City Council approves tax breaks for Catalent, putting investment decision in company’s hands
Bloomington City Council approved a series of tax breaks for Catalent – a large pharmaceutical company with a large footprint in Bloomington – in a 6-1 vote on Wednesday, with two abstentions. Tax relief, which could exceed $43 million, according to document of the cityseek to entice Catalent to choose Bloomington as the site for a major $350 million investment.
Bloomington Mayor John Hamilton is expected to sign the legislation. Hamilton approved the legislation at the February 16 council meeting, as well as his February 24 State of the City address. The Bloomington Economic Development Corporation also approved the legislation, along with the president and CEO of the Greater Bloomington Chamber of Commerce.
Even with the approval of the tax breaks, there is no guarantee that Catalent will choose to invest in Bloomington. If they do, it won’t be the first time the company has done so: Catalent has invested more than $250 million in its Bloomington plant since 2018.
If Catalent chooses Bloomington, it would create an additional 1,000 jobs, adding to the company’s current 3,200 employees, according to city documents. The company would also consider purchasing new land and equipment for the project.
Council member Matt Flaherty was the only one to vote against the legislation.
Board member Piedmont-Smith voted for the legislation, even after criticizing Catalent’s high executive compensation. Catalent’s CEO earns 188 times what an average new employee at the company in Bloomington would earn, based on board salaries. Catalent CEO received $12.5 million in total compensation in 2021, according to company documents.
Council members Kate Rosenbarger and Steve Volan abstained.
Does Catalent ownership warrant tax relief under state law?
Council members Volan and Flaherty asked city officials whether or not Catalent – which facility Thomson Consumer Electronics once busy – deserves tax relief under the laws of the State of Indiana.
Indiana law allows cities to offer these types of tax breaks in areas where development has become “impossible” or “undesirable.”
Volan said the land on which Catalent’s facility sits does not meet that standard.
“It was a resounding success,” Volan said. “No one looks at the old Thomson site and says, ‘It’s a decrepit, crumbling, abandoned, neglected place.’
Council members debated whether or not Bloomington’s housing supply could sustain a thousand new employees entering its workforce.
“We don’t have accommodation for them,” Rosenbarger said.
Monroe County rent prices are already significantly higher than the median rent cost in Indiana as well as comparable counties, such as Marian and Lake counties. According to United States Census Bureau.
The debate surrounding Catalent’s investment has revived some talking points from last year’s zoning code arguments. More progressive council members supported allowing duplexes in many areas of the city, which they said would increase the city’s housing supply, thereby lowering rental costs. The more moderate members of the council — who sit in the narrow 5-4 majority — have opposed those efforts.
The council eventually allowed duplexes in certain areas of the city, but the number allowed was capped at 15 newly built duplexes each year.
“Our (zoning code) basically froze our central neighborhoods,” Rosenbarger said at the Feb. 16 council meeting. “Fifteen duplexes a year isn’t really going to increase density.”
The city proposes the new Hopewell Neighborhood – to be held on the former site of IU Health Bloomington Hospital – is an example of new housing supply in Bloomington. Hopewell is just down the road from the Catalent facilities. Alex Crowley, director of Bloomington’s economic and sustainable development department, also said Catalent’s investment could spur new housing development in the future.
Catalent’s future demand and revenue
Board member Dave Rollo questioned Catalent representatives on the company’s performance during an economic downturn, raising concerns that the company may have to cut spending in a possible future recession.
Catalent is also involved in the production of various COVID-19 products, including three of the major COVID-19 vaccines distributed across the world, according to the company. website. Representatives of Catalent have apparently refuted concerns that as COVID-19 transitions to endemic status, the company could lose some of its business.
“Catalent has a very diverse offering,” said Andrew Espejo, Catalent’s CEO. “We are seeing very strong demand in all markets for organic products and well beyond the non-COVID program.”