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Motorola Mobility gets huge state tax credit

Friday, May 6, 2011

* There are some things missing from this AP story

Gov. Pat Quinn says the state of Illinois will provide $100 million in tax credits to Motorola Mobility as part of a deal with the company to keep its headquarters in the Chicago suburb of Libertyville.

Under the deal announced Friday, the Motorola spinoff will keep a workforce of about 3,000 at the facility. Motorola Mobility designs mobile phones and other related products.

* That $100 million number is pretty astounding until you realize that it will be doled out over 10 years and requires a significant commitment from Motorola

Motorola Mobility is committing to spend more than $500 million in research and development related to these jobs over the next three years.

* The cash is a tax credit applied to the company’s annual withholding tax liability or its annual corporate income tax liability. However, Gov. Quinn did not announce a corresponding budget cut to make up for the revenue loss. Then again, the revenue loss to the state would’ve been quite big if the company had left - not to mention the hit to the state’s reputation. And Motorola Mobility had been looking elsewhere

The cell phone maker had been considering moving its head office to more high-profile tech centers, such as Silicon Valley, San Diego or Austin, Texas, since it was spun off from Motorola Inc. earlier this year.

More

Morningstar analyst Joseph Beaulieu said, “Given that CEO Sanjay Jha has a second home in Southern California and given that the San Francisco area is home to some of the top technology companies in the United States, this is a big win for Illinois.”

Ed Longanecker, executive director of Naperville-based tech trade association TechAmerica, said Illinois’ efforts to keep Motorola Mobility and to create an Illinois Innovation Council are welcome efforts to accelerate technology and economic growth.

Discuss.

- Posted by Rich Miller        


19 Comments
  1. - Ghost - Friday, May 6, 11 @ 1:04 pm:

    With the attached obligations on Motorola, the 10 year committment, reasearch dollars, staff etc wthis is a win win for everyone.

    We need more deals like this. Not just deals that lure or start a new location, but deals which are long term and have obligations which go both way.


  2. - Jonsey - Friday, May 6, 11 @ 1:07 pm:

    “With the attached obligations on Motorola, the 10 year committment, reasearch dollars, staff etc wthis is a win win for everyone.”

    You should talk to the people in Harvard, IL.


  3. - amalia - Friday, May 6, 11 @ 1:14 pm:

    Motorola is on the upswing since the split so there should be growth and good obligation from them. Morningstar has good analysis.


  4. - Anon - Friday, May 6, 11 @ 1:23 pm:

    Now lets see Motorola push for the extension of the R&D income tax credit so they can get an additional 6.5% credit on the planned $500 million dollar investment. That would work out to an additional $32.5 million.


  5. - Fed up - Friday, May 6, 11 @ 1:26 pm:

    Let’s see madigan wants to increase local propert taxes the same day this is announced. It seems alot of people here can’t wait to tell people to load up the uhaul and go ahead and move if they don’t like quinns tax increase betrayal but will support lowering motorolas taxs to keep them from leaving.
    Someone has to pay taxes in this state. I wonder if motorolas made any campaign donations. You k ow like the sweet deal Quinn gave state employees for no layoffs in exchange for a campign donation and endorsement.


  6. - CircularFiringSquad - Friday, May 6, 11 @ 1:28 pm:

    Speaking of important biz developments, the once important Chicago Tribune got another smackdown when an LA dish TV exec was placed in charge — the move reaks of quality journalism
    BTW the announcement brought the name of another Blagoof figure ……
    “The executive council — which also included Chicago Tribune Media Group President….Chairman of Tribune Broadcasting Nils Larsen…..we all remember Nils was the Trib bag trying to get $100 million Blagoof for Wrigley….do we need to mention there is no record that any Trib official ever went to the USA to report their antics?


  7. - Bill Baar - Friday, May 6, 11 @ 1:41 pm:

    Re: You should talk to the people in Harvard, IL.

    My first thought. I drive by the place every so often and amazed Illinois got shellacked with it.


  8. - LittleLebowski - Friday, May 6, 11 @ 1:47 pm:

    Fed Up- Your act is getting old. What would you be saying if Motorola left? Give it a rest.


  9. - Rich Miller - Friday, May 6, 11 @ 1:52 pm:

    LittleLebowski is right, Fed Up. The act is old.


  10. - Quinn T. Sential - Friday, May 6, 11 @ 2:07 pm:

    Jonsey and Bill Baar; you are right on. MOTO received a $30 million incentive to build in Harvard and create jobs, on top of a HUGE property tax abatement.

    How much of that sweetheart deal was ever paid back to the local taxing bodies, or to the state? Based on the past behavior of both the Governor, and MOTO, both sides might want to count their fingers after shaking hands on this deal.


  11. - 4 percent - Friday, May 6, 11 @ 2:23 pm:

    @ Jonesy & Quinn

    Motorola signed a deal for tax incentives for the Harvard facility that included a specific number of jobs for a specific time period. They met and exceedced all of the conditions of their agreement.


  12. - thechampaignlife - Friday, May 6, 11 @ 2:54 pm:

    Of course this would be a federal issue but I’d like to see a prohibition on public fund subsidies such as this for specific businesses (as opposed to industries where promoting green jobs, for instance, may be desirable) unless there is some measurable risk of that business leaving the country (perhaps a voter referendum or supermajority legislative vote required). Basically, it’d be nice if we were fighting with ourselves over these jobs and instead worked together.


  13. - Palatine - Friday, May 6, 11 @ 3:30 pm:

    I don’t think it’s worth this kind of money


  14. - thechampaignlife - Friday, May 6, 11 @ 3:44 pm:

    Just realized I made a typo and it that last “were” should have been “weren’t”.


  15. - JN - Friday, May 6, 11 @ 3:59 pm:

    10Mil per year, 3000 employees, so 3.3k/job/yr.

    “Motorola Mobility CEO Sanjay Jha says the company has a longstanding commitment to Illinois.”

    It’s funny that they were looking at California (taxes), and Texas (competing with TI in the labor market). Obviously, never play poker with that CEO.


  16. - wordslinger - Friday, May 6, 11 @ 4:12 pm:

    CircularFiringSquad, I’m pretty sure you have something significant to say, and I’m kind of confident I know why you write the way you do, but this is one of those times I have no idea what you’re talking about.

    Give us a chance.


  17. - 47th Ward - Friday, May 6, 11 @ 4:22 pm:

    Lol Word. I thought I knew the code, but I’m still scratching my head over that one.


  18. - wordslinger - Friday, May 6, 11 @ 4:48 pm:

    47, I’m a big CFC fan in reality (what a concept) and am thoroughly amused by the beatnik prose he chooses to (try) to hide his identity.

    But I’m getting a little concerned that the alter-ego might be taking over..

    “I saw the best minds of my generation destroyed by madness, starving, hysterical naked,…”


  19. - Rob - Saturday, May 7, 11 @ 10:26 am:

    Motorola has a presence already in Silicon Valley.

    They will simply use these millions to boost their efforts elsewhere while doing some here.

    If you put $100 million into a seed fund for startups, you would be get a LOT bigger bang. Giving it to a global power like Motorola is throwing it away.

    We gave Groupon a few million recently. They then opened up a technology center in Palo Alto.


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