SOUTH BEND — South Bend City Council gave a unanimously positive recommendation Monday, Jan. 24, night for two tax abatements that could put South Bend at the epicenter of the hydroponic produce market in Indiana, and possibly the Midwest, for years to come.

JEM Farms South Bend plans to spend as much as $178 million on greenhouses and logistical equipment to grow tomatoes and strawberries throughout the year on land at Calvert Street and Renewable Drive, adjacent to the South Bend Ethanol Plant.

That facility would be located on land owned by Ceres Partners, the agricultural investment group located just south of the University of Notre Dame campus and the original investors in Pure Green Farms.

Pure Green, which is the brand name for Greenleaf Holdco, began hydroponically growing a wide variety of leafy greens in a new 4-acre greenhouse on a site near the ethanol plant in early 2021. Today, its produce is distributed to institutions and grocery store warehouses throughout the region.

The Pure Green facility caught the attention of Paul J. Mastronardi, a major figure in the hydroponic produce market throughout North America. He invested in the Pure Green facility, but also would like to potentially bring JEM operations to the area as he is also an investor in that business.

The site makes sense because there is ample room for the operations to grow with Pure Green owning about 64 acres and its parent Ceres owning 280 adjoining acres, said Joe McGuire, CEO of Pure Green. In addition, the facilities could ultimately use offal heat and carbon dioxide coming from the nearby ethanol plant, there’s ample water to support hydroponics and its location is favorable to distribution.

“There’s 55 million people within about a 300-mile radius of Pure Green,” said McGuire. “And there’s 75 million within 400 miles.”

According to its proposal, JEM could ultimately spend about $178 million building and equipping about 100 acres of greenhouses over a period of several years to produce tomatoes and strawberries under the Red Sun Farms label. Ultimately, it says it could employ as many as 110 people who would be involved in growing, packaging and distribution.

JEM employees would make an average of about $29.77 per hour, and even with the abatements, the project would still generate about $2.5 million in taxes over the abatement period, according to its application.

At the same time, Greenleaf says it could spend approximately $68 million expanding its Pure Green operations that currently grow, package and ship romaine, arugula and leaf lettuces. “If things work out, we’d like to add three more greenhouses,” said McGuire.

According to the Greenleaf proposal, the expansion would allow it to retain existing 25 jobs and add 75 new positions over the next several years. Jobs at Greenleaf average just over $24 per hour and the company estimated it would still generate about $500,000 in taxes during the abatement period.

The proposals left South Bend Council’s Community Investment Committee with unanimous approval with council members expressing their excitement for the projects and the city being at the center of the rapidly growing market for indoor grown produce.

Beyond the abatement, the two hydroponic businesses are asking for help extending electricity and natural gas to the undeveloped sites.

“This is one of the most significant capital projects we’ve seen in a long time,” Jeff Rea, president and CEO of the South Bend Regional Chamber of Commerce, said of the proposal. “It’s in an area of town that’s ripe for development but has been held back because of the high water table.”

Agra Greenhouse Group, which focuses on site selection work for large greenhouse operators, is representing both JEM and Greenleaf in the expansion proposal and is asking for 100% abatement from real estate taxes for five years with the rate subsiding and finally disappearing after the ninth year for both proposals.

The site selection firm also is asking for 100% abatement from personal property taxes for five years, but the Indiana General Assembly is currently considering legislation that would reduce or curtail such taxes on machinery and equipment.

“It’s a good site because of its proximity to markets, its ample water supply and possible partnerships with the ethanol plant,” Greg Elam, a principal in Agra Greenhouse Group, said prior to the city meetings. “But the projects don’t make sense without the incentives and adjustments in the electric utility rates.”

If the incentive packages are approved, Greenleaf could be ready to break ground on a second indoor greenhouse for lettuces as early as this spring, Elam said. It could be the end of this year or early next year before the JEM facility would be able to break ground.

The 10-year property tax abatement for the two projects is valued at about $10.4 million, and the personal property tax abatement is valued at just over $6.8 million.

Based on its economic analysis, the city’s Community Investment department estimated the deal could have an economic impact of $84.6 million because of the other investments it could spur, as well as direct and indirect jobs.