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Question of the day

Wednesday, Jul 16, 2008 - Posted by Rich Miller

* The setup

MillerCoors has picked Chicago for its headquarters.

The company, a joint venture of Molson Coors Brewing Co. and SABMiller PLC, will employ 300 to 400 people and is still finalizing a location downtown. [..]

The firm chose Chicago over Dallas for its new home base and is making a $39.5-million investment, according to a press release from the state. The state is providing an economic package of roughly $18 million, while the city is expected to provide between $2.5 million and $5 million in tax-increment financing subsidies.

The state’s incentives include an $825,000 grant over two years and tax credits totaling $17.5 million over 15 years, according to a spokeswoman for the Department of Commerce and Economic Opportunity.

* More

But landing MillerCoors comes at a price of over $20 million in state and city subsidies, raising an oft-asked question in economic development circles: Would it have come here anyway, even without an aid package?

After all, Chicago is hardly a Rust Belt relic. It’s what economic development experts would call a “winner” city, a place with a healthy, diversified economy and cultural and recreational amenities to attract highly skilled workers.

In fact, despite all the worries over lost corporate headquarters, the number of high-paying corporate management jobs—the kind MillerCoors will create—has grown at a heady pace in recent years, according to federal employment data.

* The question: Do you support or oppose economic development efforts like this one? Explain.

       

43 Comments
  1. - Wumpus - Wednesday, Jul 16, 08 @ 9:58 am:

    Will it be a net win for the state/city?

    The thing is, many of these people will live in the burbs so how much will the city be helped outside of gas tax, parking fees and metra/pace?


  2. - Diamond Dog - Wednesday, Jul 16, 08 @ 10:00 am:

    Wow….Take THAT St. Louis!! Bud’s sold to a bunch of frogs and a week later Chicago lands Miller.


  3. - Speaking At Will - Wednesday, Jul 16, 08 @ 10:00 am:

    I support these kind of economic development efforts. However it would seem that if tax breaks for one business encourages development, would it not encourage development for business of all size if taxes were cut across the board?

    Make Illinois more business friendly to start with and you dont have to throw in all the extras to land a major employer.


  4. - Team Sleep - Wednesday, Jul 16, 08 @ 10:01 am:

    Yes, I support these initiatives. Even with the incentives and rebates, companies will still pump a lot of money into the community and state, and the more (and better) jobs we have the better off this state becomes. MillerCoors is also a viable, steady and well-performing company, so we know they will not waver in terms of production and earnings.


  5. - Muskrat - Wednesday, Jul 16, 08 @ 10:02 am:

    If Chicago were teetering on the conomic brink, and they desperately needed some good news, they needed to attract one good solid corporate move to turn the cuty’s rep around, to act as the anchor for some new develoment, then maybe. Just throwing money at anybody with a org chart and a logo seems like a bad idea. I know that $20 isn’t going to turn the El into a 21st century maglev monorail system, but there are good and useful things the city could have done with it.


  6. - Truth - Wednesday, Jul 16, 08 @ 10:05 am:

    Support. More jobs are needed and these are good jobs that will have economic spin off benefits. If a few governments have to give up some tax revenues as a trade off that is even better.

    I heard the location came down to the wire between Chicago and Harrisburg.


  7. - steve schnorf - Wednesday, Jul 16, 08 @ 10:06 am:

    Generally, I support things which succeed, and oppose those that fail


  8. - Captain America - Wednesday, Jul 16, 08 @ 10:09 am:

    I suspect that Millers-Coors might have come to Chicago anyway, since the Chicago metropolitan area is a much better place to live,work, and play than Dallas.

    But we’ve taken such a beating as a result of corporate mergers and acquiaitions, I consider the relocation of Miller-Coors headquarters as an important boost to the civic morale. I think you have to take the long-term view on economic development situations like this.

    When water runs out in Calfornia and the Sunbelt, Chicago and the Great Lakes/rust belt states are going to re-emerge as national economic powerhouses.


  9. - Dan Johnson-Weinberger - Wednesday, Jul 16, 08 @ 10:12 am:

    I generally prefer to spend economic development dollars on investments that benefit everyone (transit, universal health care, better public education) than on projgrams that benefit the few (tax breaks for a particular corporation).

    Most of the job growth comes from small business (


  10. - Dan Johnson-Weinberger - Wednesday, Jul 16, 08 @ 10:14 am:

    Oops. That was cut off…

    So I was saying I’m glad Chicago and Illinois teamed up to beat out Dallas in this contest, even though I don’t like the game of throwing corporate welfare at the biggest companies in the world in order to get them to move here.

