Canadian National Railway Co. plans to shift part of its operations to Gary from Markham Yard in Homewood, which would bring up to 251 new jobs in Northwest Indiana by 2015.
CN plans to invest $165 million to redevelop the existing Kirk Yard rail facility. The initial investment includes expanding the railroad classification yard and building a 155,000-square-foot locomotive maintenance and repair facility.
Indiana Gov. Mitch Daniels broke the news Wednesday morning on radio station WJOB. He described CN's investment as massive and that it has the potential to "bring some economic life back to that site."
"Today, we see a product of that effort as one of the leaders of the rail industry chooses Indiana's lower-cost, business-friendly climate over our Midwestern neighbors and, best of all, chooses Northwest Indiana for its new expansion," Daniels said in a statement.
The governor also said he still believes a multimodal facility will operate one day in Northwest Indiana after being "close a couple times" in years past.
"Our Kirk Yard improvements will mean significant improvements in efficiency and productivity creating new capacity for growth in the Chicago area and Northwest Indiana," Jim Vena, senior vice president of CN's Southern Region, said in a statement.
Gary Mayor Rudy Clay said in a statement the project will help the city restore its tax base and provide opportunities for full-time jobs for Gary residents.
The Indiana Economic Development Corp. offered CN up to $2.95 million in performance-based tax credits and up to $250,000 in training grants based on the company's job creation plans. The city of Gary said it was interested in providing revenues generated from creating a tax increment financing district.
The Northwest Indiana Regional Development Authority also pledged $4 million in infrastructure improvements to help land the investment, RDA Executive Director Bill Hanna said. NIPSCO also offered an incentive package that allows Canadian National to pay a reduced rate for power at the site over the next five years.
Hanna said with ongoing construction activity at the Gary/Chicago International Airport, he hopes CN's Kirk Yard commitment will help pave the way for other economic development opportunities in the area.
CN spokesman Patrick Waldron said it's difficult to predict how many people will be retained in the move of operations from Markham Yard. However, he said there's currently a high rate of attrition in the railroad industry so a number of jobs will be open in the coming years. For positions not filled internally, he said the company would go through its recruiting process and work with local agencies to find candidates.
he airport authority also approved the first steps in ceding some of its development zone to the city of Gary, which is forming a new one to accommodate Canadian National's $163 million plan for putting a repair facility at Kirk Yard.
Dan Botich, of Cender & Co., explained to the authority that the part of Kirk Yard that lies within its development zone is of no benefit to the airport, because it can only reap payments in lieu of real property taxes. Railroads are not taxed on their real property but only on personal property, Botich said.
The city will form a new development zone for Kirk Yard so payments in lieu of personal property can be collected for tax increment financing (TIF) and plowed back into improving Clark Road and other infrastructure, Botich said.
The Gary Redevelopment Commission estimates the Kirk Yard project will generate $21 million in payments in lieu of personal property taxes during the next 20 years. That money will be used to pay debt service on Economic Development Revenue Bonds issued by the city of Gary.