State’s big, bold LEAP District play draws some reflection

In the nearly three years since it began scooping up farmland in central Boone County, the state’s economic development arm has spent more than $690 million establishing the LEAP Research and Innovation District.

So far, Eli Lilly and Co. and Meta Platforms Inc. have committed to investing some $18 billion in the district, which sits along Interstate 65 in Lebanon, roughly halfway between Purdue University and Indianapolis. That figure doesn’t include the tax and other incentives state and local governments have pledged to secure those deals.

And public officials say other potential deals are in the negotiating phase.

To the state’s outgoing economic development leaders, LEAP has been a big success already—and they believe taxpayers’ return on investment will only grow in the coming years. In fact, they say the state will make most of its money back as it sells the LEAP land it has acquired to companies locating there.

But some political leaders are cautious. While expressing interest in potential upcoming deals, they are approaching LEAP with a more critical eye on its cost and its impact on natural resources.

One Democratic fiscal leader is even calling for an audit of what’s been spent so far.

And incoming Gov. Mike Braun, a Republican, says the scope of the project and the state’s investment merit review.

Braun said during a Dec. 13 media briefing that development of the district has “brought to the forefront a couple [of] things that we should have probably thought through a little more carefully.”

“We’re blessed to have one of the most important companies in the state [Lilly] that are willing to invest,” he said. “But that doesn’t mean that you don’t fine-tune [LEAP] and make adjustments along the way.”

LEAP has been the state’s answer to a hypercompetitive economic development environment in which states are scrambling to land microelectronics plants, battery makers, electric vehicle manufacturers and other high-tech manufacturers that are taking advantage of federal funding to produce key products domestically.

After Intel chose Ohio in early 2022 to build a massive chip plant, the Indiana Economic Development Corp.—the state’s job creation agency—started securing options to buy some 9,000 acres of land west of Lebanon for LEAP. The goal is to amass land that can be developed quickly when companies are looking to act.

Indianapolis-based Lilly was the first manufacturer to commit to locating in the district—announcing in May 2022 that it would spend $2.1 billion building two plants there. Since then, it has announced additional investments at LEAP that are expected to total $13.5 billion across 800 acres.

The Lilly projects could yield more than 1,300 high-wage jobs by 2030 and are to include both manufacturing facilities and a first-of-its-kind medicine foundry.

State officials say LEAP was the key to securing the Lilly projects.

“LEAP was instrumental in getting the first investment from Lilly, as well as those subsequent ones” said Indiana Commerce Secretary David Rosenberg, who will leave the agency before the Braun administration takes office.

“Speed is the new incentive,” he said. “That means you have to have the land available, you have to have an updated economic toolkit that’s competitive, and you have to have the locals on board with utilities and infrastructure ready to go.”

In addition, Lebanon officials have confirmed that Menlo Park, California-based Meta Platforms Inc. plans to invest as much as $4.8 billion to develop a data center operation on a 1,430-acre piece of land at LEAP. The state has not formally announced the plans, though Lebanon officials last month agreed to massive tax breaks for the company.

The LEAP District also remains competitive for other investments, officials tell IBJ, including a $50 billion semiconductor facility and various advanced manufacturing and research-driven projects that state officials said would fetch an additional $10 billion in capital investment.

Massive plans

Since June 2022, the IEDC has secured nearly $700 million from the bipartisan State Budget Committee to buy, market and develop thousands of acres for the LEAP District. That’s more than one-third of the total the IEDC has requested for all projects from the five-member committee, which consists of two Republican legislative fiscal leaders, two Democratic legislative fiscal leaders and the state budget director, who works for Republican Gov. Eric Holcomb.

Most of the LEAP money approved by the committee has been earmarked for property acquisitions, site preparation, utility work and other construction tied to readying the district for future users.

Rosenberg argues the state’s LEAP strategy is important in positioning Indiana for more deals. And he said the IEDC expects to recoup most of its expenses (and potentially make money) by selling the land back to companies at a premium.

Lilly has already purchased a portion of its property, paying the state $60.2 million to acquire a 600-acre site east of I-65, which is nearly 25% higher than the IEDC’s average acquisition cost of about $76,000 per acre across the district. That doesn’t include the money the state has spent to prepare the site for development.

The most recently announced Lilly projects—including the medicine foundry—came together in just six weeks, Rosenberg said. The company is expected to close on the purchase of that land this year.

“All that pre-work done by the state was absolutely critical to getting that investment by Lilly,” he said.

