Developer sues Lebanon for tech park fallout, citing LEAP District as city’s priority for water use

A developer is suing the city of Lebanon for more than $25 million, accusing its leaders of acting in bad faith and torpedoing plans for a technology park to instead focus efforts—and water capacity—on the LEAP Lebanon Innovation and Research District.

In a lawsuit filed last month in the U.S. District Court of Southern Indiana, South Carolina-based RealtyLink alleges the city prioritized the water needs of the Indiana Economic Development Corp.’s massive LEAP project over its Cedars of Lebanon tech park proposal, even after the city made commitments to the firm amid ongoing concerns about the city’s water constraints. 

Other defendants include Mayor Matt Gentry, the Lebanon City Council, individual council members and Lebanon Municipal Utilities. City of Lebanon officials did not return IBJ’s request for comment on the suit.

The IEDC is overseeing the development of the planned 10,000-acre LEAP Lebanon Innovation and Research District (LEAP stands for Limitless Exploration Advanced Pace). To satisfy the high water needs for advanced manufacturing, a state-sponsored pipeline project was introduced to pump as many as 100 million gallons of water per day from aquifers connected to the Wabash River, about 30 miles to the north. The pipeline is the subject of an ongoing Indiana Finance Authority study. 

“Despite this need, they persisted in offering the Incentives to induce the Plaintiffs to develop the Cedars despite their knowledge they might not have sufficient water to serve the Cedars,” the lawsuit reads.

Lebanon allegedly made several commitments to the company–including a tax-abatement offer and a water plan–but withdrew the hefty incentive package in March, which RealtyLink alleges killed its ability to develop the project after months of accruing interest on a development loan.  The firm–now doing business as 633 Development–also said the event garnered them a reputation as unreliable business partners, hurting future opportunities. 

The developer is seeking more than $25 million in damages for land purchases, lost anticipated profits, reputation injury and other development costs. It alleges deprivation of due process, lack of equal protection, defamation and promissory estoppel among other complaints.

RealtyLink had planned to build the industrial park on a 199-acre site near John Shaw Road and Tyre Road on the south side of Lebanon.

Project’s roots 

RealtyLink began exploring the possibility of developing a 119-acre property in Lebanon for a technology park in 2021. With plans to be developed over phases, RealtyLink said it sought to purchase the land to build multiple industrial and manufacturing buildings.

According to the lawsuit, RealtyLink said the city promised several incentives, including tax abatements, identification as an economic revitalization area, the creation of a tax increment financing district and the issuance of bonds for infrastructure development. 

Based on those promises, RealtyLink started buying property, including a $6.79 million purchase that closed in July 2022. According to the suit, the developer borrowed $3.3 million for the purchase.

With tax abatements and a water plan in place, RealtyLink said the city began annexing the LEAP district after RealtyLink purchased the property in July 2022 through IN Lebanon John Shaw LLC for $6.8 million. But the development start date was delayed by the lack of water and wastewater services infrastructure, the lawsuit says. 

The LEAP project was officially announced in May 2022, with an initial announcement by Eli Lilly and Co. that the company would invest up to $2.1 billion in a pair of new manufacturing facilities on the campus, which could span up to 10,000 acres. 

In its complaint, RealtyLink said it pursued several avenues to remedy the water issue, landing on an agreement to bring water to and from the site until the city expanded its utilities. The developer then applied for and received an Indiana Department of Environmental Management permit for its proposed “pump-and-haul” operation in April 2023.

However, RealtyLink alleges that while the city was initially on board for the water operation, it later changed course and told the developer it could not move forward despite having state approval–with Lebanon Municipal Utilities threatening to sue the firm if it accepted the permit. 

Despite the ongoing water challenges setback, the Lebanon Redevelopment Commission and the city council approved the site as an economic development area in August 2023. On Nov. 13, the council approved economic development revenue bonds of up to at the most $8.5 million. 

But the water holdup, RealtyLink said in the suit, also delayed closing bank financing and TIF conversations to the end of 2023, pushing its construction start to spring

Cedars deal axed

In early 2024, the project had a breakthrough and obtained the easements necessary to install equipment and connect to the city’s wastewater system, according to the suit. The easements were finalized on March 21. The lawsuit alleges the city and utilities pointed to the wastewater connection as the issue holding back the project’s commencement. 

Four days later, the Lebanon City Council held a meeting at which Gentry asked for the project’s tax incentives to be withdrawn, which the council unanimously approved. The mayor pointed to a December 31, 2023, construction deadline and the inability to service the park with water as the reason to withdraw the incentives. 

RealtyLink said in the lawsuit it was not given notice of the repeal and was instead alerted in a letter more than a week after its passage. It also alleges Gentry made false and defamatory statements regarding the status of the easements and the lack of communication between the parties.

It also said no deadlines were communicated to them despite several opportunities at public meetings. The city said in a letter to the developer that plat approvals are only valid for a year unless there is an extension, and it did not receive word of a renewal. 

The developer also rebutted Gentry’s assertion regarding water availability. 

“The City and LMU were aware of the water scarcity when they promised the Incentives and proceeded to promise the Incentives knowing of a strong likelihood that water would not be available for the Cedars,” the complaint reads.

In its lawsuit, RealtyLink said it calculates its damages as exceeding $25 million, noting it lost more than $3.3 million on the purchase of the property, an additional $5 million in profit from the first phase of the proposed Cedars project, and various costs tied to engineering, design and due diligence processes. The company also said that it planned to purchase additional land for $58,000 per acre for a future phase, which would have brought in a projected $20 million in profit.

So far, neither the city of Lebanon, city council, the utility agency, nor the individuals named–Gentry and council members Dick Robertson, Sierra Messenger, Robert Hawkins, Mike Kincaid, Keith Campbell, Sandra Jasionowski and John Copeland–have filed appearances with the court. No additional dates have been set for the case.

Mickey Shuey contributed this story.