July 17, 2006 – Starting next year, Illinois will provide additional tax breaks to companies that build near affordable housing units or public-transportation routes, in a move legislators say will continue to attract new companies and new jobs to the state while also reducing sprawl.
Supporters of the measure include a variety of anti-sprawl advocates who work for more compact development of cities and towns, as well as Chicago Metropolis 2020, a coalition of business and civic leaders.
Though the measure is widely supported, some say offering incentives without mandating restrictions on where businesses can build is not enough. Others criticize giving corporations big tax breaks and government-funded infrastructure investments at public expense, arguing that politicians and corporations have historically abused subsidies and contributed to urban sprawl.
Like other states, Illinois already uses financial incentives to lure companies. Since 1999, the state has given millions of dollars to private firms through programs like the Economic Development for a Growing Economy (EDGE). With the passage of the new bill, the state will provide an additional 10 percent to companies already receiving EDGE benefits that relocate to a site determined by the state to be â€œlocation-efficient,â€� according to Mark Harris, spokesperson for the Illinois Department of Commerce and Economic Opportunity
"A lot of local officials are too eager to promote economic development at all costs and not doing it in a careful way."
Companies that expand to locations that are hard to reach by workers could still qualify for the additional breaks if they provide some form of transportation help, such as transit cards or carpooling assistance.
But with the bill set to take effect in five months, Harris told The NewStandard that Illinois is still determining how these measures would work.
The job exodus in urban areas like Chicago has been ongoing as manufacturing industries move overseas or to suburban areas, and corporate headquarters employing white-collar workers and service workers alike have migrated to less-densely populated areas.
A study released in 1999 by the Brookings Institution, a centrist think tank, found that cities nationwide, including Chicago, have lost jobs to lower-population areas. In surveying 92 large metropolitan areas, researchers found the majority suffered either job losses or lower employment growth rates than their suburbs.
The rate of employment in Chicago grew by 0.4 percent, but the rate in the cityâ€™s suburbs jumped by 9 percent, according to the report.
Carrie Makarewicz, senior research analyst with the urban-planning think tank Center for Neighborhood Technology, said residents who were able to keep their jobs during the corporate exodus from Chicago face longer commutes. They are also frequently forced to drive due to the lack of public transportation, she told TNS.
Advocates say longer commutes mean less family or leisure time for workers, increased air pollution and construction of more roads over farmland and wilderness.
"It's a way to try to give companies more inducements to [engage in] compact development, less destruction of farmland, more redevelopment of poor areas."
Urban analysts cite a wide range of reasons for job sprawl, from the creation of the National Highway System to companies following cheaper labor and land prices. But they also blame the massive subsidies politicians have used to try to manipulate development â€“ for instance, paying companies to move into â€œblightedâ€� or less-industrialized neighborhoods.
Philip Mattera, research director of the national Good Jobs First, said subsidies to corporations were partly to blame for Chicagoâ€™s problems as well.
â€œWe would say that a lot of local officials are too eager to promote economic development at all costs and not doing it in a careful way,â€� Mattera said. â€œThey think that if they throw money at developers and loosen regulations, the economy will boom. We think thatâ€™s a mistake. We donâ€™t say there shouldnâ€™t be any subsidies, but they should be done in a way thatâ€™s careful and targeted.â€�
Good Jobs First released a report in 2003 on Illinoisâ€™s subsidy programs that detailed several massive bonds issued to companies such as Sears and Motorola for projects that contributed to what critics called â€œstate-subsidized sprawl.â€�
In 1989, according to the report, Sears moved its headquarters from downtown Chicago to an outlying area and received about $66 million in a government incentive package that included highway construction and site preparation. The report also noted that the state declared the business park to which Sears moved an enterprise zone, which qualified the company for tax breaks.
The report found that the commute times for some workers who kept their jobs at Sears increased to more than an hour each way.
"This would target companies who voluntarily do this... but how many companies are going to do that?"
Jeff McCourt, project director of the Illinois branch of Good Jobs First, said the new bill in Illinois will encourage companies in the future to avoid the path Sears took. But, he added, the legislation is a compromise. His group wanted the state to only subsidize companies that build in location-efficient areas, and to stop giving EDGE money to companies that do not. "Even though we would have preferred a mandatory bill,â€� he said, â€œthis will still mark an important step."
McCourt told TNS the bill could help control over-distribution of incentives. "Itâ€™s the state looking at its economic development subsidies and asking how do you maximize the public benefitâ€¦. It's a way to try to give companies more inducements to [engage in] compact development, less destruction of farmland, more redevelopment of poor areas." he said.
Makarewicz of the Center for Neighborhood Technology also supports the bill. She agreed it has limitations in how many companies it can encourage to build close to public transportation or affordable housing. â€œThis would target companies who voluntarily do this... but how many companies are going to do that?â€� she said.
â€œIf itâ€™s voluntarily for companies to try to get these credits,â€� Makerewicz concluded, â€œit still means that lots of companies buy up farm in the outskirts of towns with no housing or transit.â€