Catalent Plans Investment / Requests Tax Abatement from City

Catalent Indiana (formerly Cook Pharmica) is requesting a tax abatement from the City of Bloomington to support a $126M investment in the plant that occupies the former RCA/Thompson property that will create at least 200 jobs with a median wage of $24.52 and an annual payroll of $44M. Catalent is a contract pharmaceutical manufacturing company, meaning that it manufactures biologics (medicines produced from living organisms) on behalf of other companies. The company currently employs 839 (full-time).

Architect’s Rendering of the Project

The Project

The proposed investment includes $40M in real property and $85M in personal property (manufacturing equipment). Catalent describes the project in their tax abatement application as follows:

The project is comprised of two phases; Phase 1 consists of building out a 15,000 sq.ft. of ISO 9 manufacturing space and is aimed to expand Catalent, Bloomington packaging capacity and add new capabilities to support specialized device assembly for biological products produced within the site by 2020. Phase 2 is to expand Catalent, Bloomington drug product sterile filling capacity by 2022 to support. The fill/finish capacity at the Bloomington site will be expanded by 79,000 sq. ft., with both GMP [Good Manufacturing Practice, an FDA standard] and non-GMP capabilities.

Phase 1 is aimed to expand Catalent, Bloomington packaging capacity and add new capabilities to support specialized device assembly for biological products produced within the site by 2020. This will be accomplished by the purchase and installatino of a Flexible top load cartoning machine, an automated Auto-injector assembly machine, and Syringe assembly equipment. A new Quality Control laboratory will also be constructed to support the expanded production.

Phase 2 is to expand Catalent, Bloomington drug product sterile filling capacity by 2022 to support commercial launches and clinical development. A high-speed flexible vial line, utilizing both ready-to-use (RTU) components and bulk filling, will be installed along with a high-speed flexible syringe/cartridge line, and a fully automated vial inspection machine. This investment will nearly double the site capacity with over 460 additional filling days.

Application for Designation as an Economic Development Area (ERA)

The Abatement

The requested abatement is the “traditional” Indiana tax abatement, which phases in the new property taxes resulting from the company’s investment over a 10-year period (starting with 100% of the new property taxes abated in the first year, and ending with 5% in the 10th year). Using estimates based on current tax rates, the present value of the abatement over the 10-year period is around $2.6M, and the company would also pay about $2.2M in new property taxes over the same period. Tax abatements only apply to the new assessed value created by the investment; they do not reduce the existing property tax responsibility of the company.

Process

This after, the City’s Economic Development Commission (of which I am a member) reviewed the application, and heard from City Economic and Sustainable Development staff and representatives from Catalent, and forwarded on the abatement application to the City Council with a unanimously positive recommendation.

The memo from the City’s Department of Economic and Sustainable Development, which provides additional background on the application, can be found here:

In order to approve the abatement, the City Council will have to vote in favor of the application at two separate meetings (a so-called declaratory resolution and a confirmatory resolution). Most likely the soonest this could happen, if the City Council supports it, is at the March 6, 2019 meeting.

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