    If only we had a progressive income tax to tap into those high management salaries……


  11. - Ghost - Wednesday, Jul 16, 08 @ 10:16 am:

    CA I have to disagree with that one. Dallas IMHO is more appealing, less congestion, better cost of living, better airport etc.

    I support some kind of aid package, BUT I question the amount of aid provided here.


  12. - VanillaMan - Wednesday, Jul 16, 08 @ 10:17 am:

    Q - Do you support or oppose economic development efforts like this one? Explain.

    A - Yes, in this case. $20 million isn’t a lot of money to have Chicago labeled as MillerCoors headquarters. The 350 jobs and the real estate investment made by the firm will offset what we paid to them.

    What would have happened if we offered $20 million to Goose Island or another local brewery instead? How many jobs could have been created for a firm that already considered Chicago home?

    While it has become popular and necessary to compete with other locations for national brands and companies, we should always focus on those brands and companies that already consider us home, pay our taxes and hires our neighbors. By ensuring that our home brands and companies are given the biggest breaks, we are better off.


  13. - nonewtaxes - Wednesday, Jul 16, 08 @ 10:18 am:

    hmmm low taxes and tax breaks are good for companies, which is in turn good for the people. But let’s tax the hell out of the consumer.

    This government is so screwed up. They know low taxes are a benefit to everybody yet they keep raising our property, sales, and trying to raise our income tax.

    We need smaller government where everyone gets those breaks not just to woo companies to the city.


  14. - Dan S, a voter and Cubs Fan - Wednesday, Jul 16, 08 @ 10:21 am:

    I support economis developement for new business, just to bad it could not be an American business.


  15. - wordslinger - Wednesday, Jul 16, 08 @ 10:25 am:

    I hold my nose and support on a case-by-case basis. If the numbers seem to work, okay.


  16. - Anon - Wednesday, Jul 16, 08 @ 10:26 am:

    ===I suspect that Millers-Coors might have come to Chicago anyway, since the Chicago metropolitan area is a much better place to live,work, and play than Dallas.===

    The tax literature almost universally reports that tax incentives have very little influence on corporate location decisions. They are viewed by the decisionmakers as found money that be negotiated after the decision has already been made. Interestingly enough, the most famous exception to this basic truth was the decision to move Mobil’s headquarters to Dallas about 20 years ago — it was reported that a major motive for the decision was Texas’ lack of a personal income tax on the big bosses’ incomes.


  17. - Shorty Circowitz - Wednesday, Jul 16, 08 @ 11:02 am:

    Gotta support anything that helps Illinoisans live the high life. Here’s to the champagne of bottled beers!


  18. - erstwhilesteve - Wednesday, Jul 16, 08 @ 11:02 am:

    A little data would be useful. How many similar incentives have been accepted in the past X years, how many of these companies are still around, how many of these have asked for further subsidies later on as a bribe for staying? How many of those that left actually violated the terms of their agreement? And perhaps a more important question - is anyone keeping track of this systematically?


  19. - What planet is he from again? - Wednesday, Jul 16, 08 @ 11:03 am:

    I’m generally opposed. Where do you draw the line? Why would one company get a better deal than another? (Connections? Kick-backs? Or maybe even a Tony Rezko?) If taxes are too high for one company, then taxes are too high for them all. But that said, if a company/industry gets a tax break of any sort, I’d much rather see one for something like Coormillers than, say, tax incentives to keep a baseball/football/basketball/hockey team in town.


  20. - Vote Quimby! - Wednesday, Jul 16, 08 @ 11:09 am:

    from the trib piece ==”You can think of it as ‘this company just bought stock in Illinois.’==

    It sounds like they bought in at Gatehouse-type prices…..I agree if the numbers work great, but let’s not forget about the companies already here. TIF is abused at so many levels (the –entire city– of East St. Louis is a TIF) its become a joke about what is blighted. Another jab at St. Louis with their loss of Bud….


  21. - jerry 101 - Wednesday, Jul 16, 08 @ 11:09 am:

    oppose.

    Wealthy, highly profitable corporations Like Miller shouldn’t be getting welfare dollars from struggling families.


  22. - Six Degrees of Separation - Wednesday, Jul 16, 08 @ 11:16 am:

    What planet-

    In today’s global economy, our “pure” traditional American way of attracting business strictly on the merits takes a beating from the way much of the rest of the world does business. I have heard several international firms talk about what they had to do to get a foothold in some countries. For better or worse, this angling for business has also crept into our culture, where “everybody’s doing it, so we have to do it, too” becomes the standard for offering rebates, incentives, abatements and the like for inducing firms to locate or relocate in your town or state.

