Daley Defends Use of TIF (Re-post From Crain’s)

Daley defends TIF for United move

By Eddie Baeb
Aug. 06, 2009

(Crain’s) — Mayor Richard M. Daley says the city’s proposed $24-million subsidy to help bring 2,800 United Airlines employees downtown is warranted because of the recession and the importance of the airline and air traffic to the city’s future.

At a news conference Thursday in the lobby of the newly rechristened Willis Tower, Mr. Daley said the move of UAL Corp.’s operations center from northwest suburban Elk Grove Township to the iconic skyscraper will make UAL the city’s biggest private employer.

“This is the largest relocation of jobs to the city of Chicago in recent years,” Mr. Daley said.

The airline will have 16,000 workers based in the city limits once it moves into Willis Tower, North America’s tallest building, which was known as Sears Tower until last month. The relocation could begin as soon as fall 2010, United says.

The Chicago region’s largest private employer is Wal-Mart Stores Inc., with some 23,000 full-time employees, according to a Crain’s list published Jan. 5.

Contingent on the subsidy, UAL has agreed to lease 460,000 square feet on nine lower-level floors for 15 years in Willis Tower, 233 S. Wacker Drive. The company wouldn’t disclose which floors it will occupy.

The proposed TIF subsidy would cover 40% of the estimated $60-million build out of UAL’s space.

The mayor downplayed the risk of such an investment even though UAL’s credit is sub-investment grade and there’s speculation the company might not survive.

“You have to have confidence. I believe the (federal) economic stimulus did not recognize this industry. This industry is vital,” Mr. Daley told reporters. He later defended providing tax-increment financing for such deals: “If you don’t create jobs, then you lose more and more business.”

City staffers also note that the subsidy will be paid out over several years, and will include provisions allowing the city to get some of its money back if UAL doesn’t live up to terms of the agreement, including maintaining a certain number of jobs.

UAL CEO Glenn Tilton told reporters that the subsidy package was “key,” and that other municipalities also offered incentives. He said 13% of UAL’s local employees live in Chicago and that 80% live within five miles of a Metra station.

“All things considered, this facility — both from an economic perspective and a quality of work-life perspective — was the best facility in the running,” Mr. Tilton said.

The company had estimated it would cost $50 million to $90 million to upgrade the sprawling Elk Grove Township campus, which Mr. Tilton noted was built in 1961 and is now 40% vacant.

“Vacant space is not a motivating influence on a workplace,” he said.

A leasing representative of Willis Tower with U.S. Equities Realty says 1 million square feet of space has been leased in Willis Tower over the past two years. The tower has suffered from high vacancies since the terrorist attacks of Sept. 11, 2001.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: