Elkhart is hardly alone in its suffering in this recession, as many Elkhart Project readers have pointed out.
"Elkhart, Schmelkhart!" grumbled a reader called ‘withoutadoubt’ after my last post on the Norwegian carmaker Think deciding to locate a new facility in the northern Indiana town. “What is this place, the center of the universe?”
Answer: No. But the Think deal presents a good opportunity to restate the purpose of The Elkhart Project, which is to report on the recession and the recovery through the lens of a single community and individuals as a way of showing what is happening throughout the United States.
The Think investment in Elkhart illustrates, among other things, the tough decisions that communities have to make as they try to create jobs for local workers. That includes deciding just how much they are willing to offer in the way of tax incentives to make their location more attractive than others.
Local governments across the nation are struggling with the notion of tax abatement to lure companies — a strategy that has risks — as reported in the The Elkhart Project in November.
The financial incentives the local governments offered Think were not the only factor the Norwegian company considered in its choice of Elkhart as a site, but they were an essential part of it, reported Josh Weinhold of The Elkhart Truth.
The Elkhart City Council gave initial approval to a 10-year tax phase-in for Think at a Monday meeting, which also allowed significant state tax benefits to kick in. The Truth report says that "Think is expected to save about $2.92 million in taxes over the life of the phase-in, but pay almost $2 million in actual taxes. The jobs it brings in are estimated to generate $705,000 in new city income taxes." The investment could also receive a federal loan through the U.S. Energy Department, which has allocated $25 billion to spark development of electric cars and trucks.
Not only was Elkhart weighing the financial costs and benefits of the deal, but the less tangible impacts – whether the presence of another "green" company could help change it from the "RV capital" to a center for development of next-generation vehicles and new technology.
In this case, even local officials who profess to be against tax abatements in principle seemed to support substantial perks for Think.
"When you have a good project, there's not much that can stand in the way," Elkhart City Council member Rod Roberson, told The Truth. "In no way was the council going to be an obstruction to it. I think that we all wanted this to be successful."
For more detail on the deal, the vehicle, and the company behind it, see the series of articles in The Elkhart Truth:
Elkhart becomes an electric car center
Think City car: No gas required
In eleventh-hour negotiation, Elkhart City becomes Think's U.S. home
Think had been eyeing Elkhart County for a year
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We can revitalize cites and states, but it takes investment and the government can not do it all. When money finds a greater return at lower risk, it goes there. It does not matter that this is good for the country and the people, it is return that counts.
Interesting that it takes a foreign company. Would the same incentives be available to a local one...I doubt it? When the incentives are gone, will the company pull the plug (pun intended) and be gone as well? What happens if oil doesn't continue to go up in price or liquefied natural gas gets subsidy?
On your way to Indianapolis, look to your left at Tipton. Do you see a vacant building that another foreign company was enticed to build? Do you know the financial problem that has caused in the community? Who is "eating" all that debt? I propose that it's you, indirectly, and because of these colossal failures, small business growth finds no capital.
I'm an entrepreneur. I've worked to develop new products and take them to market. I've chased money to make it happen for over 25 years. I've never once received a single penny of government money nor tax abatement. In fact for my efforts I've become a target of corruption... bribery demands in North Manchester, never ending cycles of thieves and a court system that has allowed these thieves to go scott free.
In fact the last theft (in Miami County) was a modular home. The court says that my argument that the house, taken from storage July 15 (reported to the Sheriff that day) is explained by an attorney cover up scheme August 18. So they don't ever have to explain the July act. The court says the home is "worthless", yet was assessed at $70,200 (at 62% complete on the thief's foundation). Indiana's Appeal Court chief justice says my argument that theft in July is not explained by the cover up scheme in August, "is not cogent", affirming that title is vested in the person who stole it. The thieves win (buddies with the Prosecutor and Sheriff).
One can clearly tell I'm frustrated. The impediments to success that I experience have kept me from building that company that would employ people. My goals to build new business are countered with local government (specifically courts) that is worse than organised crime. Open lies in court by skilled and politically connected attorneys have thwarted my efforts. Neverending cycles of theft have taken first my resources, then my motivation. The thieves win...and they are well connected in the court(s). Yet no media will take up how they operate, violating court rules openly.
With a failure rate of 95% in the first five years, one should ask themselves if we have structural problems in our government, not simply ideas that are not working. I propose that graft and corruption in the courts and local government are the reason that local entrepreneurs stand no chance of success (from my experience). I believe our dependence on foreign business for our new business (job)creation has already and will continue to threaten our national security. Their profits go home. This company will be gone when the incentives and government supported bonds dry up.