Bloomington to woo Catalent with tax break as drug company could invest $350m and create 1,000 jobs – The B Square
By the end of 2026, Catalent could spend $350 million to expand its Bloomington operation to South Patterson Drive in the southwest part of the city.
The project would create 1,000 new jobs, increasing its local workforce by about a third.
The pharmaceutical company plans to spend around $10 million on real estate development, possibly buying more land. The other $340 would be invested in personal property, which includes all non-permanent devices inside a building, such as manufacturing equipment.
The pharmaceutical company‘s investment would be subject to a tax allowance on the appreciation of real estate and personal assets. The real estate would be reduced at a rate of 50% per year for 10 years, for a total of $826,760 in additional property taxes paid and $826,760 in reduction.
The biggest break is in personal property, which is 90% for 20 years, and totals approximately $43,450,785 in reduced taxes, with $4,827,865 in additional taxes payable.
It’s not done, even though Bloomington City Council grants the abatement, in a series of steps that will begin to its meeting on Wednesday February 16.
Indeed, Bloomington is just one of many other locations across the country vying for the potential expansion of Catalent’s production capacity.
During the February 4 city council business session, Bloomington Economic Development Director Alex Crowley put it this way:[Catalent has] not made a decision – we are competing for this investment with other parts of the country. They have organic factories, as you will hear in their presentation, in different parts of the country.
Crowley added: “I think Bloomington compares quite well, talent-wise, quality-of-life-wise, location-wise and availability of adjacent land.”
Available land nearby includes a 90-acre parcel just south of the current Catalent facility, which is owned by the Monroe County government.
The county-owned real estate is part of the “economic revitalization zone” that Bloomington City Council will be asked to designate next Wednesday. On Wednesday’s agenda is a resolution that would do two things: designate the economic revitalization zone; and authorize the abatement period.
After that, there is a break for public review and then a final confirmation resolution, which is currently scheduled for the March 2 board meeting.
Catalent’s application for the tax abatement indicates that the company “plans to upgrade buildings to support increased manufacturing capacity as well as potential future new construction.” The request continues: “If the tax abatement is approved, property improvements would occur in phases on the property currently owned and may also include acquisitions of additional properties.”
Catalent says its planned expansion is “critical to the company’s ability to remain competitive and pursue additional growth opportunities.”
One of the challenges in creating 1,000 new jobs is finding housing for new employees. During last week’s city council business session, Crowley pointed to Catalent’s proximity to the former IU Health hospital site at 2nd and Rogers, which the city of Bloomington has an agreement to purchase. the site master plan report concludes that it could support between 660 and 1,000 new dwellings.
Crowley said at last week’s working session: “I think the two areas of interest and concern that we might have are number one, workforce housing and attracting labor.” He continued: ‘If you recall the hospital site is just up the road, this is going to provide significant housing availability as it is built.’ He added: “The proximity to this site is actually very interesting for us.”
Housing new workers in Bloomington, or at least somewhere in Monroe County, is crucial to the trade-off between forgoing property taxes through the reduction and collecting more local income taxes from the additional workers.
In Indiana, local income tax is levied in the county where the worker lives, not the county where the job is located. If new workers all had to commute from outside Monroe County, income taxes on the additional $66.5 million per year in payroll Catalent expects to pay new workers, n wouldn’t go into the government coffers of Bloomington or Monroe County. Crowley told council members during their business session last week that half of Catalent’s current workforce lives outside of Monroe County.
Catalent’s request for the tax abatement pegs the lowest-paying new jobs at $19 per hour and the average full-time hourly wage for new positions at $30 per hour.
Catalent has quadrupled the number of jobs it promised under previous tax cuts. A tax relief granted in 2019 was supposed to create 200 new jobs, but generated 839 new positions.
All of the tax breaks that have been given by Bloomington to various businesses have been on the west side of town.
Crowley told council members who attended last week’s working session that the biggest “curve” with the proposed tax abatement is the 20-year period. It’s the first time Bloomington has exceeded a 10-year abatement period, since state law was changed in 2014 to allow abatements longer than a decade, Crowley said.
According to Crowley, Catalent wants to protect its long-term tax liability given the nature of its equipment, the length of its liabilities and the character of the pharmaceutical industry.
Crowley said Catalent’s personal property abatement could turn out to be about the same reduction in income as a potential “floor” reduction on depreciation value, which current state law fixed at 30% of the initial value. There are discussions in the state legislature about lowering the “floor,” Crowley said. If the value of a personal property can depreciate to near zero, instead of being artificially maintained at 30%, then the tax on that property would also approach zero.
Under consideration this year is HB 1002which would exempt from the 30% floor any new depreciable personal property purchased after January 1, 2022. It was passed by the House of Representatives and is now before the Senate.