    To be fair, under the old way of doing business, many towns gambled (and some still do) with making infrastructure improvements before the fact with taxpayer money in the hopes of attracting business. Some of these improvements were moderately or wildly successful, while others created a nightmare of tax burden with little tangible results. In many cases, offering incentives to ensure a project and to close the deal is better than gambling with tax money in hopes to land a project.


  23. - NoGiftsPlease - Wednesday, Jul 16, 08 @ 11:16 am:

    Remember Motorola in Harvard? Empty now. There should be a payback clause if the company decides to pull up stakes within a certain amount of time.


  24. - enrico depressario - Wednesday, Jul 16, 08 @ 11:51 am:

    Boy, are those MillerCoors people gonna be disappointed when football season gets here…


  25. - Phineas J. Whoopee - Wednesday, Jul 16, 08 @ 12:07 pm:

    All the Miller employees should have to live in Chicago and send their children to public schools in order to recieve the tax breaks.

    The City council should ban drinking beer at outdoor festivals in order to celebrate this announcement.

    Two more steps in keeping us the most nanny government in the country.


  26. - Ghost - Wednesday, Jul 16, 08 @ 12:38 pm:

    “In many cases, offering incentives to ensure a project and to close the deal is better than gambling with tax money in hopes to land a project.”

    good point


  27. - TaxMeMore - Wednesday, Jul 16, 08 @ 12:43 pm:

    It is immoral and just plain evil to take poor people’s money and give it to some of the largest and richest corporations in America. How many people in Illinois don’t have health insurance or can pay for health care?

    Anyone that thinks it is ok to give more money to rich people at the expense of our poor children and families that are all paying burdensome and poverty creating tax rates needs to resign from all government involvement right now. You are the problem.


  28. - Slugo - Wednesday, Jul 16, 08 @ 1:13 pm:

    I spent many years in state economic development and my opinion is using tax $$ to entice or bribe companies to locate anywhere is not good public policy. The best plan is creating a really good economic climate where business wants to grow, hire and invest. What’s a good climate? How about fair & stable taxes, qualified workforce, healthy infrastructure, fair & stable regulatory policies all of which is dependent on a government that is also fair and stable. Unfortunatley, Illinois has not had much of the latter so we have to resort to the bad policy of incentives. The paradigm of more taxation and the subsequent (corrupted)power that comes with the redistribution of that money has put Illinois in a bind it may never find it’s way out of.


  29. - Wumpus - Wednesday, Jul 16, 08 @ 1:20 pm:

    Well Phinneas, politicians should send their kids to real public schools, not the magnet schools either


  30. - Joe Schmoe - Wednesday, Jul 16, 08 @ 1:28 pm:

    Unfortunately, if we don’t dangle the bait, another state will.


  31. - Don Smith - Wednesday, Jul 16, 08 @ 1:34 pm:

    I am a Schlitz guy. I would be jacked up if Schlitz or whoever owns them would relocate to Chicago. This stupid thought is brought to you by Schlitz! Go for the Gusto! GO for Schlitz. Rich, here’s a new way to generate advertising revenue for your blog.


  32. - ahoy! - Wednesday, Jul 16, 08 @ 1:43 pm:

    Yes! Now if we can just get this administration to work and get new jobs and investment outside of Chicago instead of just moving them around and calling it economic development.


  33. - Lefty Lefty - Wednesday, Jul 16, 08 @ 1:45 pm:

    I imagine the numbers are out there somewhere indicating whether these incentives end up working out. In my little town I couldn’t believe the city gave $40,000 in tax breaks to a restaurant that was to open. Now, 5-6 years later, it seems like money well-spent since the place is packed 6 nights a week. On the other hand, publicly-financed Olympics and professional sports stadiums have been shown to be money losers.

    Who’s going to do the math for us here?


  34. - HappyToaster - Wednesday, Jul 16, 08 @ 2:43 pm:

    ===Schlitz or whoever owns them would relocate to Chicago===

    Pabst Brewing owns the Schlitz label. Pabst received state incentive to move HQ to Woodridge last year.


  35. - Ernest T. Bass - Wednesday, Jul 16, 08 @ 3:23 pm:

    Incentives to get business come to Chicago is like hanging a pork chop around your ugly kids neck to get the dog to play with them. I may get the job done, but it is a terrible way to do it. If Chicago was so great, why the multimillion dollar pork chop?


  36. - Plutocrat03 - Wednesday, Jul 16, 08 @ 4:24 pm:

    I can support economic development, but this is most charitably, tomfoolery.

