Besides bragging rights and a new dose of civic pride, exactly what do Chicago and Illinois get for the big bucks they have agreed to lay out to lure Boeing from Washington state?
It’s a company with a marquee name–no question about that–but it comes to Chicago with only 500 jobs, most of which are likely to be filled by transferees from Seattle.
Anticipating the question, Gov. George Ryan had a ready answer on Thursday.
A state-sponsored study has concluded that the aircraft manufacturer’s relocation will generate $4.5 billion in local economic benefits over the next two decades, as every job created by Boeing generates five more.
But the deal didn’t come cheap.
Ryan agreed to provide Boeing with up to $41 million in tax breaks and various state grants over 20 years, while Mayor Richard Daley anted up another $19 million in property tax relief over a similar period and a $2 million grant. There’s also the city’s promise to establish a downtown area heliport that can be used by the aircraft manufacturer and other local companies that need to whisk executives to and from the central city.
Chicago’s property tax forgiveness depends on passage of new legislation in Springfield that would permit such assistance to corporations moving their headquarters to Illinois.
The city also will contribute $1 million to retire the lease of an existing tenant in the space that Boeing will occupy, and City Hall may help pay for hangar improvements at Midway Airport that would benefit the company, said Planning Commissioner Alicia Mazur Berg.
Hit the total button and it’s upwards of $63 million, not counting the heliport and hangar
“It is wonderful to have Boeing come to town,” said Jackie Leavy, executive director of the Neighborhood Capital Budget Group, a not-for-profit organization that pushes for improvements in areas outside the Loop. But “any incentives should be measured, and there should be a clear set of quid pro quos. How long will Boeing (guarantee) to stay? We should see some terms in return for the public investment.
“Cachet is not enough for the ordinary person in a Chicago neighborhood who may be working two or three jobs making ends meet or for people whose local school is falling apart,” Leavy said.
But in the city’s corporate and civic community, the expected benefits of the Boeing deal brought near-ecstasy.
“Chicago attracting a headquarters of a significant multinational, multi-sector entity like Boeing is huge, both economically and to the civic psyche,” said MarySue Barrett, president of the Metropolitan Planning Council.
“I think the economic value at this point is almost impossible to calculate,” Barrett said. But “it will have huge ripple effects … Keep in mind, headquarters (operations) tend to employ attorneys, ad agencies and accountants. Chicago’s professional services sector has been one of the fastest growing of any sector.”
“The headquarters operation is going to draw people from other places to come here and do business,” said R. Eden Martin, president of the Civic Committee of the Commercial Club of Chicago. “They will fly to Chicago and they will stay in hotels and eat in restaurants and hole up for six weeks and negotiate a deal.”
Some of the financial impacts will be immediate, said Jerry Roper, president of the Chicagoland Chamber of Commerce.
Several hundred families will be buying or renting homes and then decorating them, for example, and Boeing’s fleet of corporate aircraft must be fueled and maintained in their new Chicago base, he said.
But longer term, Boeing is expected to grow into new business areas such as air traffic control technology and financial services.
“You can imagine how we will benefit from that,” Roper said. “This is a company that has decided to reinvent itself. We have the brain trust of Boeing coming to Chicago, and each and every time they come up with a new idea, those of us in Chicago and Illinois are a part of that.”
The sentiments of pro-Boeing-ites were summed up on the marquee of the Chicago Theatre.
“Chicago Wins! Welcome Boeing,” its message declared Thursday.
More than 10 years ago, the state and Hoffman Estates played the corporate headquarters relocation game.
In that one, Sears, Roebuck & Co., which was moving its home office out of downtown Chicago, decided to build in the northwest suburb instead of competing locations outside of Illinois.
More than $180 million in tax exempt, low-interest bonds issued on Sears’ behalf are being retired by property tax payments made by the company. The state, meanwhile, has made about $25 million in local infrastructure improvements.
It is difficult to judge whether such incentives pay off for the state and local governments, said Fred Giertz, an economics professor at the University of Illinois at Urbana-Champaign.
If Sears officials were being honest when they threatened to move out of state, “then it probably was worth it,” Giertz said. “If they weren’t, then it probably wasn’t.”
It’s a similar question with Boeing–would the company have come here without the incentives?– although at first blush, it appears the city and state will come out ahead, he said.
Besides producing invaluable infrastructure improvements, luring Sears helped Hoffman Estates’ image, said Mayor William McLeod.
“It put us on the map, there’s no doubt about it,” he said.
A similar advantage is expected fall to Chicago with Boeing’s landing, experts said.
“This shows that Chicago is competitive and it puts the city in the game in other places,” Giertz said. “It raises the visibility of Chicago, showing it is a viable option.”
On what might be called the micro economic level, the Boeing news was bittersweet.
Shop keepers and merchants near the building at 100 N. Riverside Plaza where the company will set up shop said the 500 new arrivals are most welcome, but won’t come close to the 1,200 Morton International employees from the high rise who were customers before they were let go following a corporate merger.
“To tell you the truth, I’m sadder to see Morton leave than Boeing come,” said Gary Klaus, the owner of Herm’s, a nearby hot dog emporium. “You got to know all of them over the years. You knew if one wanted extra chili or no relish. These guys from Seattle don’t even know what a real Chicago hot dog is.”
“Lots of papers have been left in my hands since the Morton guys stopped coming,” said newspaper vendor Ray Constanz. “Boeing will be a great boost for me, for sure. But now Daley has to fill up the rest of the building.”
