organizations because we know that best-in-class states have built powerhouses with local and regional economic development organizations,” she said.

By some accounts, the IEDC already works closely with local governments on development efforts, including packaging incentives to companies considering investing in Indiana. For the SK Hynix deal, the state worked with Purdue as well as the city of West Lafayette—with which it has been in a battle over water challenges related to the LEAP project—to secure land and local tax incentives. It also worked with Kokomo on the Starplus Energy deals announced in 2022 and 2023, as well as with Fort Wayne for a new Google data center announced this week.

But some local officials have quietly expressed concerns over a site like LEAP and say the IEDC’s involvement in development and land acquisition could lead to favoritism.

While the IEDC and Holcomb have largely shrugged off those concerns, Crouch said working closely with cities and towns on future land purchase and large-scale development projects could ease the minds of local leaders across the state.

Throughout the primary campaign, Crouch has sought to separate herself from her counterparts by campaigning on a gradual reduction—and eventual elimination—of the state income tax, with a goal of increasing take-home pay for Hoosiers.

She said such an approach could be beneficial for Indiana as it competes for jobs and projects with states like Texas, Florida and Tennessee, which have no individual income tax.

Crouch, like Chambers, also said having a statewide water plan is imperative to determine where development districts should be located, if the state opts to go that direction. It’s a sentiment echoed by all the other candidates, as well.

“We have to understand the needs of the prospects that we’re going to be attracting to these particular districts,” Crouch said. “Then we have to be sure that we’ve worked with our local communities and utility companies to ensure that we’ve developed suitable sites for those projects—let’s be sure we’re putting these projects … in the right locations.”

A local problem

Hill, who was Indiana attorney general from 2017 to 2021, said local officials should have a say in whether the state can take on larger development projects within their bounds, if it should be doing so at all.

A Hill administration, he said, would put a stronger emphasis on local input for proposed projects where the state is involved and would limit how the IEDC uses its authority to acquire land.

“I don’t like what the IEDC has done in Boone County with relation to this project, and I think it’s a prime example of government gone rogue,” he said. “This strategy clearly sets out winners and losers, and it’s an example of the state coming in with a heavy hand and exerting authority over local decisions on how to develop a particular community, something that should first start with the members of that community.”

Hill’s economic plan is largely focused on reducing the state’s gas tax, corporate income tax and spending, while offering larger budget surplus tax rebates to Indiana residents.

He also said he has concerns about the state’s use of large incentive packages to attract out-of-state companies—particularly the impact those deals might have on existing companies.

He added that performance-based incentives, which are used regularly by the IEDC to ensure a company is meeting its obligations, should continue to be Indiana’s standard. Many local governments also have clawback provisions built into their incentives to allow them to recuperate funds if a company reneges on its deal.

“There are certainly some deals that may be attractive, but we need to make sure that we nail down the details and that they don’t end up being more detrimental in the process,” he said. “If you’re getting an agreement, to waive taxes or to get any kind of [incentive], we need to ensure that the company that came into Indiana met their part of the bargain. There should be penalties [or] something in place to make sure that the companies that come in, that were provided the golden deal, have some opportunity to pay us back if they don’t hold up their end of the bargain.”•