INDIANAPOLIS — Gov. Mitch Daniels announced Tuesday a baked goods supplier plans to build a new multi-million dollar facility in Marion.
Café Valley Inc. expects to build on 20 acres of the former Thomson facility and employ more than 100 people when it opens in 2014.
The Phoenix-based company plans for this location — to be called Café Valley East — to serve the Midwest and Eastern United States.
However, many details have yet to be determined, including the amount of the initial investment and whether the company will receive federal tax credits it needs to finalize financing.
It was one of nine companies that unveiled investment plans in the governor’s office that could bring more than 2,500 projected new jobs to the state.
Marion-based Moorehead Communications also announced plans to expand operations to the Indianapolis area.
Officials hope project sparks Thomson redevelopment
Mayor Wayne Seybold said the redevelopment of the 3301 S. Adams St. Thomson property was the “exciting part” of the Café Valley project. In a news release, he said it was a “sweet deal” for the city.
“We’re excited that they’re taking one of the most blighted areas in the city and really enhancing it,” he said.
City officials hope the project could be the catalyst for further development at the former television and electronics factory. With one notable exception, it has been largely empty since it was closed in 2004.
Café Valley plans to demolish part of the building’s southwest portion, near the corner of South Adams and 38th streets, ultimately utilizing one-third of the 60-acre property. The exact configuration is still being determined, as is the final cost.
Larry Polhill, Café Valley principal partner and board of directors member, said the company was “well underway” with designs for the new facility and securing food processing equipment.
He said the company hoped to have its financials finalized by early next year in order to break ground by March 2013.
“We’re on a very tight timeline,” he said.
Polhill said the company hoped to receive New Markets Tax Credits from the federal government in order to secure financing for the project. If they do not receive them, it could derail the project.
These credits incentivize investors who build in low-income communities and are allocated once per year.
“Hopefully there will be some new allocation after the first of the year,” Polhill said.
Assuming financing is secured, Café Valley plans to begin operations in early 2014 with 100 initial workers.
Polhill said the company prefers to recruit and employ “as many people as possible” locally. He did not give exact figures on wages saying they would be driven by “market conditions.”
He said the company projects 400 jobs in the facility by 2018 and would be “frankly disappointed” if it doesn’t do better.
When it built its 300,000-square-foot Phoenix facility, Café Valley projected that it would have 200 jobs at the location. It now has 400.
Seybold said recent development like University Marketplace and proximity to an expanding Indiana Wesleyan University helped draw the company. He said a long-planned $2.4 million project to improve South Adams Street between 33rd and 38th streets had also been a factor.
“All that stuff fits together,” he said.
Incentives yet tobe finalized
New Markets Tax Credits were an important part of why Café Valley chose Marion.
Polhill said Café Valley utilized New Markets Tax Credits when it built its Phoenix facility and found they were a helpful step in securing financing for a company with few shareholders looking to expand.
“Without New Markets Tax Credits, we could not have gotten the financing, especially in the down economy, to build new commercial property and basically a startup operation that size,” he said. “New Markets bridged the gap to make the senior lenders comfortable to do the financing at the end of the day. Without that it would not have happened.”
Rob Young, business development manager for CME Corporation said the tax credits were the “key filter” in the company’s search for a new location, but that ultimately the project was decided by a combination of variables.
“That was the ticket to the dance for any community that we looked at, but beyond that it’s what is the site, what is the proximity to the interstate, what other resources can be out there?” he said.
The tax credits are allocated to local community development entities. City Director of Development Darren Reese said it hasn’t been determined whether Café Valley will use an existing one or a new entity will be created.
He said this development entity or some combination of the city of Marion, the Grant County Economic Growth Council or the state may also end up taking over the whole of the 60-acre Thomson property from current owner Lester Lee as Café Valley starts its plans. Lee would continue to be a partner in the project, he said.
“That’s one thing that got the state excited about the project — our goal is to redevelop this for entirety of the site,” Reese said.
Lee could not be reached for comment.
The Indiana Economic Development Corp. has also pledged $5.8 million in “conditional tax credits” based on capital investment plans.
Indiana Economic Development Corp. CEO Dan Hasler said this and other jobs announcements were not because the state offered “large and up front incentives” as seen in other states.
According to an IEDC news release, the state is offering the nine companies up to $31.4 million in conditional tax credits and training grants. This does not count local incentives that are being offered as well.
Gov. Mitch Daniels said the state’s incentives were dependent on the whether jobs have been created and the state strives to do it as “inexpensively as possible.”
“As business people we know that, so we’re willing to talk about short term training dollars (or) short term tax relief,” he said. “But we know that’s not the sundae — that’s the cherry.”
Reese said the state tax credits would be taken from the state’s portion of a community revitalization enhancement district (CReED) set up for the Thomson facility.
CReED districts collect up to $1 million per year in sales and income taxes for use in economic development. Control is split between state and local boards.
Former Thomson plant tenant TriEnda, a Portage, Wisc.-based plastic pallet manufacturer, received a $1 million CReED incentive that was lost after the company failed to reach its goals.
In 2008, Daniels and Seybold announced TriEnda would begin operations in the Thomson plant and eventually reach 340 workers by 2012. It reached about 80 employees in the south portion of the plant before falling idle in 2011 and being subject to multiple lawsuits.
The city of Marion is also putting together incentives, but final details have not been determined.
“We’ll let that out as it does come together,” Reese said. “We do believe that we got a deal, obviously, but details are not something we can discuss.”
Whatever city incentives are offered will go through the Marion Economic Development Commission, the Marion Redevelopment Commission and the Marion City Council, Reese said. It will likely involve tax increment financing that will cycle increased tax revenues from development back into the property, he said.
When Thomson closed in 2004, about 1,000 people lost their jobs in one day. Even more workers lost their jobs in the years leading up to the closure.
City Council President Don Batchelor said he long wanted for activity to return to the Thomson facility. He represents District 5, which includes the property.
“Hopefully we can get some of that demolished and that will erase some of the painful memories that continue to linger in that part of our district,” he said.
Seybold, who was a newly elected mayor in 2004, said the governor first came to Marion when the Thomson plant closed. He said Tuesday was the “end of a chapter” in many ways as Daniels nears the end of his term.
“Here it is, one of his last announcements and we’re going to tear the buildings down, rebuild new buildings and people are going to be hired,” he said.