What can $18 million really buy?

According to the Indianapolis Business Journal the Metropolitan Development Commission is slated to approve more tax payer money to subsidize Dow AgroSciences on the northwest side of Indianapolis.

The Metropolitan Development Commission is slated to approve $5 million in TIF funds to help Dow AgroSciences defer $20 million in project costs related to a $340 million expansion expected to create 577 high-paying jobs over the next five years.

The huge investment will greatly expand the company’s research and development capacity and is a major win for Indiana’s life sciences industry. Most of the created positions will pay between $65,000 and $95,000 annually.

Dow AgroSciences, a subsidiary of Midland, Mich.-based giant Dow Chemical Co., produces agricultural products, such as seeds and pesticides. In recent years, it has moved heavily into biotechnology, and plans to roll out five products by 2012 that could generate $800 million annually in new sales.

The first phase of Dow AgroSciences’ expansion will be the addition of a 14,000-square-foot greenhouse and a 175,000-square-foot research and development facility at its corporate campus on the city’s northwest side. The greenhouse should be finished by year’s end, according to the company, while the R&D facility is slated to open in early 2012.

The Indiana Economic Development Corp. gave the company $12.5 million in performance-based tax credits and another $205,000 in training grants to encourage the expansion. The city of Indianapolis will kick in another $500,000 from its Industrial Development Grant Fund to help pay for road, sewer and water improvements related to the project.

By our calculations, that totals $18.205 Million for 577 jobs at Dow.  That is roughly $31,000 per job.  What will we get in return for our $18Million+ investment?  It will take a lot of calculating to figure it out exactly, but here's a quick set of questions that could make this a really really good deal, or a really really bad deal for the tax payers of Indiana and Indianapolis.

• It is unclear from this information if the property taxes will go up on the new development, so that could be additional revenue.
• The $340 million expansion will no doubt create and sustain some construction related jobs; hopefully there is a prevailing wage agreement???
• If their new products will generate $800 million in sales, do they collect sales tax from their customers or are these wholesale transactions?
• The jobs are projected to earn up to $95,000 so that will be additional income tax revenue for the county and state, and those folks will hopefully contribute to their communities financially.
• If they are going to generate an ADDITIONALLY $800 million in sales annually, what are their current annual sales, and can't they access a line of credit?
• Finally, if Dow will generate an ADDITIONAL $800 million in sales annually, could the tax payers get their $18 million back? 

Our $18 million investment equals less than 3% of their projected revenue from the project FOR ONE YEAR, but equals more like 600% of the projected money needed to save things like the libraries or IndyGo.

Even though the members of the Metropolitan Development Commission are not directly accountable to the public, and get to make these decisions essentially behind closed doors, the members are overwhelmingly appointed by the Mayor of Indianapolis.  Maybe he can ask Dow to grant us our money back after they pad their bottom line.