Indianapolis Approves Investment Aid for Corteva
The City-County Council of Indianapolis, Indiana, has approved plans for a $30 million package of investment incentives for Dow-DuPont spinoff Corteva Agriscience if it retains its operations in the US city.
The business, which includes the local arm of Dow AgroSciences and currently employs around 1,400 people in Indianapolis, is set to be incorporated as a public company in June 2019.
The city would pay the funds to Corteva in the form of economic development revenue notes that would be paid back with $5 million annually in tax increment financing funds that the city had previously passed through to government units such as schools, libraries, parks, police and fire protection. Those entities would not receive any funds until the notes are paid off.
Local discussions on the incentives began in 2016, a year after Dow and DuPont announced their merger and subsequent split. At the time, city officials are said to have feared the loss of jobs and investment that Dow Agro had previously made. A vote on the package was reportedly delayed due to legal steps Dow and DuPont had to complete before merging.
As part of the incentive package, Corteva will be required to retain its workforce for 10 years, and the money will be withdrawn if the company does not maintain the jobs.
US reports said the council’s Metropolitan and Economic Development Committee moved the proposal forward to the full council, despite the objections of members who had expressed concern that the deal would draw funding away from other businesses and schools.
The newspaper Indianapolis Business Journal (IBJ) quoted council vice president Zach Adamson – who voted against the package – as calling the incentives “nothing shy of extortion,” as the agrochemicals company was not obliged to make any fresh investment in the city.
The council vice president said one of his biggest fears was that other companies would threaten to leave the city as a way to obtain more public incentives.
IBJ also quoted a Corteva representative as suggesting the company might make an additional $100 million investment in its Indianapolis operation.
This was not part of the deal, however, and the company official stressed that incentives were needed for it to maintain its local base.
According to Indianapolis’ deputy mayor Angela Smith-Jones, Dow Agro’s annual economic impact in the city has been about $60 million on average, and the council’s chief financial officer, Bart Brown, calculated that Corteva will pay more than $3 million in annual in taxes in 2019.
Under the Dow-DuPont split scenario, Corteva – which will be headquartered at the former DuPont base in Wilmington, Delaware – will have at the start more than $14 billion in pro forma sales revenue and $2.6 billion in pro forma operating EBITDA, based on 2017 figures.