Champaign council to vote on $290,000 in incentives for Yahoo

CHAMPAIGN — Internet giant Yahoo says its decision on whether to nearly double its space and triple its employment numbers in Champaign will be driven by whether the city council signs off on a package of development incentives.

The Champaign City Council tonight will go over a proposal to pay Yahoo for new jobs it could create if the company expands its University of Illinois Research Park operations. Council members will meet in study session at 7 p.m. Tuesday in the Champaign City Building, 102. N. Neil St.

Research Park developer Fox Development Corp. is planning a 40,000-square-foot building at the corner of First Street and Hazelwood Drive, immediately south of the I Hotel and Conference Center. According to city documents, the developer and research park staff are negotiating with Yahoo to occupy that building, which has room for more than 250 employees.

According to city documents, Yahoo also considered space in the M2 building in downtown Champaign. Right now, Yahoo employs about 90 in the 24,000-square-foot Research Park location it moved into in 2007.

"Yahoo is hoping to expand its office space and highly-skilled workforce (e.g. engineers) significantly, if the conditions are right," according to Yahoo's own description of its plans in city documents. "Most of new jobs may be created within next 12-24 months. However, there are various factors within and without the company's control, which may impact Yahoo's decision and the schedule (construction and timely availability of new office space, approval of various business incentives, competitive environment, etc.)."

Under the proposal, the city would pay $3 per square foot of new high-tech space created. The city often pays that incentive to developers, but in this case, would pay the tenant, Yahoo.

It would also pay $1,000 per new employee making at least 2.5 times minimum wage. Those jobs would have to last for at least five years, and city officials expect the starting pay to be around $75,000 per year.

Because the project is within a special development district, it is eligible for a waiver of local and state sales taxes on construction materials and a five-year real-estate tax abatement.

Altogether, the development incentives would cost up to $290,000. Typically, the cities of Champaign and Urbana and the village of Savoy share the cost of Research Park development incentives.

Those discussions have yet to take place because the planning was done confidentially, but city officials think Champaign and Urbana would both pay about $137,750, with $14,500 from Savoy. New real-estate tax revenues would consequently be shared among the government agencies along the same proportions.

Based on the project timeline, city officials do not expect they would have to pay those incentives until late 2014 or early 2015.

If the developer applies for and receives the five-year real-estate tax abatement, none of the entities would receive that new tax revenue until the abatement expires.

City officials say Yahoo is a key name and keeping it in the UI Research Park will help draw other high-tech companies as it looks to develop eastward. Officials also say it will improve Champaign's high-tech talent pool — some engineers and programmers are reluctant to move to Champaign because of a lack of opportunities for advancement.

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MSJ66 wrote on November 12, 2013 at 8:11 am

Thats right lets give all these highly profitable companies such as Kraft and Yahoo and all the others that will want follow suit these tax payer funded corporate welfare handouts. Then we can have a city council that cries about budget deficits and wants to keep rasing property taxes and fees for the other 99% of the citizens of the city to give other peoples money to those who least need it. When do I get my tax free purchases and property tax rebates just for living in this pitiful excuse of a town run by buffoons?

Sid Saltfork wrote on November 12, 2013 at 10:11 am

Good comment.  Mutiply the money amount for the state buffoons giving out more corporate welfare.  The citizens of Illinois do not own the state.  We only are allowed to rent.

wykhb wrote on November 12, 2013 at 11:11 am

Why are these projects that benefit the University of Illinois and Fox Development not being given subsidies by THEM?   Oh right, just like any other project there, it falls onto local residents and taxpayers of Illinois to pay while they pad their wallets.   According to UI, companies are clamoring for space in these wonderful "Business" parks, so how is it that you can't demand a premium from THEM?   I know, sadly I know.  Seems like another I-Hotel Public Private partnership, which owns what again? 

Local Yocal wrote on November 16, 2013 at 11:11 am
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"Sorry folks, can't afford to fix your street, add more patrols, repair your sewer,....tight economy, you know. Please forget the incentives we give to the corporate giants that have left us a little short."

Where's the Chamber of Commerce now to complain about the City creating more STRUCTURAL DEFICIT with more new spending? Oh, that's right, it benefits their constituency. 

Dang, 160 poor people could use a $1,000 handout too over at the Township. Oh that's right, it would be a mismanagement of funds.

How about in exchange for our tax dollars, The City put a requirement that priority must be given to local residents who Yahoo hires in the new 160 paid positions? Oh that's right, the unemployed around here aren't qualified for these highly technical jobs.

How about Yahoo just pull its own weight then? Oh that's right, that would be a "bad business climate" for a company that makes about $4 billion a year and yet lays off 2000 employees as recently as 2012. 

Dag nab, it's hard to be a conservative nowadays, unless we change the party name to Selfish Hypocrites.

Sid Saltfork wrote on November 16, 2013 at 12:11 pm

Right on, Local.  We do agree on somethings.

