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.