Indiana House gives local officials more control in economic development bill

Local government officials concerned that state economic development leaders would overstep their bounds with the creation of new innovation development districts have won some concessions from Republicans in the Indiana House.

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

“It puts into statute this negotiation and collaboration that the IEDC has to do,” Brown said. “That’s what the people were worried about that all the sudden [the IEDC is] going to come in and boom, we have this in our backyard and know nothing about it.”

Changes to the bill were made last week in the House Ways and Means Committee. They were made in response to concerns raised over how much control the state would have over local tax money generated through proposed innovation development districts that could be created anywhere in the state to lure large-scale economic development projects.

As initially proposed in legislation endorsed by Gov. Eric Holcomb, local and state taxes generated in each district would have been placed in a statewide fund for economic development.

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

The money in the local fund could then be transferred for to the now-separate statewide fund, which would still be managed by the IEDC to dispense grants, loans and investments for a project in a district. The General Assembly could allocate money for the fund as well.

The local fund could be used for land acquisition, improvements of utilities and infrastructure, recruitment of new businesses and new employees to the district, and training of employees in the district.

Innovation development district boards appointed by the IEDC and local governments in each district would oversee the local funds. Each board would consist of six area residents. Three would be selected by the state secretary of commerce and three by a local governing body.

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

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

Brown said the change was a better approach to put attracting remote workers in the hands of local officials who can best market their communities and unique incentives.

“Would you rather go to, you know, Muncie, Indiana, or to Indiana? I mean, there’s going to be a much better selling aspect of it locally,” Brown said.

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

Overall, local government groups said the changes made the bill better but still did not do enough in some areas.

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

IEDC officials have insisted since the outset that local partnerships would have to be maintained in the Innovation Development Districts to make large developments happen, but some local officials felt there was little in the initial bill to guarantee that.

Gov. Holcomb told reporters last week that local governments are always involved in deals from the start, and SB 361 would not change that.

“Local permitting doesn’t occur if the local community doesn’t want it,” Holcomb said. “This is a win-win scenario. This is also how we win in the future with deals the size that we’re starting to get interested in.”

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

“The IEDC is doing everything that they should appropriately do, which is to push us to give them as much flexibility as possible,” Huston said. “We’re trying to meet that balance between giving them the flexibility they need to operate and adjust quickly, and making sure local communities feel that buy in on those projects.”