Three Chicago firms to refund $34 million in TIF subsidies back to the city
See the article from the Chicago Sun-Times.
From the article:
The largest break — $15 million — comes from CME Group, which was granted a TIF subsidy but is taking a pass because it no longer needs the help after settling its tax issues with the state. ...
Another $13 million will come from the CNA group. The insurance giant got a $13.7 million subsidy in December 2008 to renovate its 333 S. Wabash headquarters, but used the money to renovate and lease space it no longer needed after a corporate restructuring.
The redevelopment agreement required CNA to maintain at least 2,700 employees at the site through 2018, but fell short of the requirement for all of 2010. The funds will go to local taxing districts now that the Central Loop TIF has expired.
The third refund — nearly $5.4 million — will come from Bank of America, which took over a TIF redevelopment agreement for 540 W. Madison from ABN Amro and was required to honor ABN’s job promises.
After reporting the required 2,739 jobs in 2009, Bank of America subsequently “self-reported” that it had “overstated the job number” by including the jobs of DRW, an on-site consultant. Bank of America was required to return the 2009 payment with interest and wrote a check for $5.4 million on Nov. 1, 2011. The funds were returned to the River West TIF.
TIF, or tax increment financing, the process by which future presumed increases in property tax revenues are encumbered by using the future revenues in the here and now as incentives to businesses for various expansion projects, is a tried and true financing technique for local governments. At the same time it can be controversial, seen as a give-away. And many times the job figures aren't realized.
In DC we have a bunch of examples of how this program doesn't work well for the city. For example, the "employee-owned" Bureau of National Affairs, a publishing firm, received big property tax reductions for many years. When the property tax reductions expired, they moved to Arlington.
Or Co-Star, the big realty information services firm, agreed to move to DC from Bethesda, and they bought a building--so it happens at a rock bottom price due to the real estate crash, which not even two years later, they sold for great profits, all the while pocketing $6 million in tax abatements. See "Abatements rise in popularity in luring companies to D.C." from the Washington Business Journal and the Costar press release, "CoStar Dials Up $101M Sale of HQ Bldg. One Year After Buying it for $41M".