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United generously returns TIF subsidy it was required to return anyway

Mayor Emanuel praises company's "corporate citizenship" after it fails to fulfill its TIF agreement with the city

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I woke up one day last week and saw what looked to be a miracle on the front page of the business section in my Chicago Tribune, home-delivered as always.

Out of the goodness of its heart, United Airlines returned $5.6 million in subsidies it received from the city to move into 77 W. Wacker back in 2007.

That's right: United didn't have to give back the money but did so anyway. "I commend United Airlines on an incredible act of corporate citizenship that speaks to the unique role Chicago's business community plays in the future of the city," Mayor Emanuel said.

Well, readers, I'm not particularly proud of this, but I must admit—I didn't believe it.

Call me jaded. Call me a skeptic. Call me Ben if you insist. But I could not believe that anyone—much less a big corporate operation—would give up so much money unless they had a metaphorical gun to their head.

It turns out I don't have to believe it, because it's not true. United didn't return the $5.6 million because its corporate leaders were so sensitive that they cried at the end of E.T.—though they may have. They returned the money because they were required to—a term of the jobs covenant they made with the city five years go.

Bummer. Another blow to my faith in man's innate benevolence.

As you might have guessed, the $5.6 million came out of the tax increment financing program. That's the one where the city quietly jacks up your property taxes by about $500 million a year, then turns the money over to the mayor to spend as he wants. Even though the TIF money is only supposed to go to the poorest, most blighted neighborhoods—and 77 W. Wacker is definitely not in one.

Yet United got the money after it declared it was moving its corporate headquarters out of Elk Grove Village and into whichever city offered the best deal. Well, they didn't put it quite that bluntly, but that was the gist of the matter.

Mayor Richard M. Daley, who pretty much invented the TIF program in Chicago, decided to shower United with $5.6 million on the grounds that it would be a shot in the arm for our economy and civic pride to have another corporate powerhouse call the Windy City home.

Apparently Governor Rod Blagojevich agreed, as he kicked in a state grant worth $1.35 million to seal the deal.

So United moved into 77 W. Wacker. And the mayor, the governor, and United officials got together for a press conference where they wore themselves out patting each other on the back at the great news that United was going to take our money and stay here as opposed to moving to San Francisco or Denver or anywhere else.

Give Mayor Daley credit for one part of it, at least: his negotiators worked some ironclad language into the deal. United promised to keep 325 full-time jobs at 77 W. Wacker until at least 2017. If the company violated the deal, "the city shall have the right to recapture the full amount of all City Funds previously paid or disbursed to [United] for the project," the redevelopment agreement reads.

In addition, United promised to prove it was keeping the jobs at 77 W. Wacker by filing regular reports that "include the names and titles of [people] employed at the headquarters."

Not that anyone at City Hall would pay attention, as we painfully learned in regards to Republic Windows and Doors. That's the fiasco where the city gave $10 million in TIF funds to a company that broke its promise to maintain a full workforce at its plant on Goose Island.

Anyway, fast-forward to 2009, when United decided to move its entire operational headquarters—including about 2,500 jobs—out of Elk Grove Village and over to Willis Tower.

Why Willis Tower as opposed to anywhere else in the universe? Because Mayor Daley sweetened the deal by doling out $26 million in TIF money to United plus another $10 million grant. All told, the city had committed more than $40 million in subsidies to one already-thriving company.

In contrast, the Michigan Avenue TIF in Roseland—one of the poorest communities in Chicago—has received about $5 million in the last ten years. I guess blight is in the eye of the beholder.

United has once again decided to move its corporate headquarters, this time from 77 W. Wacker to Willis Tower. That means they're supposed to return the millions they got for promising to keep 325 employees at Wacker until 2017.

It's hard to see how the move contributes much toward developing the city. Yes, the landlord at Willis makes out. But the landlords at 77 W. Wacker now have a pretty big hole to fill.

Curiously enough, the building at 77 W. Wacker is owned by the State Teachers Retirement System of Ohio, the largest teachers' pension fund in that state. You know, for years I've been hammering our mayors for diverting more than $2.5 billion from the public schools into the TIFs. So it's good to know there are teachers somewhere who've benefited from Chicago's TIF program. It's just a shame you have to go all the way to Ohio to find them.

I contacted the mayor's press office for comment, but they didn't get back to me. United spokeswoman Christen David e-mailed me a statement: "We feel it is appropriate to return the incentives we received from the city for our redevelopment at 77 W. Wacker."

I'm not sure why Mayor Emanuel would bend over backward to give United credit for doing something the company had to do anyway. Unless, of course, it's all about perpetuating the narrative—which the mayor's pretty good at perpetuating—of how he and corporate Chicago are working hand-in-hand as benevolent guardians of the public purse. TIF program included.

"United continues to make long-term commitments to Chicago," Mayor Emanuel said in his statement, "and demonstrates that not only does the company want to be part of the Chicago business landscape for decades to come, but that it is committed to making this business landscape as strong as it can be."

Well, not to disagree with our mayor—since you know I never do that—but I can think of about 40 million other reasons why United should be committed to Chicago and its business landscape for many years to come. v

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