- A generation ago, economic development seemed to follow a rudimentary construct.

Economic development meant job creation, and job creation was seen as inherently good.

Accordingly, economic development was, by definition, a positive, beneficial endeavor.

Now it's not quite so simple.

Hi, I'm Jon Schwantes, and on this week's show, we'll examine the changing nature of economic development at the crossroads of America.

"Indiana Lawmakers," from the State House to your house.

(bright music) As Indiana's economic development strategies have become more sophisticated, the public's perception of economic development has become more nuanced.

And one of the biggest changes came in 2005 when Indiana jettisoned its Department of Commerce, a traditional, some would say stodgy government agency, in favor of a quasi-public entity, the Indiana Economic Development Corporation, that could be more nimble and more responsive to business primarily by acting, well, more like a business.

In the years since, hundreds of millions of state tax dollars have flowed into the IEDC, often with few strings attached.

One particularly controversial project is the so-called LEAP Innovation District, some 9,000 acres of construction-ready land along I-65 in Boone County.

Initial public concerns about a lack of transparency have escalated into an all-out legal and legislative battle over the IEDC's plan to build a 35-mile-long pipeline that would bolster the LEAP District by diverting billions of gallons of water annually from an aquifer near West Lafayette.

The Citizens Action Coalition, Indiana's largest consumer watchdog, maintains that the project promotes bad public policy by treating water as a business inducement to be doled out like tax breaks rather than a precious public resource to be preserved and protected at all costs.

Of course, a lot of other things have happened for Hoosiers, economically speaking, since the IEDC was created.

But as water becomes a scarcer commodity around the world, hopefully, this helps prime your pump, so to speak, about the debate surrounding land and water use right here at home.

We all use the term economic development, but are we all talking about the same thing?

The fact is, the term has always had something of an eye of the beholder quality.

And these days, thanks to an increasingly complicated economy and an unprecedented level of competition for high-tech, high-wage employers, a lot of Hoosiers seem to have be seeing and perceiving different things.

Joining me to discuss the issue, our State Senator, Spencer Deery, a West Lafayette Republican who serves on the Senate's Commerce and Technology Committee and the Chamber's Education and Career Development Committee; and State Representative, Renee Pack, an Indianapolis Democrat who serves on the House Commerce Small Business and Economic Development Committee.

Thank you both for being here.

- Thank you.

- Thank you.

- Let's start with a simple question, and we'll start with you, Renee Pack.

How do you define economic development?

We just talked about it being in the eye of the beholder.

What does it mean in the 21st century?

- I think in the 21st century, economic development, depending on where you are, can be really different.

I know in my district on the West Side, I have smaller towns.

I have Speedway, Clermont, of course Wayne Township.

So when we develop our economy, we're depending on shops, we're depending on the IMS, we're depending on independent proprietors.

And we might not get the big tech companies where I am, where in other areas, that might be something that's really prominent.

- So you'll have to limp along with that little Indianapolis Motor Speedway.

- Yeah, that little tiny- - That little tiny one.

- That little tiny, but there's some great things going on there too.

- Spencer Deery, your definition.

- So I'd take a very broad view but also take it down to the individual, that economic development is giving individuals the opportunities to have the fulfilling life, to have a career that, and provide for their family, and to have our government services have the tax revenue from growing businesses to be able to provide those for our Hoosiers.

So really it's about giving every Hoosier an opportunity to be successful and follow their American dream.

- You know, it seems increasingly economic development is a state initiative.

I mean, that's with the creation of the Economic Development Corporation, which replaced to a certain extent the Old Department of Commerce.

It really was designed to bring everything under one roof and sort of coordinate.

Based, though, Representative Pack, on what you just said, you're talking about the Clermonts and the little communities that are seeing this in a much more individualized way.

Is the state-wide approach the right approach, do you think?

Or have we somehow gone off course?

