Jul. 27—What does it take to land a multibillion-dollar investment? A lot, apparently.
The joint venture between Stellantis and Samsung SDI will receive from the city of Kokomo real and personal property tax abatements on the proposed multimillion-square foot electric vehicle battery plant, according to a development agreement between the city of Kokomo and the joint venture, dubbed StarPlus Energy LLC in the agreement.
According to the agreement, StarPlus Energy LLC will receive a 100% abatement for its personal property, which includes the machinery and equipment installed, up to $1.175 billion in value for 20 years, and will also receive a 100% abatement on its real property for 10 years.
Additionally, the city will be required to put the battery plant in a tax increment financing (TIF) district and allow the availability of increment revenue to StarPlus Energy LLC for 10 years after the expiration of the real property tax abatement.
With the abatements and TIF district, it will be at least 20 years before local taxing units, such as the city, county, the school corporation and library, will receive any property tax revenue generated from the battery plant, barring any additional real property investments above the $1.175 billion figure that is not abated.
In return, Stellantis and Samsung SDI will build at least a 2.6 million-square-foot battery plant that is expected to be completed in two phases.
In the first phase, the joint venture is expected to make a capital investment of $872 million in the form of new equipment and employ approximately 1,000 people, with the second and final phase coming in at a $303 million capital investment and the employment of 400 additional workers. Real property investment is estimated at $1.44 billion.
The average wage, per the agreement, is to be no less than $32.07 per hour, or $66,705 a year assuming a 40-hour work week, by 2027. Stellantis and Samsung SDI officials have said in the past they plan on having the plant open in the first quarter of 2025.
While it's unclear exactly how much money the abatements will save the corporations, it will likely be in the millions, if not tens of millions, throughout the life of the abatements.
The local tax abatements, meanwhile, join a slew of state-level incentives offered.
The Indiana Economic Development Corporation has committed a $37.5-million investment in conditional tax credits. The project is also receiving $2 million in conditional training grants; $20 million in conditional redevelopment tax credits; $2 million from the local community to support infrastructure improvements at the site; and up to $100 million in conditional structured performance payments.
In addition to outlining incentives, the agreement also outlines commitments made by the city to pay for or facilitate certain infrastructure improvements at and around the project site.
Required infrastructure improvements outlined in the agreement are as follows:
* Relocation and decommissioning of existing waterline.
* Improvements to provide water utility service by Indiana American Water Company by Aug. 1, 2023.
* Improve and expand 250 North west of Touby Pike past the site and then connect North 50 East, along with other related road and right-of-way improvements.
* Relocation of existing detention area and drainage improvements to an offsite location, and to the extent required by the final site plan approved by the city, additional offsite stormwater detention area(s).
* New fire station or other infrastructure improvements to provide fire protection service to the project site.
* Improvements to the city's wastewater collections system so there is sufficient wastewater treatment capability and capacity to provide for the plant's wastewater.
* Engineering, architecture and other soft costs related to the above referenced improvements.
* Relocation of existing power lines on Busby Road (North 100 East) and the acquisition of land completed by Dec. 31, 2022, for a substation that will provide non-exclusive electric service to the project site and other customers.
* Acquisition of land for a natural gas station by Dec. 31, 2022, which will provide non-exclusive natural gas service to the project site and other customers.
To help the city with paying for the infrastructure improvements, StarPlus Energy LLC will pay the city $1.75 million a year over 20 years for a total of $35 million as a form of payment in lieu of taxes (PILOT). The payments begin May 1, 2024, and are to be paid on or before May 1 every year thereafter.
The agreement also stipulates that any incremental TIF revenue generated after the expiration of the real property tax abatement must first be used toward the $1.75 million the joint venture is agreeing to pay the city each year and then to repay costs incurred by StarPlus Energy, LLC.
It's unclear how much the infrastructure improvements will cost the city, though it's expected to be in the tens of millions. City officials, when asked Monday, did not provide an estimate, though City Attorney TJ Rethlake said the PILOT payments should end up covering a good amount of the expected public infrastructure improvement costs.
The Kokomo City Council unanimously approved a resolution authorizing the development agreement between the city and StarPlus LLC on Monday at its regular meeting without any discussion.
Despite a lack of property tax revenue coming from the development, Kokomo Mayor Tyler Moore said development will still be a boon for the local economy as it will benefit from an increase in local income tax revenue, increase in commerce at local businesses and, hopefully, an increase in residential property taxes from battery plant workers who choose to live in Howard County.
"Also, the additional development that may stem from suppliers or residual companies that will develop close by that will provide additional tax revenue," Moore said.
Charlie Sparks, CEO and president of the Greater Kokomo Economic Development Alliance, echoed Moore's comments.
"There really are supplier opportunities there," said Sparks, who announced he's retiring this September. "The disposal income that it creates for the retail and service sector because of new jobs and wages will benefit the economy."
PURCHASE OF THE PROPERTIES
The Kokomo Redevelopment Commission approved the spending of millions that will be used to purchase the land that will be home to the Stellantis and Samsung SDI battery plant.
The Commission approved Friday the spending of up to $7 million in TIF money that will be used as a forgivable loan issued to the Greater Kokomo Economic Development Alliance so the Alliance can purchase four parcels of land totaling 168 acres on the city's north east side.
Three of those parcels are east of the 142 acres originally bought to house a multi-tenant industrial park and will be sold to the joint venture Stellantis and Samsung create; the fourth is 42.60 acres directly south and will remain under the ownership of the Alliance and likely be used for supporting infrastructure.
Specifically, the RDC's nonprofit entity — Kokomo Community Development Corporation (KCDC) — will issue the forgivable loan to the Alliance. The Alliance will then purchase the land and sell most of the land to the joint venture company Stellantis and Samsung create for a price that has not yet been finalized as of last Friday, according to Rethlake.
The Alliance will return that money to the KCDC, and the money will then return to the TIF fund, where it can be used to pay for supporting infrastructure for the battery plant.
Construction on the multimillion-square foot plant is expected to begin next month.
Tyler Juranovich can be reached at 765-454-8577, by email at tyler.juranovich@kokomotribune.com or on Twitter at @tylerjuranovich.
