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ELKHART -- Eleventh-hour negotiations between an electric car manufacturer and a Middlebury property owner broke down last week, and hundreds of jobs and more than $56 million in development are coming to Elkhart as a result.
Think North America Inc., which planned to build its first American manufacturing plant in Middlebury, has changed course and is coming to Elkhart instead.
The small town's loss may be the city's gain -- but either way, it's a win for the county, local officials said.
"Short notice, but good news," Mayor Dick Moore said. "I did not want to lose this company to someone else outside this county or outside this state."
Think officials were deep in talks with a Middlebury property owner, and planned to open their first stateside electric vehicle plant north of the town. But as the process went forward, company officials said, the two sides reached an impasse over certain aspects of the contract.
That forced Think to look elsewhere, and company executives turned to their back-up site, an industrial property on Elkhart's east side at 3221 Magnum Drive.
"The property owner was not willing to go into certain areas of the contract that we wanted to go to," said Tom Kemeny, Think North America's chief financial officer. "The Magnum property owner has been quite supportive in those areas of the business."
Kemeny said the company finally decided at 8 p.m. on New Year's Eve that the Middlebury plant was not a feasible option. The Economic Development Corp. of Elkhart County then worked with the city and the company to get a tax abatement plan worked out for the new location.
Barkley Garrett, the city's economic development director, said officials worked through the weekend to get the abatement document drafted and completed in time for Monday's city council meeting.
The city wasn't actively seeking to swipe the deal away from Middlebury, he said. But once EDC and Think came to the city with the opportunity, it moved quickly to make it happen.
"We're not poaching other communities' projects," Garrett said. "We knew our site was a back-up site. We were not involved in negotiations until they contacted us through EDC."
CITY OFFERS TAX BREAK
The Elkhart City Council granted initial approval Monday to a 10-year tax phase-in for Think by a 8-0 vote (Councilman David Henke was absent).
The company will save more than $2.7 million in personal property taxes and $191,000 in real property taxes over the period, according to city documents. The development, though, will generate more than $1.8 million in new personal and $195,000 in new real property taxes in those 10 years.
The additional jobs are expected to create another $205,000 in local income taxes, as well.
Think plans to invest $55 million in personal property investment (including machinery and equipment) and $1.2 million in real property improvements (building upgrades and renovations). It will create 415 full-time jobs by 2013, at an average wage of $16 per hour, city documents state.
Company officials, though, said their operation here will be highly scalable. While demand for their electric vehicles grow, it can increase operations -- and hire more employees. Initial production will result in the hiring of about 100 workers.
A confirming resolution and memorandum of agreement must be passed by the council to make the deal official. A vote will likely come at the body's Feb. 1 meeting.
THE 'PLACE TO BE'
Think considered a number of other locations, including Michigan and Oregon, before settling on Indiana. The area's skilled work force, proximity to key suppliers and location in the center of the country made Elkhart the ideal location, Think officials said.
"It's just an excellent place to be, and now we want to turn that into improving the electrical vehicle infrastructure of this state," Kemeny said. "We're not producing prototypes. We're producing vehicles."
Think is pursuing additional federal and state assistance to supplement the local tax breaks. The company is working its way through the complex application process for a U.S. Department of Energy Advanced Technology Vehicles Manufacturing loan.
Elkhart's tax abatement will also make the company eligible for tax credits and training grants from the Indiana Economic Development Corp., Garrett said.
Though the project is just getting off the ground, local officials said they're thrilled at the possibilities Think brings with it.
The Norwegian company will join Navistar and Electric Motor Corp. as electric vehicle makers in Elkhart County, a trend that could signal the area's arrival as a new type of manufacturing hub.
"With this kind of thinking and investment, did we not become the RV capital of the world?" Moore said. "Perhaps with this, we can become the electric vehicle capital of North America."
Garrett, too, said Think's arrival offers a solid building block for economic development. As the city looks to bring new employers and opportunities in, the presence of a new "green" company offers great potential for growth.
"We want to stay in a mode of diversification," he said. "It's good in whatever field you're going into. But this gives us one more base in which you can diversify."