- I've worked over the summer on a land use task force, and a lot of what we found is that it would be a good idea to give our local communities more control over their economy and also cities more say-so over their economy.

So there are times that I think we can overstep.

We don't know every community in this state, but the folks that live there and work there, they know, and I think we should leave more up to them when it comes to deciding issues on economy.

- I guess the challenge is how to balance it, right?

- Exactly.

- And finding what that middle ground.

How about you, Senator?

- I mean, is it, or have we gone too far one direction?

or does it make sense to have all the tools in that state control toolbox?

- I think it definitely makes sense that we have tools.

And certainly there is still an individual focus and local focus.

You know, look at the Ready Grant program, which has been a massive success and huge popularity.

But, you know, you go back to the creation of the time when IEDC was created around 2005, and we were, you know, probably about last in the country in economic momentum and, you know, most job losses and, you know, a billion dollar budget deficit, and you compare that to where we were last year.

We had about $29 billion in new economic investment from businesses and 22,000 more jobs.

So there's a lot of successes.

Now, you- - I listened to the State of the State address, so you remember the talking points.

- Well, but you know, now, anybody though, like myself, that is a big advocate of those successes though, also needs to recognize some of the mistakes that we've made and maybe some of the oversteps and ways that we can improve.

'Cause if you're not constantly asking yourself, how can we improve, or in what ways have we lost the trust of Hoosiers on this issue of economic development, then your ability to move that forward in the future is gonna be diminished.

- And there's no doubt that IEDC has had successes.

And I should point out, we invited the organization to send a representative.

Because of scheduling difficulties, they were unavailable to provide somebody.

But we can stipulate they've done some good things.

"Forbes Magazine," I think last year, ranked Indiana number one in the country, best state to start a business.

We're, you know, pick that ranking, whether it's sustainability issues, or whether it's automotive manufacturing, or whether it's utility costs, and we seem to be doing pretty darn well, and certainly, those investment figures.

We've got the largest solar farm, I think, going in up in Northwest Indiana, another expansion of the Toyota plant in Princeton.

I mean, but yet, you're saying, Representative Pack, that maybe not everybody's benefiting equally?

- Not throughout our state.

Now, in my district, we have areas where you have a lot of apartment dwellers, and they don't work in my district.

They go outside of our district for those jobs, maybe Plainfield, Brownsburg, where there's a little bit more industry.

So we have a lotta people that work outside the district.

But also, we depend a lot, especially along Main Street and along the streets of Speedway, we depend on those smaller businesses and those smaller, those smaller shops that really bring in customers, especially during the month of May.

I mean, a lot of our businesses can sustain themselves for a year just based off of capital from the month of May.

So everything after May is just extra.

So there's a balance.

I think there has to be a balance, and every community is different.

- Agreed.

Senator?

I mean, those who have benefited certainly have made headlines, and they've benefited, but there perhaps are pockets of the state.

And we hear the complaint that there is regional favoritism, and I guess that always happens when any project is announced, and it's like, "Gee, I wish that were here," unless it's something that they don't want, and then the NIMBY effect comes in, and now, it's like, "Don't want it there."

How do you strike that balance on it when you're dealing with 92 counties?

- Well, certainly, I represent both an area in the West Lafayette area that is just booming, massive economic development, you know, new job sites announced just about every other month, it seems.

I also represent some very rural areas where the economy is pretty stagnant, if not declining, the population is declining.

And there's a lot of contributors to that.

You know, certainly, you know, things that have taken the time of us on both sides of the aisle over the last couple of years, and our colleagues.

So, you know, economic development can't fix everything, so we have to absolutely continue to say how can we extend those benefits to every part of the state, both rural and urban and everything in between?

- And it seems like any more we talk about the incentives and we talk about infrastructure and shovel-ready.

I don't know if we're still using the phrase, shovel-ready, but that was popular, certainly, for a while, construction-ready sites and so forth.

But then, we also have to have a workforce.