Kasia Tarczynska is a senior research analyst for Washington, D.C.-based nonprofit Good Jobs First, which tracks and is generally critical of corporate subsidies. She said that while her organization has concerns about states using public money to attract big companies, the IEDC’s approach of buying land and then selling it for development could prove beneficial.

She added that companies presented with a choice between land that’s ready to go for development or receiving a subsidy will often pick the former because it requires less upfront investment on expenses that can’t be recouped.

“A company would rather come to a place where they can start building right away, where they don’t have to wait. The speed matters,” Tarczynska said. “They would rather go there and not get subsidies than get subsidies and have to wait for a year to start construction or investment. So these sites are a big factor.”

In the case of LEAP, however, the state is doing both. The IEDC and Lebanon officials have collectively pledged nearly $1.8 billion for incentive packages, relying in part on tools created by the Indiana General Assembly in recent years at the agency’s behest.

Across the three Lilly projects, the IEDC has pledged up to $1.7 billion in tax breaks and rebates—the state’s largest incentive package ever.

That deal heavily relies on an innovation development district designation established in 2022, which allows the state to rebate some taxes collected on new investments by a company in the district. Lilly is expected to receive more than $1.6 billion in rebates over the next 30 years. It is also receiving multiple job-based incentives, such as a combined $49 million in redevelopment tax credits, $15 million in infrastructure work and a $5 million skill enhancement fund, along with money from the state’s deal-closing fund.

Lebanon used a 2019 data center law to provide Meta a 35-year complete personal property abatement covering the cost of equipment while also giving the company a 10-year, 50% real property tax abatement for the buildings in the first phase of its development.

In turn, Meta has committed $1.5 million annually for a community impact payment program for each completed phase of its project, with those payments expected to be put toward quality-of-life and placemaking initiatives.

Major spending

Much of the money the state has used to prep LEAP has also come from tools the IEDC requested from the Legislature, including a deal-closing fund and a land acquisition bank. In 2022, the Legislature gave the IEDC $300 million for the deal-closing fund and added $500 million in 2023. Lawmakers also put $150 million into a one-time land acquisition fund.

So far, the IEDC has spent at least $529.7 million approved by the State Budget Committee from those other and funds for LEAP. It is in the process of spending an additional $43.2 million now.

And the budget committee has approved an additional $121 million for LEAP projects that the IEDC has yet to begin spending.

Ben Worrell, a principal in the location advisory practice of Indianapolis-based McGuire Sponsel, said the state is being “incredibly ambitious” in its spending on LEAP to lure users.

But he added that Indiana is not alone in its efforts. Georgia officials spent more than $1.2 billion to acquire and prepare 2,000 acres of land for electric vehicle manufacturer Rivian. The state also provided a $1.5 billion incentive package for the project.

Texas, meanwhile, is spending tens of millions of dollars annually as part of its deal-closing fund to help prepare sites for development. And Pennsylvania is set to allocate $500 million for its efforts to attract high-tech manufacturing.

Rosenberg has long described the state’s effort to secure investment at LEAP—targeting the world’s largest microelectronics, life sciences and advanced manufacturing companies—as akin to North Carolina’s Research Triangle Park. There, hundreds of companies have spent billions of dollars since the 1970s to locate research and development facilities.

“I think what the LEAP District is really trying to do is say, ‘Hey, Indiana is a player out here that can go to bat with the likes of Austin, the Research Triangle and the Boston metro area,’” Worrell said. “So for Indiana to be in that same weight class is really pretty impressive. It’s going to be up to the [new] administration as they come through to say whether they want to keep investing in this. But I think there is some of that … skin in the game here for Indiana to keep seeing these opportunities and capitalize on this momentum.”

The state is spending economic development money outside LEAP, as well. The State Budget Committee has approved IEDC’s requests totaling about $1.1 billion for other projects across the state since early 2022. That includes $100 million for a microelectronics project that fell through (most of that money was eventually diverted to LEAP) and $500 million for the second iteration of the Regional Economic Acceleration and Development Initiative program, called READI, for quality-of-life and economic projects throughout Indiana.

Worthwhile investment?

Overall, Worrell said he expects the private and public companies to invest far more in LEAP than government does, even taking into account incentives, utility projects and land preparation. In fact, he projects a return of nearly 10 times on the public investment.

“I think that’s a pretty good return,” he said.