    After all the $$ that went to Boeing to bring its HQ here, What is the payback to the taxpayer? Most will live in the ‘burbs. If they take Metra/Pace that is a net loss to the taxpayer.

    The only Boing benefit has been “Chicago based Boing …….” news report blurbs.

    Our politicians are not sophisticated enough to understand what is ego driver and what is financially driven.

    Do we have a case of the whosencha crowd being given the commissions from the real estate and insurance sales?

    $20 million could have reinstated some of those programs cut from the budget. Even made a small tax cut somewhere…..


  37. - DAL INC - Wednesday, Jul 16, 08 @ 4:34 pm:

    Pabst is a virtual brewer–they do not make anything. All Pabst products are contracted out to SABMiller. Just a corporate office filled with executives and nothing to manage.


  38. - VanillaMan - Wednesday, Jul 16, 08 @ 4:40 pm:

    Out of the 300-400 employees, how many do you believe will actually live in Chicago? How many will send their children to Chicago public schools? How many will shop in Chicago for their furnishings, food and apparel? How is it we still assume that if a business locates in Chicago, Chicago will get the benefits?

    When Chicago public schools are ranked among the best, when Wal-Mart opens it’s stores in Chicago, when the GOP is running county and city offices, then maybe we’ll start seeing a rebirth. Not a day sooner. This city is so stagnant, using the word comatose doesn’t do it justice.


  39. - Ahem - Wednesday, Jul 16, 08 @ 5:20 pm:

    mmmmm…BEEER!


  40. - Arthur Andersen - Wednesday, Jul 16, 08 @ 6:26 pm:

    AA is with Slugo. I also did my time, and it was fun, handing out the big cardboard checks across the State in the name of “economic development.”

    I came away from almost every big project thinking “screwed again.” I was glad to be gone for that Motorola deal. “Stateline” deals like Motorola are even more chancy because it’s never certain what percentage of the workforce will live in your state. The site selection and relcation pros (non-governmental) tend to believe that corporate HQ moves are the worst to “compete” for because the decision is ultimately driven by non-economic factors primarily related to the CEO and his/her personal preferences/biases.


  41. - Spahn and Sain and pray for rain - Wednesday, Jul 16, 08 @ 8:02 pm:

    Why would this venture not be located in Milwaukee, Wisconsin? Or Golden, Colorado? Am I missing something?

    This seems like feel-good window-dressing with no added value or connection to the City of Chicago.

    Possibly, a net loss considering the most of the transplants will move to the suburbs anyway.

    This reminds me of the Boeing deal which I also thought was screwy.

    Call me old fashioned, but I think HQ should be relatively close to their manufacturing facilities.

    I’m a Chicagoan, and I think that the loss of taxpayer monies to bring these (structurally hollow)HQs here in the interest of personal political egos is unnecessary and irresponsible.


  42. - yinn - Thursday, Jul 17, 08 @ 9:11 am:

    Illinois now has a “Corporate Accountability” website. Companies that receive certain forms of development assistance must now agree to file an annual report documenting the numbers of jobs and wages they provide to make it clear whether they’ve kept their promises. DeKalb can track Target Corp, which receives the EDGE tax credit for the warehouse it established here in 2004.

    http://www.corpacctportal.illinois.gov/ProgressReport.aspx

    Many communities are beginning to pair their tax abatements with what I believe are called “clawbacks,” as part of agreements, in which companies must repay previously-abated taxes if they decide to leave the area before such-and-such date.


  43. - Truthful James - Thursday, Jul 17, 08 @ 10:34 am:

    Well, Phineas

    “…All the Miller employees should have to live in Chicago and send their children to public schools in order to recieve the tax breaks…”

    if CPS was where they taught you to spell, I don’t want the Miller kidlets to go there.

    Matter of fact, I don’t want the Miller employees to use any public services. Let them spend money at Chicago stores and eat at Chicago restaurants (sales taxes, baby), raise housing values by living in the best neighborhoods and high rise condos (property taxes.)

    But you can be sure they aren’t going to open any breweries in Cook County with the high assessments commercial properties pay. Unless they get incentives for that to support high wage industrial jobs.

    But somewhere in the City an Economic Development balance sheet must have been put together and we can hop there is a net gain in City and County revenue.

    The other important thing is that Chicago used to have a cohesive corporate leadership. Granted the leaders then were really owners in the real sense of the word. But they were responsible in large part for the growth of Chicago into a beautiful city. Times have changed, but perhaps this might become a net advantage for Chicago.


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