We have to have a way for that workforce to live somewhere, go to school somewhere, find a way to get from point A to point B.

- And transportation- - How much is that part of this?

And is that given its due, do you think, in these discussions?

- Housing and transportation, healthcare, all of that plays into the success of our economic development.

- And are we paying attention?

I mean, I know we've reduced corporate tax rates, some of the lowest tax rates in the nation, but, I mean, do you sense that employers that might be considering a move are looking more about a low tax rate or a road that isn't riddled with potholes and some sort of mass transit system that workers can get around, I wonder?

- Oh, we, I mean, we have pretty great transportation rankings as well.

The one where we lag is on the human capital, on the workforce development issue.

I mean, you look at the business indicators, and we, going from that part of that Mitch Daniel miracle from 2005 to now, we've just, on almost every single business indicator, we're thriving.

The business exception is that workforce development, and that's one that, and that's one that, and I think that's why you see it's been such a focus in the last few years, both education, both, you know, looking at alternatives to higher education, and that absolutely has to be one of our focuses if we're gonna continue to grow.

- "The Mitch Daniels miracle," not bad wording for a guy who spent the last decade working for Mitch Daniels as president of Purdue.

So you get gold star for bringing the boss up.

(Renee laughing) But talking about career readiness and college readiness, that's what you spend your life doing.

- I've spent- - Your day job, when you're not wearing your legislative badge, you're in Wayne Township.

And that's what you've been doing for 15 years.

How important is that, and where are we as this state in terms of that kind of readiness?

- We're seeing some really positive advancements with college and career readiness.

We have legislation that's helping that along.

We still have some concerns about the legislation.

We wanna make sure that we don't have corporations gaining dollars off of our young people.

We wanna make sure that they're safe.

We wanna make sure that our young people are in positions, apprenticeship positions to where they're still able to complete the other parts of their education.

But I know, in our district, we have what we call the three E's, which is employment, enlistment, and enrollment.

So we've got three different groups that our kids are moving towards.

We've got those that are going into the military.

We have those that are going to the workforce, and then we have those who are going into college or some other institution, so it's important to find out and get to know our kids and know where they belong and where they're comfortable.

We have an Area 31 section of our high school that is absolutely excellent at preparing kids for careers, from drafting to electrician work to culinary work.

I mean, it just covers the gamut.

So it's getting to know our kids and getting 'em in that place that they really need to be so that they can ensure that we're economically sound.

- That's good to hear 'cause if some of these goals that IEDC has come to fruition, there'll be plenty of work to go around.

- You're gonna need 'em.

- Well, you guys are all warmed up now, so let's get into the controversy.

I just wanted to make sure you'd had your caffeine surging through your system, but, you know, almost every economic development project has some degree of controversy.

Either people want it in their backyard, they don't want it in their backyard, et cetera, et cetera.

And my frame of reference, my first race, gubernatorial race, I covered was in '88, which happened to be, and economic development was a big issue, and your district now, you were in kindergarten and maybe not even living there, but the Subaru-Isuzu plant now, Subaru of Indiana Automotive there in Lafayette, it was a $86 million state incentive, which seems kinda quaint now in hindsight, but it was very controversial.

Evan Bayh, the Democratic candidate, won largely on criticism of John Mutz, then lieutenant governor, for the incentives and so forth.

So, I mean, your district, Senator, is no stranger to controversy.

Now, that's proved to be a tremendous success.

thousands of jobs, seven, eight million cars have been produced.

Okay, we now have hindsight 30-some years, that's a success.

The tough part is figuring out which projects are gonna yield that kinda payoff.

And there's one in your district right, well, it's not in your district, but it affects your district, and that is the LEAP Innovation District, which is in Lebanon, south of you.

But you're very concerned about this, not because necessarily, it's not in your district, but you're worried about one of the resources that's being sought, water, may be coming, millions of gallons from your district down to supply that area.

You're concerned.

Explain it.

