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Elkhart's Think car deal is cool, but not free

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