State officials will pay the city $21 million to reserve water and wastewater capacity for Eli Lilly’s new plant to be built on Lebanon’s north side.
The Lebanon City Council last week approved a memorandum of understanding between Lebanon Utilities and the Indiana Economic Development Corp.
Under normal circumstances, developers submit a plat or permit application to the city for their development and ask to reserve water capacity at the same time.
But the IEDC has not completed a deal with Lilly yet and guaranteed water capacity is part of what Lilly requires, Jeff Jacob, attorney for Lebanon Utilities, told the council.
Lilly and the state announced in May the company would invest $2.1 billion to develop a new plant on 600 acres just north of Lebanon on land acquired by the state. The new facility would be the anchor company for a new “megasite” called LEAP Lebanon, which was to house an expansive, high-tech business park.
LEAP, which stand for Limitless Exploration-Advanced Pace, is the largest economic development project in Indiana history.
The IEDC wants the city to set aside 860,000 million gallons of water per day and the same capacity for wastewater discharge, according to a memorandum of understanding between the IEDC and Lebanon Utilities.
That’s about 56% of the city’s current water capacity and 39% of its wastewater capacity, Jacobs said. Once the memorandum is final, the IEDC would pay the city a $21 million availability fee within 90 days to build more capacity.
If Lilly were to back out of the deal, the city would not reimburse money spend for improved infrastructure but get to keep the infrastructure and could later use it to attract another development, Jacob said. And the new development would also have to pay an availability fee, he added.
Developers must pay for their own connection to the city utilities, and that protects ratepayers from having to pay for projects, Ed Basquill, Lebanon Utilities general manager, said.
The IEDC said earlier it would provide utilities for the LEAP project. Councilman Mike Kincaid asked Jacob about the state’s commitment to providing water and why the city is being asked to do so.
Jacob said the state is still working on the water supply but that it’s a longer term project, while Lilly has been asked to start building by December 2023. Lilly is expected to begin seeking building permits through the city in June.
Kincaid also wanted to know if the city could handle Lilly’s water demands absent state assistance in the future, and Jacob assured him the city can.
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