- Exactly, yeah, you know, and you're right, with every economic development project, there's going to be that not-in-my-backyard crowd that objects, and as an economic developer, sometimes you have to be able to tune that out and look in the long view.

What I've been trying to articulate to my colleagues is that the opposition that is being faced right now is extended much beyond that.

You know, there's always gonna be that part, but it's left, it's right, it's urban, it's rural.

Everybody has concern, you know, to unanimity.

And part of the reason for that is I think that, you know, as important as the job that economic development is and IEDC, we've gone from the phase where maybe we were dealing with, you know, small site developments or we're moving quickly with some incentives to what's being proposed here is a massive development project of thousands of acres of farmland that were purchased largely in secret and, you know, a billion-dollar pipeline to bring water to it without having some of those conversations for a infrastructure project like that that we would expect that come with, you know, the roles of government of transparency and accountability.

And so somehow, we have to find that balance of how do we compete for large jobs like that but also recognize that there are times when we need those things, I mean, sometimes, you know, slow down the process of accountability and transparency.

But without that, you generate so much animosity and lack of trust that the project then may be hindered in the future.

So we've been working on some legislation, try and provide some guardrails and some regulatory expectations for large water projects that I think could help that in future situations where maybe we might need to move water, and business can know what to expect.

- And you say, again, I was asking you earlier if you represented Lawrenceburg or some place that was out, you might still have these concerns 'cause you say this affects, it may be your water today, it may be somebody else's water or whatever other resource, and they should have a say, I guess, arguably.

Do you agree with that?

I mean, he says everybody's concerned about this.

You don't have a dog directly in the fight, but- - We do have a dog in the fight.

We do have a dog in the fight because the southern end of that distributary is Eagle Creek, and Eagle Creek is in my district, so we do have a dog in the fight, and we do have concerns.

- Oh, then, you're on the receiving end.

- Yes.

- Certainly not the- - Yes, so we do have some concerns about transparency and about the speed that this whole project was moving, and I'm glad to see it was halted so that we could get some legislation in place and so that we could get a better view, a better idea of exactly what the plan is.

It was just thrown on us pretty quickly.

And I wasn't contacted.

The only way I knew was through news stories and through my colleagues that live in Lafayette, Lafayette, Indiana, and I just thought that it touched on being a little bit misleading, and I think that our Hoosiers needed to know a lot more about this project before it moves forward.

- And for those who, there are a lotta things we could, if you haven't been following this closely, that we could fill in the blanks, but basically, there was one study that said, "Hey, this is okay.

There's plenty of water there," and that was done by the IEDC.

Some people balked and said, "It shouldn't be done."

That's an interested party.

So then the governor said we'll have it done by the Finance Authority.

They're just a bunch of accounting types that don't have any, you know, bias one way or the other.

Get the green eye shades out.

They'll just... That still wasn't necessarily satisfactory and probably won't be, but at least that has delayed the process, and there's a willingness on the part of the state to hold off until we see that, which may be fall.

So how do you square that, though, with the notion that the IEDC was set up ostensibly to be more like a business and not have all these public meetings where, you know, the old joke, the cartoon about, oh, we got 18 meetings and 20 task forces, and in 10 years, we'll come back with a proposal.

They wanted to operate at the speed of business and with a 14-member board.

You know, was that a wrong design, I guess, from the outset?

- No, it most certainly wasn't a wrong design 'cause we need to be able to compete for those jobs, otherwise, we're gonna get left behind.

You know, we're competing with other states, and there's expectations there.

My argument is just when you get to a certain degree of not just recruiting jobs or not just developing small, you know, one-plant site, but you're actually developing communities, I think that's where we need to have some guardrails that say, this is moving beyond just the IEDC's portfolio and into the realm of government, and we need to have more buy-in from the community.

Otherwise, I mean, it's really in the interest of economic development advocates like myself, because running into the kind of opposition that currently is occurring doesn't help the project and doesn't help you recruit the jobs that we want as well.