Katie Culp, CEO of Indianapolis-based site selection and incentive consulting firm KSM Location Advisors, agreed. She said the Holcomb administration should be satisfied with the performance of LEAP so far, given the substantial commitments made by Lilly alone—not to mention Meta’s plans.

House Speaker Todd Huston, R-Fishers, said he hopes to work with the Braun administration to find additional ways to support the LEAP District, even if it means modifying the state’s approach based on new priorities or budget restrictions.

“There’s been extraordinary success over the last four years, and I would think we just want to continue to build on it,” he said. “We’re going to always have to reflect [on] what our budget condition is, and this is one of those priority issues. We’ll work with the Braun administration to figure out what tools they think they need and what makes sense from a budgetary perspective.”

But while some Republicans like Huston and Senate President Pro Tem Rodric Bray have said they’re excited about the state’s ongoing investment in the site, many public officials have expressed frustration over the state’s rollout of the project.

Initially, the IEDC pursued options on land in Boone County secretly, requiring those involved to sign non-disclosure agreements. Then, when the site didn’t have enough water to support high-tech manufacturing, the IEDC quietly began working on a plan that would have pumped water from the Wabash River in Tippecanoe County to LEAP. The state has declined for more than a year to release its study of that proposal.

Former state Rep. Sharon Negele, a Republican, told IBJ the LEAP project has not been handled well and that the lack of transparency was a “massive failure.” She said the project demonstrates a need for policy that protects landowners’ rights and communities, especially with other developments requiring massive water withdrawals.

Democratic Rep. Greg Porter of Indianapolis, who sits on the budget committee, worked unsuccessfully to curtail the state’s effort at LEAP, citing transparency concerns and results he so far considers to be lackluster.

Porter said while there’s been talk for months of a $50 billion semiconductor fabrication facility locating at LEAP, the lack of progress on that front has made it more difficult for him to support efforts at the district. (Two sources told IBJ that while the district is a finalist for the semiconductor plant, the company has opted to slow its plans until after President-elect Donald Trump takes office in January.)

“I am absolutely not content with the amount of state funds used for LEAP so far,” Porter said in emailed comments to IBJ.

“I would be extremely skeptical of supporting any additional state funding for the LEAP project. In fact, I think an audit of what has been committed so far in precious, scarce, taxpayer dollars is of much greater priority and importance. Who knows? Maybe some of what has already been committed can be ‘clawed back.’”

What comes next?

The state’s Rosenberg said LEAP has been integral to Indiana’s strategy of landing big companies. And he pointed out that the IEDC has attracted more than $90 billion in planned investments over the past three years, compared with $45 billion in 12 years before that.

But Braun has expressed an interest in shifting the IEDC’s focus back to a regional approach that is more like the strategy of Gov. Mitch Daniels’ administration.

While Braun hasn’t laid out what he plans to do with LEAP, he has proposed several new initiatives to better spread the economic wealth, a key campaign promise. That includes a program to incentivize private investment in rural areas, workforce development tax credits and a new IEDC entrepreneurship and innovation office focused on small business.

He has appointed David Adams, a former state workforce development commissioner, to serve as Indiana’s next commerce secretary, a position that has been expanded to include authority over the state’s tourism, workforce development and community development efforts.

Adams has not talked specifically about his approach to LEAP. But he told IBJ last month that, in alignment with a major pillar of Braun’s policy agenda, he plans to focus on spreading economic development, entrepreneurial and workforce opportunity around the state.

The Holcomb administration has pushed back on the suggestion that it has not taken a regional approach to economic development. IEDC officials have said about 72% of the deals struck in 2024 have gone to existing Indiana companies looking to grow their operations.

And under Holcomb, the state has also continued to invest heavily in regional development efforts.

The $500 million first round of the READI program sparked $9.7 billion in total investment, most of which came from private entities, the state said. Another 203 projects are in line for another $500 million through READI 2.0, as well as a $250 million fund from Lilly Endowment Inc. for arts and culture-related development.

Culp said she’s not inclined to think LEAP will be discarded altogether under Braun, given that several deals are being negotiated or are under consideration and work is already underway there.

“There’s the practical matter of how you unwind some of these commitments that have already been made or investments that have already been made,” she said. “You can be philosophically opposed to the concept of it all, but much of it has already been initiated and is moving forward.”•

Correction: This story has been updated to correct the percentage of money the IEDC has requested that is LEAP-related and to remove a figure in the table that was inadvertently inserted twice. See more corrections here.