Taxes from a future FedEx distribution center in Greenwood would help pay for new and widened roads, parks, a new fire station and sewer and stormwater upgrades on the east side of the city.
Projections from the city show the 608,000-square-foot facility would pay nearly $100 million in property taxes over the next 25 years, and that money would go toward city projects that officials hope will make the area near the city’s newest Interstate 65 interchange ready for more growth and economic development.
FedEx is considering building a distribution center on a 237-acre property on Worthsville Road, just east of I-65. The center could eventually be expanded to twice its initial size, company representative Debbie Dillenger said.
The company plans to invest $259 million, including $49 million to purchase the land, $110 million to construct the building and $100 million on equipment. Construction would begin in June of 2018, with operations set to begin in June of 2020. By 2024, the new center would create 80 full time jobs with an average wage of $24.55 an hour and 375 part time jobs with an average pay of $14.24 an hour.
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In return, FedEx has requested a 10-year, $17.3 million tax break, which was given unanimous approval by the city redevelopment commission and will also need to be approved by the Greenwood City Council.
The tax break is necessary to make this project competitive with others FedEx is considering across the country, Dillenger said. FedEx has eight similarly-sized distribution centers planned to be built across the U.S., she said.
This would be the largest tax break Greenwood Mayor Mark Myers can recall the city ever giving out. FedEx hasn’t requested any other financial incentives from the city, he said.
Myers and redevelopment commission president Brent Tilson both said the tax break is a fair deal due to the quality and number of jobs the project will create, as well as the additional property taxes the city will receive.
City officials already have a list of projects that could be paid for with those added tax dollars.
Last year, the land where the distribution center would be built was designated a tax increment financing, or TIF, district, meaning that property taxes on any new development would be set aside for infrastructure and economic development projects, rather than being spread out among the city, county, schools, fire departments and libraries. Indiana law allows for TIF districts to collect taxes for 25 years after borrowing money to do projects.
During the 10-year tax break, FedEx would pay about $29.8 million in property taxes. After the tax break ends, that amount will rise to around $4.5 million a year, according to a tax break application filed with the city. If the project is approved and comes to Greenwood, that would put nearly $100 million into the city’s TIF district over 25 years.
When the Worthsville Road TIF district was created, city officials identified $104 million in potential projects, including $27 million in drainage improvements, $4 million to purchase land and build a new fire station on the southeast side, $4 million to purchase and develop park land and multiple projects to repair and construct roads.
But that also means the added tax dollars from FedEx, and any other new businesses within the TIF district, won’t go to other local governments, such as Clark-Pleasant schools, during that 25-year period.
School officials have raised concerns about that in the past, especially as new neighborhoods have developed in the area. Businesses pay significantly more in property taxes than homes, but the city has included multiple new development areas into TIF districts, meaning the school district doesn’t get those property taxes for decades after development happens. School officials had also asked the city to borrow money early for projects in the Worthsville Road TIF district so the 25-year time period would begin sooner, but no loans have been borrowed yet.
School districts are welcome to request money from the city redevelopment commission for any specific projects they would like help with funding, Myers said.
The city had previously paid $11 million as part of a joint project with the Indiana Department of Transportation to create an interchange at Worthsville Road and I-65, a project that is now paying off with development coming to the area, Myers said.
In addition to FedEx, Newgistics is planning to build a 447,000-square-foot distribution facility within a newly created 350-acre business park planned at the intersection of Allen and Graham roads. If the FedEx project is approved, that will mean fewer than 50 acres of land remains to be developed in that business park.
“The city made those investments with the aspiration of helping that area develop, and I’m very excited to see that area start to develop with FedEx and Newgistics,” Myers said.
The FedEx distribution center would be bordered by Allen Road, Collins Road and Graham Road, but only the southern half would be developed as part of this project, Dillenger said. FedEx could eventually expand and double the size of the facility, but that wouldn’t happen for at least seven to eight years, she said.
The facility will be a capable of processing up to 30,000 packages per hour, she said.
The amount of part-time jobs isn’t a concern, Myers and Tilson said, both citing the fact that the positions pay well for part-time work and eventually come with benefits.
Benefits would be available to full-time employees immediately and to part-time employees once they’ve worked for 1,000 hours, Dillenger said.
The part-time positions will also be a benefit to Greenwood residents looking to earn additional money, Myers said.
One concern about the distribution center is that semi-trucks will cut across Worthsville Road to Interstate 69 once that is completed on the west side of Johnson County along State Road 37. But Myers has talked with trucking companies, who have said that the route semi-trucks would likely be directed to would be to take I-65 and Interstate 465 to get to I-69, he said.
FedEx is considering opening a distribution center in Greenwood. Here’s a look at some details of the project:
Location: northeast of Worthsville Road and Interstate 65 interchange
Cost: $259 million
Size: 608,000 square feet, with room for expansion
Jobs: 80 full time, 375 part time
Construction timeline: June 2018 to June 2020
Capable of processing: 30,000 packages per hour