- If the water issue had not come to the front or maybe there had been sufficient water, for instance, in the 9,000 acres that currently constitute LEAP, would you still, was the transparency concern significant enough that you still would've been, it would have given you pause?

- So I feel like I would have some questions about the amount of land that was purchased, although I don't wanna get too far down there.

Not representing that area.

I don't know fully how that all unfolded, but, you know, I probably would have less concern if there wasn't this pipeline project along with it.

Just because of that, I think is getting in the realm of government, but I still would have some concerns.

- Your thoughts?

Same?

- Yes, yes.

That's a lot of acreage.

That's a lotta square miles.

- Once again, it's supposed to be, it's billed as the largest sustainable development in the country, I believe, around 1,000 acres.

- I think it's important to get not just information to those residents or the people that are nearby or living close by.

I think it's important to get buy-in.

- Well, let's talk about, you've outlined what you perceive to be the problem.

Let's talk about possible fixes.

You're coauthor of legislation that would add some legislative members to the board essentially of the IEDC, non-voting.

Tell us about that.

- Yeah, it would start to really, as a first step, to say, you know, the legislature, maybe, and not just the budget committee or leadership, but maybe we need a little bit more communication with members the general assembly, and we need more local input and local buy-in and, you know, little bit of home rule as we are buying large tracts of land, and that's what the legislation would do.

It certainly isn't gonna address all of the issues that I think we need to start to address in terms of economic development, But it's a first opening conversation starter to say, you know, what are those points that we need to fix if we wanna continue to grow?

- I'll sponsor that.

- Representative, makes sense as a first starting point?

- Yes, I told him, I said, "I'll sponsor that one."

- All right.

- In the House.

- See, this is why we bring you to this show.

- (laughing) Get out of here.

- We not only inform citizens, but we help expedite the process.

- Yes.

I'm sorry, go ahead.

- But no, you would agree- - I would agree.

- That needs to happen.

And have you thought about other resolutions to this?

- There had to be a halt, and I'm so glad that everybody spoke up and made it clear that, we need you all to stop, to hold off, to delay this so that we can take a look at some legislation and make some changes as to how IEDC proceeds with projects like this, of this size.

This is monumental.

This is absolutely huge, and it's gonna take more than just some of the smaller projects that they had.

- All right, well, we'll leave it there.

We certainly appreciate the insight that you both bring to this, helping us understand what certainly is a complex issue, and as we become more of a big player in this global economy, is destined to be even more complicated as we move along.

I thank you very much.

- Thank you.

- Again, my guests have been Republican Senator, Spencer Deery of West Lafayette, and Democratic Representative, Renee Pack of Indianapolis.

And time now for my weekly conversation with Ed Feigenbaum, publisher of the newsletter "Indiana Legislative Insight," part of Hannah News Service.

Ed, what's really at work here with this controversy over the LEAP District?

- Well, there are three main concerns, Jon.

You know, one deals with the agency with the IEDC and questions about secrecy.

You know, ever since they were spun out of the Department of Commerce, which was actually a state agency under the lieutenant governor's control, and where you had a little bit more oversight over things and you didn't have to, well, you had to answer to people but you didn't have that- - Those pesky public meetings- - Yeah, you didn't have that independence that you've got now and outsiders kind of running things.

So you've got questions about secrecy.

You've got questions about, right, do we want to just kind of rein in IEDC on all of this now, or do we really want to do something about the specific issue at hand, or do we wanna do something, you know, pointing toward the future on that?

You've got philosophical concerns.

You know, you talked a little bit in the discussion about whether we should have state-down economic development, whether we should be dictating this from the state level, whether the local folks should be the ones that are going out there and looking for opportunities, putting together their own sites, or whether the state should be doing it?

If the state does it, you know, should the state basically be dictating the terms of everything, and should the state be getting the payback for some of these things.

Like, the state assembled this site in Boone County.

