BIG PICTURE: Cities, States Roll Out Arsenal of Incentives

All of the carrot-dangling done here may soon be eclipsed in New York City, where Northeast Bureau Chief Glen Thompson reports incentive opportunities could be more abundant in number and more generous in scope following the World Trade Center bombings.

"There are a huge number of proposals from many different directions," says Stephanie Greenwood, a research analyst at government and corporate accountability group Good Jobs New York. The grand-daddy of them all, she tells Thompson, is a proposed $1.1-billion subsidy for the New York Stock Exchange that could include its trading floor being part of a new World Trade Center.

That deal would top the $1-billion carrot used in Texas for the Supercollider project. However, only $600,000 of that incentive package was ever used before the fusion project was shut down, Bill Shelton, managing director of Ft. Worth-based Cornerstone Group, tells GlobeSt.com Southwest Bureau Chief Connie Gore.

In addition to running an economic development consulting firm, Shelton is also an economic development instructor at Texas A&M's Real Estate Center. He plans to write a book on incentive practices across the US, Gore notes.

Chicago Mayor Richard Daley, however, did not need to see the galley proofs to know he was in a high-stakes poker game when Boeing Corp. made the surprising announcement it was pulling its headquarters and 500 high-level jobs out of highly-livable Seattle for Chicago, Dallas or Denver. Although Chicago was considered to be No. 2 or 3 during most of the corporate courtship, finishing anywhere but first was not an option for Daley and his staff.

While civic image was an overriding motivation for Chicago to land Boeing's imprimatur as a world-class city, Daley has long focused on keeping and luring jobs, whether they be blue-collar or white-collar, within the city limits. He is fighting against mayors and governors on that score, and in addition, there is the byzantine Cook County property tax system which favors residential uses at the expense of commercial property, which often is exploited by neighboring counties.

The Cook County Class 6(b)incentive program lowers industrial property assessments from 36% of market value to 16% for the first 10 years, 23% in the 11th year and 30% in the 12th year. Companies using the incentive this year include Aramark Uniform and Career Apparel for a $23-million plant on the former Chicago Amphitheater site, Lakin General Corp. for a $7.2-million project on a former contaminated Archer Daniels Midland location on the West Side, Keebler Co.'s $18.3-million ice cream cone production plant in the Pullman neighborhood and Alstyle Apparel & Activewear Manufacturing Co. for its $18.2-million T-shirt plant on the North Side.

The city has aggressively used tax increment financing (TIF), even applying it in the Boeing deal to offset property taxes paid at 100 N. Riverside Dr. TIF money also is paying 25% of the costs of a $98-million training facility near Midway Airport for American Trans Airlines, which nixed an Indianapolis offer.

Even surrounding suburbs have gotten into the act. To lure a developer willing to build a $28-million condominium project near the Grand Victoria casino, Elgin, IL officials donated the site in a $4.2-million incentive package. "You can't do urban development without development incentives," said Scott R. Chesney, principal of Colorado Springs, CO-based Vandewalle & Associates. In southwest suburban Plainfield, IL, incentives from the Plainfield school system, the village of Plainfield and Will County Center for Economic Development helped convince Guinness UDV to expand its production plant by 90,000 sf.

Creativity extends to Amarillo, TX, where Gore reports details of a $45-million package that landed Bell Helicopter Textron. The Amarillo Economic Development Corp. is buying 185 acres at the city's airport and is kicking in $1 million in start-up funding for training. That project also includes a 10-year property tax abatement. A $32-million non-taxable, sales tax generated bond fund pays Bell $2,500 per job while $8 million of taxable revenue bonds provide additional money for 1,475 jobs. If Bell delivers on the head count, Gore says, they get a rent-free deal. At the end of 10 years, she adds, Bell Helicopter Textron could get the real estate free and clear.

Besides a $2.3-million, interest-free loan amortized over 14 years, Star-Tex got additional relief to rehab a building for a call center in Big Spring, TX. Star-Tex can apply 10% of its annual payroll to reduce that loan balance every year, Gore reports.

Jobs also are the driving motive behind New York City's Relocation Employee Assistance Program, which is being targeted in Lower Manhattan in the wake of Sept. 11. Qualifying firms get a $3,000-per-employee tax credit for up to 12 years, Greenwood tells Thompson. However, even that program is not without its critics.

"The biggest concern that our organization has with incentives is that what the Downtown area really needs is investment in infrastructure and transportation," Greenwood says. "Handing out incentives to individual companies is expensive and it's not a very efficient way to redevelop the area."

One of Portland, OR's economic development efforts, the Storefront Improvement Program, is being used by developers John Kellogg and Thad Fisco to rehab an industrial building passed by 25,000 cars every day, reports West Coast Bureau Chief Brian Miller. It recently was leased to a basketball footwear and apparel company that plans to hire 15 workers.

Besides loans up to $250,000, Portland offers an Employee Investment Program and the Quality Jobs Program and Deferred Loan for tenant improvements, Miller adds. The deferred loan is available up to $50,000 for 10 years while the Quality Jobs Program loan can be waived if job goals are met.