Deal to give Dow Agro successor $30M in incentives rankles some councilors

A panel of City-County Council members on Monday advanced a plan to provide Corteva Agriscience with $30 million in incentives to maintain operations in Indianapolis, but not before several councilors expressed objections.

Corteva is the agriculture division of DowDuPont, which formed last year through the $62 billion merger between Dow Chemical and DuPont. Wilmington, Delaware-based Corteva—which includes the local operations of Dow AgroSciences—is set to be spun off as a public company in June 2019. Corteva employs about 1,400 workers in Indianapolis.

The deal would authorize the issuance of $30 million in economic development revenue notes to Corteva from the city of Indianapolis, which would be paid back with about $5 million annually in tax increment financing funds that the city had been passing through to government units like schools, libraries, parks, police and fire protection. Those entities would no longer receive those funds while the notes are being paid off.

Dow and DuPont announced their merger in December 2015. Discussions on the incentives began in 2016. At the time, Indianapolis officials were afraid the city would lose the jobs and investment Dow Agro had previously made. The incentive package has been delayed until now because of various legal steps Dow and DuPont had to complete before they combined operations.

Under the incentive deal, Corteva will be required to retain its workforce for 10 years. There is an incentive clawback included in the proposal if Corteva does not maintain the jobs.

A representative from Corteva, Rajan Gajaria, said the firm was currently not at risk of leaving the city.

The council’s Metropolitan and Economic Development Committee moved the proposal forward to the full council on an 8-3 vote, despite the objections of a group of council members who said they were concerned about what the deal would mean for other businesses and schools.

Council Vice President Zach Adamson, who voted against the deal, told IBJ that the incentives were “really nothing shy of extortion” because the city wasn’t promised new investment beyond the $30 million investment in Dow’s facilities on Zionsville Road that already had occurred.

Gajaria said there could be an additional $100 million investment into Indianapolis operations from Corteva, but that proposal is not included in the deal.

Adamson said he was concerned that other Indianapolis companies would threaten to leave the city as a way to get more government incentives.

“One of the biggest fears I have about this whole process is the precedent we’re setting here,” Adamson said. “I’m horrified at the prospect that if we do this for you today—with no commitment of any additional jobs, no commitment of investment—that tomorrow it’s Infosys, the next day it’s someone else. We have announced to every company in the city that’s going to be the new normal. That can’t happen.”

Gajaria told the council it was a “fair challenge” to raise, but he said at the time of the negotiations with the city, incentives were “needed to make sure we could continue these operations here.”

When asked by Republican council member Jefferson Shreve whether council members would be reneging on the city's commitment to the firm if they voted against the deal, Deputy Mayor Angela Smith-Jones said “yes.”

Smith-Jones acknowledged that schools, libraries and parks could receive less money. But she said the administration is trying to find creative ways to lessen the shortfall.

Republican council member Janice McHenry said she voted against the deal because schools need the money. 

“I certainly don’t want to see something happen that hurts our school systems and what they have in finances,” McHenry said. “Any amount a school doesn’t get is significant. A few dollars here and there make a huge impact.”

But Leroy Robinson, a Democrat who represents the district where Corteva is located, said he supported the deal because it would have been “devastating” if the firm left.

Smith-Jones told the council that Dow Agro’s annual economic impact in the city of Indianapolis is approximately $60 million. The company will pay more than $3 million in annual in taxes in 2019, according to council Chief Financial Officer Bart Brown.

“We were faced with the temporary loss to the taxing units or a permanent loss [of jobs],” Robinson said. “It’s unlikely we could replace [Dow] if we were to lose this.”