They're going to be selling some of the land.

At what price?

To whom?

How does that work?

Or should the locals be doing those kinds of things?

And then you've got the site concerns, the questions about the ability of the locals to participate in the bigger discussions about things like how does this affect our schools, our housing, and are we going to be able to bring, as we've discussed, water to this site?

And one thing that's not been talked about today is the energy issue, and are we going to be able to get sufficient electric power to the site?

There's some real questions about that and some other infrastructure issues at play there.

- And this is not a partisan issue, is it?

- It's a political issue, but it's not a partisan issue, Jon, absolutely.

You know, it's become an issue in the Republican gubernatorial primary.

You've got two former IEDC directors, one of them who brought this thing to fruition, and he's being attacked for it by the others.

Even the other former IEDC director in there has raised questions about the way that this was done, but in the legislature, it's a bipartisan issue.

You've got Democrats and Republicans uniting against this project in many of the other areas, and it's really become kind of a geographic issue, and the big question is going to be to what extent are the folks up in Lafayette, Tippecanoe County, and along the pipeline area going to be able to get other communities along the Wabash River from Terre Haute down up to bring their pressure to bear on this?

And this also raises other questions about water withdrawal in other communities.

If, for example, Nestle in Anderson has been able to tap into the aquifer there for their bottled water work up there.

And there's a plant in Bloomfield that's been able to use the aquifer there for all kinds of bottled water that they produce as a private packager for other labels and things like that.

So we've really not addressed this in a comprehensive way, and it looks like it's about time to do so.

- Well, to your point, I never would've thought that economic development would be the most divisive issue in a Republican gubernatorial primary, as it has become.

So how does this get fixed?

Because if there is dissatisfaction with the secrecy and the lack of transparency, et cetera, which again, was by design.

It was about being nimble, being able to deliver a piece of land with, here's no strings attached.

Here are the keys to the car, so to speak.

And it's been successful.

IEDC has a track record that most states would envy.

I mean, like I said, number one place to start a business.

We got a long list of investments.

So how do you reconcile the dissatisfaction with the fact that they're doing a, by all accounts, pretty darn good job?

- It's difficult.

And as I said, you know, the question becomes do they wanna really do something, or do they wanna make it look like they're doing something?

And then, you've got mayors from outside the Metro, from far away from the LEAP District, the question whether they're ever going to see any economic development again from the state, brought in by the state, or whether the state's going to just say, hey, you know, we've got this land here.

We're going to direct all of our projects to this area because we benefit from it.

We need to get a return on that investment.

- You know, the governor has talked about momentum.

He mentioned that word several times in the State of the State address about the Indiana model and the momentum.

Does this hurt our momentum, economic, in terms of this crisis, if you wanna call it that?

- No, I think perhaps just the opposite.

It shows the state's nimble enough to put these things into play and that we're willing to talk about these kinds of things.

And in the end, something's going to get done, and this project is basically too big to fail.

You know, Eli Lilly, I don't think, is going to walk away from this, or we're not going to let Eli Lilly, a homegrown company, walk away from this.

You know, we've got the opportunity for a multi-billion-dollar chip plant to come in too as well.

So I think that this thing will work, but it's a question of, you know, the devil being in the details, as it is almost every week with every issue on this show.

- As it always is, right?

- Absolutely.

- Ed, as always, we greatly appreciate your insight.

- And thank you, Jon.

- The three R's of education used to refer to reading, writing, and arithmetic.

Now, many education policymakers seem to be more interested in three other R's: rigor, relevance, and almost constant reinvention.

We'll learn more on the next "Indiana Lawmakers."

(bright music) Well, that concludes another edition of "Indiana Lawmakers."

I'm Jon Schwantes.

On behalf of commentator, Ed Feigenbaum, WFYI Public Media, and Indiana's other public broadcasting stations, I thank you for joining us, and I invite you to visit wfyi.org for more State House news.

Until next week, take care.

(bright music)