THJB/Todd Berry

     Two major industrial areas have been granted Tax Increment Finance status for future development: a portion of the Jadcore complex being developed by Radley Inc. (a wholly-owned subsidiary of Jadcore), at 300 North Fruitridge, and the Fort Harrison Business Park, at Steelton and Fruitridge, being developed by Thompson Thrift Management Inc.
     According to Steve Witt, Terre Haute director of redevelopment, said establishing TIF districts can help promote certain prospective developments. 
     “The Fort Harrison Industrial used to be known for years and years as the old Smith Farm property,” Witt said. “We’ve taken a number of companies up there over the years. Two of them ended up going into the southern industrial park. One was Staples and the other was Aisin. Both of those visits to the Fort Harrison property were very quick visits, because we would pull over to the side of the road, and they would look at the property, and they would say, ‘that’s a nice piece of property, but we want to break ground next month, and you don’t have any roads. You don’t have any infrastructure.’
     “Creating a tax allocation area at that geographic location gives us a tool that we can use, not only in the near term but down the road.”
     In TIF districts, all tax revenues resulting from improvements to land are “captured,” that is, redirected from the county general fund and sent to the Department of Redevelopment, who then spends the money on infrastructural projects in the area for economic development.
     Radley’s plans primarily consist of what are termed “spec buildings,” that is, speculative buildings, in which a variety of businesses or industries could locate. These buildings are usually built to accomodate the widest possible spectrum of tenants within the zoned area. Radley plans two buildings of 200,100 square feet, two of 184,000 square feet, and one of 100,800 square feet. 
     Garmong Design/Build Construction is the contractor. At press time, John Doti, president of Jadcore, preferred not to speculate on potential tenants of these large spec buildings.
     “What I think is interesting about the Jadcore area—and encouraging—is the fact that they have done two spec buildings previously that were very successful,” Witt said. “The first one is the one along Locust Street which is the home of Tri-Remanufacturing. And then the one on Fruitridge, which houses Columbia House. When Columbia House consolidated their Bloomington and Colorado facilities, they went for this building and I think that was a strong attraction for them to come to Terre Haute for that operation. If that building hadn’t been there, readily available and nearby, Columbia House might have gone to another location.”
     The size of the ThompsonThrift is development is approximately 152 acres, with approximately 112 acres currently available for development. So far, Wabash Valley Packaging has about 14 acres and a 120,000 square foot warehouse, Data Management has about nine acres and a 60,000 square foot warehouse, and VP Racing Fuels Midwest Regional Office/Distribution Center is situated on about nine acres. 
     Roy Dressler, business development director for ThompsonThrift, added, “One thing I know is that it’s in the works to have Steelton Road upgraded, and all utilities are there. We’ll subdivide whatever anyone needs. We’ll work with whoever is interested.”
     Witt said there is the possibility of further development. “There are basically three parts to the Ft. Harrison Industrial Park. ThompsonThrift has purchased part of the property, and have an option to purchase the balance of the property.”
     The process of development of these properties involves a combination of financing techniques, including bonds, TIF and Economic Development Income Taxrevenue, Witt said. “How the process works is, first we have to figure out how much assessed value we have to work with, and then we have to figure what [the [prospective company’s] infrastructure needs are. Then we have to figure out if we have enough future tax revenue coming from that assessed value to make the debt service on the bond issue that will give them the up front money they need to make building and the infrastructure, so it’s kind of a reverse engineering.”
     According to Witt, the bonds are issued by the Terre Haute Economic Development Commission. Radley’s bonds amounted to $975,000.00, and the Thompson Thrift development amounted to $1.1 million.
     In the case of the Radley development, the bonds are guaranteed by Radley. This means, in effect, that if for any reason the revenues from the TIF status do not cover the bonds, then Radley has already agreed to be responsible for any such shortfall. 
     “The reason we did it that way,” Witt continued, “is that they’re not selling off the property. They’re keeping it. These are their buildings. We wanted a mechanism. We were offering a tax increment, but that’s all the community was willing to do. The bankers wanted an added measure of security, other than just the pledging of tax increment. Really, there was no problem at all. Radley readily agreed to do that.”
     However, ThompsonThrift was a different situation. In their case, the EDIT revenues should be enough to guarantee their bonds. Witt explained: “We went to Thompson Thrift and said, ‘Look, the bonds won’t sell without some sort of security mechanism. What do you guys think of about guaranteeing the bonds?’ And they said, ‘Well, if we owned the whole property, we would do that. But we only own this third, and we don’t know if were going to end up owning the balance of it, number one, and number two, we’re selling off parcels. We’re not keeping all the property as in the case of Jadcore.’ So they weren’t comfortable in providing a guarantee for their bonds, which I could understand, based upon that information.”

Todd Berry can be reached at todd@thjournal.com.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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