Bloomington City Council approved a resolution to grant Catalent tax abatements Wednesday. The decision is one step in the effort to convince the bio-manufacturing company to expand its local plant. Some council members pushed back at the idea despite unanimous approval.
Some council members see the expansion primarily as an opportunity to expand the local economy and restore Bloomington’s footing as a manufacturing town. Other members questioned the city’s ability to keep up with the demand for workforce housing.
If selected, the $350 million expansion could add 1,000 jobs to Bloomington over the next five years. The average salary for the new jobs would be $60,000 per year. Currently, 52 percent of Catalent’s nearly 3,200 employees live in Monroe County, and the company does not anticipate this statistic would change after the expansion.
In total, $340 million of the investment would be for personal property equipment, whereas $10 million would be designated for real property.
The first tax abatement is a 90 percent relief on personal property tax for 20 years. Economic and sustainable development director Alex Crowley said the estimated total value is $2.1 million in abated taxes per year, or a net present value of $28.5 million over the entire abatement period.
“We’re proposing a 20-year abatement, which is new for Bloomington and a tool only made available in Indiana since early 2014,” Crowley said.
He said one reason for the 20-year window is to provide Catalent predictability in its decision given the Indiana state legislature has previously proposed eliminating personal property taxes.
“If a state law were to pass, the floor on depreciable property could drop or disappear,” Crowley said. “The effect could be to reduce our local personal property tax revenues, and thus the value of this abatement.”
The second abatement is a 50 percent break on real property tax for 10 years. This is estimated to total almost $83,000 per year, or a net present value of $638,000 in both paid taxes and abatements over the course of 10 years.
Catalent previously received a tax abatement for an expansion in 2019. That project was estimated to add 200 full-time jobs but added more than 800 jobs.
“This company has consistently underpromised and over delivered in what they have done,” councilmember Sue Sgambelluri said. “They are a part of an industry that has a strong future.”
Every member ultimately supported the resolution, but councilmember Steve Volan expressed concern about the impact the expansion could have on affordable housing. He suggested Catalent dedicate at least one-fifth of the proposed parking lot expansion to a housing developer. This developer could then operate a long-term lease with Catalent under the condition housing only be used for employees.
Volan said this development could improve the company’s carbon footprint by reducing the number of employees commuting.
“You don’t have to buy the housing,” he said. “You just have to agree to let someone develop on the land. But you and everyone else benefits from it.”
Councilmember Matt Flaherty supported the resolution, but said council is acting in uncertainty.
“I still have some discomfort because I feel like the connection hasn’t been made clearly or strongly enough for me that this is necessary and justified as a condition in order for Catalent to invest," he said. "My hope would be that Bloomington… is attractive enough on its own that we wouldn’t have to abate taxes to attract growth.”
Council will now have to pass a confirmatory resolution at a later meeting. Currently, the public hearing and final vote for this second resolution is scheduled for March 2.
Additionally, council canceled its work session scheduled next for Feb. 23.
