By Ted Schnell • BocaJump | Wednesday, June 27, 2012
Offering incentives to businesses has been a source of friction on the Elgin City Council and likely a source of frustration among a city administration that has worked to broker such deals under policies set in prior years. Expect Elgin’s economic development efforts to shift gears.
On the City Council agenda tonight is what the administration describes as “the last of the agreements in which the city provides cash incentives” for economic development of properties outside a tax increment financing district. In this case, the city is offering as much as $40,000 from its jobs grant program, an incentive the city has given before to recruit such companies as Siemens Energy and Automation, Givaudan Flavors Corporation, Bystronic Inc. and Sears Holdings Corporation.
Assistant City Manager Rick Kozal said earlier this week that the city continues to work on incentives deals, but none going forward will involve cash.
That the administration is referring openly to the $40,000 cash deal with Mueller & Co. LLP as the last of its kind is an acknowledgement of a shift in direction that became eminently clear during the City Council’s Feb. 23 strategic planning session.
Mueller & Co. LLP’s deal actually has been in place with the council’s provisional approval since a year ago, but has gone no further as the company worked to find and lease new offices to accommodate a surge in staff. In addition to the $40,000 in cash, the city would waive about $55,000 in impact and permit fees.
Established in Elgin in 1968, Mueller & Co. LLP is a certified public accounting and management-consulting firm, according to the staff memo to the City Council on the incentives deal. Today it has its largest office in Elgin, as well as offices in St. Charles, Chicago and Oakbrook Terrace. Mueller & Co. LLP employs about 80 people, including 15 partners.
The administration’s focus with the deal has been on retaining the 52 full-time jobs Mueller & Co. LLP already provides in Elgin, as well as bringing in 22 new full-time jobs to Elgin from its St. Charles office.
In Elgin, the city administration calls its cash incentives “jobs grants,” and has used them to encourage businesses seeking a deal to create more jobs at a higher-than-average wage, topping it off with an additional bonus for each new employee who lives in Elgin. That is no different with the Mueller & Co. LLP deal.
According to the administration, after the council gave provisional approval to the deal in June 2011, Mueller & Co. LLP began negotiating a lease with John B. Sanfilippo & Son Inc. to occupy the long-vacant space on the second floor of 1707 N. Randall Road. Mueller & Co. LLP plans to finish its consolidation at its Elgin facility by Nov. 1.
Strings tied to jobs grants
Under the deal brokered a year ago, the city would pay Mueller & Co. LLP a $1,000 jobs grant for each of its full-time employees relocating to Elgin from Mueller’s St. Charles office. There is a caveat on that — to be eligible for the jobs grant, the position must have an annual salary exceeding $40,000 before benefits. Finally, the company would receive an addition $500 bonus for any such full-time employee residing in Elgin.
Other conditions require Mueller & Co. LLP to keep 80 employees at its Elgin location for a five-year term to realize the full amount of the grants. The staff memo states the city also offered similar job creation incentives for any additional full-time employees hired in the next five years who are paid more than $40,000.
The city’s maximum payout under the deal is $40,000.
The city also committed to a “fast-track” permitting process for the expansion of Mueller & Co. LLP’s Elgin facility and will waive the city’s building permit fees for its expansion.
This discount will remain in effect as long as Mueller continues to employ not less than 80 employees in the city, the staff memo states.
The city paid $3,000 to Incentis Group LLC for an economic and fiscal impact analysis of the Mueller & Co. LLP incentives package. Incentis determined that the city would recoup more than its cost for the incentives. Among the Incentis findings:
- The annual economic impact of Mueller & Co. LLP’s project, post-completion, will include an annualized economic activity of more than $11.8 million.
- The equivalent of 104 full-time jobs on an annualized basis and $9.3 million of annualized employee earnings.
- The fiscal impact from the Mueller & Co. LLP project over the next 15 years is estimated to include total additional direct tax collections of $266,066.