By Josh Weinhold, Truth Staff
jweinhold@etruth.com
ELKHART -- It wasn't all about the money for Think North America Inc., but it certainly didn't hurt.
Financial incentives offered by state and local governments weren't the deciding factor in bringing the electric automaker to Indiana, Think executives said, though it was part of the "price of entry."
"We just didn't compare the absolute dollar value of the incentives and then decide the highest," said Richard Canny, Think Global chief executive officer. "We really looked at a number of factors, but clearly having those incentives were essential for bringing the project here."
Long, large tax phase-in
Think, a wholly-owned subsidiary of Norwegian company Think Global, announced its new Elkhart factory on Tuesday -- the company's first in North America. The plant, on the city's east side, will start churning out electric cars early next year and employ more than 400 by 2013.
The Elkhart City Council gave initial approval to a 10-year tax phase-in for Think at a Monday meeting, which also allowed significant state tax benefits to kick in.
The deal came together in a matter of days, after Think couldn't reach an agreement with the landlord of a building it planned to use in Middlebury.
Think, working with the Economic Development Corp. of Elkhart County, turned to its fall-back site, the former Philips Products building here.
City officials quickly put together the phase-in agreement, in time for the city council to approve it and the Think announcement to roll on.
"These types of opportunities do not come around very often," said Barkley Garrett, the city's economic development director. "So when they do come around, you certainly need to take advantage of them and take out all the stops."
Think's business plan first went through a scoring system the city uses to assess tax phase-in candidates. Several indicators were analyzed, Garrett said, including the number of jobs created, the amount of capital investment and employee wages.
The car maker received high marks -- high enough that Garrett could recommend a 10-year phase-in, the longest allowed by the state.
Think will save about $2.92 million in taxes over the life of the phase-in, but pay almost $2 million in actual taxes. The jobs it brings in are estimated to generate $705,000 in new city income taxes.
The totals were set based on EDC recommendations, using a formula that factored in the amount and rate of Think's local investment.
Think won't pay any real or personal property taxes in the first year, but will begin to pay more and more over time, according to a scale set by the state for all phase-ins. By the 10th and final year, it will pay 95 percent of its real property tax and 90 percent of its personal property tax.
As with all phase-ins approved by the city, Think will be required to provide annual progress updates to the council, which will vote on whether Think is or is not in compliance with the phase-in agreement.