GREENWOOD — Cummins will now have complete control of its plans and up to five years to build a facility in Greenwood, after the city and company terminated a more-than-year-old project agreement.
Columbus-based Cummins will buy 31 acres of land located at the southeast corner of Interstate 65 and County Line Road for $4.5 million from the City of Greenwood, part of a new agreement between the city and company.
The Greenwood Redevelopment Commission unanimously approved that agreement, including the sale of the 31 acres to Cummins, during a special meeting Thursday morning.
This land is intended to be used for a 100,000-square-foot information technology and digital hub that Cummins announced it would build in May 2019. Now, that may not happen.
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Exact plans for the digital hub are to-be-determined, said Jon Mills, Cummins spokesperson.
"We’re no longer saying that’s what we’re going to do, but we’re going to continue to evaluate it," Mills said.
Initially, Cummins and Greenwood entered into a project agreement in which the city offered taxpayer-funded incentives totaling more than $10 million because Cummins agreed to invest at least $35 million and bring in 500 new jobs, paying about $100,000 each with benefits.
Cummins and Greenwood share the same vision for development of the property, and the company will evaluate how the site can be best used for its benefit and Greenwood’s, Mills said.
Greenwood had already purchased the 85-acre property southeast of the highway interchange for $7.7 million, and intended to sell 31 acres to Cummins for a mere $10, essentially giving it to them. The land the company intends to build on is valued at $5 million, according to city documents.
Per the now-terminated project agreement, Cummins was expected to start construction by June this year, but the pandemic changed the project’s course, and it was put on hold for months.
The new agreement is mostly a result of several financial hits Cummins took from the ongoing pandemic. In July, Cummins reported second quarter results that included the largest drop in sales in a decade and the largest quarterly revenue decline in the company’s 101-year history — 38% — due to industry-wide company shutdowns and weak economic activity related to the pandemic, according to The Republic. Third-quarter revenue increased compared to the previous one, but was still down 11% from the same time last year.
Considering the company’s pandemic-related challenges and changes in the industry, Cummins asked to be released from its initial project agreement with the city, giving it more time and greater flexibility to determine the best future use for the property, according to a City of Greenwood news release.
The $4.5 million purchase gives Cummins that flexibility, while also compensating Greenwood for expenses related to property acquisition, improvements and professional fees.
"This is a positive step forward," Mills said. "We’re grateful to the redevelopment commission and the mayor for working with us."
The land will now be under the title of Cummins, so the company can decide its own plans and timeline for construction. However, if within the next five years, Cummins decides to not use the land, wants to sell it to a third party or develop it in a way that was not in the original agreement, the City of Greenwood can buy back the land, according to the termination agreement.
Cummins is still obligated to build the information technology and digital hub it promised in the original project agreement, and cannot use the land for other purposes unless it notifies the city first.
The city can also buy back the land if Cummins has not begun "substantial project construction" with an investment of at least $1 million in five years, the termination agreement says. For now, Cummins does not have a plan in place to start construction in the next five years, Mills said.
The city will not provide any of the other incentives promised until Cummins starts construction, Greenwood Mayor Mark Myers said Thursday. As part of the $10 million in incentives, the city planned to spend up to $3 million on road improvements and utilities, reimburse the company for construction of a parking lot valued at about $1.8 million and donate $1 million to the Central Nine Career Center in Greenwood.
None of that money has been paid out, and it won’t be until Cummins is physically in Greenwood, Myers said.
Cummins will continue to remain committed to Central Nine Career Center, helping to develop career opportunities for local youth and provide a digitally-focused curriculum, Mills said.
Overall, Myers sees the new agreement with Cummins as a win for both parties. It show the company’s commitment to the city, he said.
"It’s very exciting for me to know that they do own property in the City of Greenwood," Myers said. "That gives us even more excitement, knowing they own that land, so eventually they will develop out on it."
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Here is a look at what has happened so far with the Cummins-Greenwood project:
May 2019:
- Cummins and the City of Greenwood announce a new 100,000-square-foot information technology and digital hub to be built at the southeast corner of Interstate 65 and County Line Road.
- Cummins and Greenwood sign a project agreement, outlining $10 million in incentives from the city, and a $35 million investment from Cummins.
- Greenwood buys the 85-acre property from County Line Properties, LLC, for $7.7 million, with plans to sell 31 acres to Cummins for $10.
- Construction is set to start by June 2020.
May 2020
- After no movement on the property, and the onset of the coronavirus pandemic, Cummins and Greenwood start discussions about delaying the project.
June 2020
- The construction deadline in the project agreement expired June 30.
November 2020
- The Cummins-Greenwood project is delayed indefinitely while a new agreement was in the works, Cummins and city officials said.
December 2020
- Cummins buys 31 acres set aside for the project from Greenwood for $4.5 million, taking control of the project plans and timeline.
- The original project agreement is terminated.
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