Local Yocal wrote on November 16, 2013 at 3:11 pm
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As we gripe about our taxes, our expenses and our difficulties; as we throttle the Liberal Mayor Gerard with his tax-and-spend-and-fumble-away-new-revenues structural deficit so as to usher in sound fiscal management under Mayoral-elect Feinen (watch how she votes on this one, kids at home); here is a current portrait of Yahoo!, the needy welfare recipient the City plans to help as reported by The Chamber of Commerce's Bible, Forbes Magazine:

It’s now revealed in the earnings slide deck: Yahoo expects revenue ex-TAC to be $1.06 billion to $1.1 billion in the third quarter, a little under Wall Street’s forecast of $1.12 billion. For the full year, Yahoo trimmed its revenue ex-TAC forecast to $4.45 billion to $4.55 billion, from a previous range of $4.5 billion to $4.6 billion. Non-GAAP operating income for 2013 is forecast to be $900 million to $1 billion, down from previous guidance of $1.05 billion to $1.1 billion.

Better not let President Ronald Reagan catch these Yahoo Queens dodging their taxes. I'll bet the C.E.O. Marissa Mayer buys cigarettes with her Link card too.

It wouldn't be too hard to do, other than no one will, but really,....if the City does this for Yahoo!, homeowners should boycott paying their property taxes for a year. Explain out of the other side of your mustache, Tom Bruno, why homeowners should pay their property and sales taxes and Yahoo! shouldn't? It would be a great opportunity for you and The Chamber to kiss and make up.

Mr Dreamy wrote on November 18, 2013 at 3:11 pm

Let's see, 140 new jobs, starting at $75,000 each (they are engineers, folks) means an additional $10,500,000 in payroll EVERY YEAR. Not bad for a $270,000 tax rebate.

So before you hate on big government, and big corporations, and our city council, do the math. They have a big time winner here. But it's fun to gripe, isn't it?

Sid Saltfork wrote on November 18, 2013 at 4:11 pm

Depends if you are the one being hired, or the ones being taxed for the benefit of the corporation.  First, ask your self the question why Yahoo needs a tax break?  Yahoo moved here for the local resources of the university, and the labor pool in the first place.  There is only so much money in the pot.  What other things could have the $290,000 been used for within the community.  Did Yahoo really need $290,000?  Which major corporation, auto dealership, hotel, or other business is next?  Dream on.....zzzzzzz    

Local Yocal wrote on November 18, 2013 at 4:11 pm
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Payroll to who? I doubt any of the 8.9% unemployed here in this county will get hired at Yahoo!

If Yahoo! can afford 10 million in new salaries, then it can afford to pay its taxes like everyone else.

Unless you can explain why it's better the City continue to run deficits?

Yes, it's fun to gripe, check it out:

http://www.news-gazette.com/news/local/2007-05-23/champaign-council-reje...

Illini Libertarian wrote on November 18, 2013 at 11:11 pm

The point that everyone seems to be missing is that Yahoo is turning down lower-priced rent at M2 in downtown Champaign to take high-priced space in a new building.  The difference in rent & expenses between a new building on the UI research park and existing office space in CU is more than the proposed incentives. Therefore, without the incentives, Yahoo could hire the same number of employees, generate the same revenue, and contribute the same amount to the local economy.

This is purely a politically driven decision. Perhaps someone should be investigating those who will benefit from Yahoo taking the incentives and building at the research park. Is it the developer at the park who contributes to both Republicans and Democrats?  Is it the director of the park who just happens to be married to a state senator?  Or perhaps it is another politically connected individual at the University or in Springfield. 

Any council person who votes in favor of these incentives who also voted in favor of the incentives for the downtown hotel needs to have their head examined.  Giving up tax revenue to encourage the construction of a hotel then giving incentives for a company to choose the research park over downtown Champaign is ridiculous. 

Local Yocal wrote on November 18, 2013 at 11:11 pm
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I don't doubt there is some back scratching going on to keep Yahoo! out at Research Park, but under either scenario, Yahoo! does not need any financial assistance or tax breaks.

Local Yocal wrote on November 19, 2013 at 7:11 am
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Interesting,....The News-Gazette took this article off the Most Commented list, despite this article has more comments than some of the articles currently on the list and today's article on the Champaign City Council agenda for tonight makes no mention of Billionaire Yahoo!'s plea for welfare. Guess we got to figure out another way to sneak Yahoo's welfare entitlements through a tad more quietly?

There is Council Bill No. 2013-213 on the official agenda to "approve preliminary/final plat of Lot 1101 and 1102" out at Research Park, might that be an approval of $290,000 of incentives too?

It's just so hard to be a member of the SLH Party. (Selfish Lying Hypocrites)

Mike Howie wrote on November 19, 2013 at 10:11 am
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Thanks for your comment, but I should clarify a point. Tthe "Most Commented" and "Most Viewed" lists are generated automatically, and they reflect stories that are posted within the past seven days. So the list changes based on time. (Otherwise, stories from years ago would always be at the top of both lists.) This story is a week old, so it has moved off the list.

But you raise a good point. I should have included a link to this story in today's story from Patrick Wade. I've added that now to the "other related content."

Thanks for reading.

Mike Howie

online editor