Since news first surfaced about the deal in July, we've been following Mayor Daley's efforts to convince United Airlines to move its operational headquarters from the Chicago suburbs to downtown's Willis Tower. At first, the city offered the corporation $25 million tax ...
Since news first surfaced about the deal in July, we've been following Mayor Daley's efforts to convince United Airlines to move its operational headquarters from the Chicago suburbs to downtown's Willis Tower. At first, the city offered the corporation $25 million tax increment financing (TIF) funds as an incentive, most of which would go to refurbishing the new offices. Apparently that didn't cut it, so in August Mayor Daley added on an additional $10 million in public funds to sweeten the deal. Yesterday, the City Council Finance Committee advanced the proposal, as the Tribune's Hal Dardick reports.
We're thankful that Dardick has stayed on top of this story (neither the Sun-Times or Crain's appear to have written anything on yesterday's development), but we wish he would have provided a bit more historical context. Specifically, the Tribune article failed to note that, since early 2008, Daley has forked over an additional $15 million to United in return for moving its corporate offices to another downtown office building:
- $5.47 million in TIF funds to help refurbish United's new corporate headquarters at 77 W. Wacker Dr. (Early 2008)
- $10 million for "improvements at 77 W. Wacker Dr." to be doled out in $2 million annual increments to offset the local tax on jet fuel. (July 2009)
Combined with the $35 million incentive package now working its way through the City Council, that brings the total amount of public subsidies secured by United to over $50 million in less than two years.
In his article, Hardick goes on to quote City Hall's estimate of how the company's move to Willis Tower will result in a boost in tax revenue:
[T]he city will net $44.5 million in revenue during that period [the next ten years] because of the move, [Community Development Department deputy commissioner William] Eager said. If United stays for 15 years, the city will net $101.4 million, he said.
That sounds great in theory. But will we ever know if these benchmarks are met? Will we ever know if the company retains the required number of staff at these locations?
The answer is likely "no." There are now over 160 TIF districts across Chicago and thousands of individual redevelopment projects. Yet we remain in the dark about which of these investments have delivered the promised benefits and which haven't. Nonetheless, we're expected to simply trust Daley's latest assurances that it's all worth it.
What remains clear is that the city's schools and public transit infrastructure are starved and crumbling and in need of immediate relief. Seems like an odd time to be spending tens of millions in taxpayer dollars on corporate office renovations.
UPDATE (3:00 p.m.): The Reader's Mick Dumke has more:
It doesn't sound like United will be held to much account if it reneges on its commitments. From the Department of Community Development's report on the United deal: "If United fails to maintain a minimum of 2,500 FTE positions at the Building during the term of the Compliance Period, United will be in default of the RDA."
What does it mean to be in default of the redevelopment agreement? What happens to the company then? Will it face any penalties? It's not clear. [...]
In essence, United is being handed public money and told to do the right thing.