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 MillerCoors announced Sept. 4 a restructuring strategy that
will involve layoffs of 350 salaried employees by the end of the month.
Among the 350 layoffs, according to the Chicago Tribune, 150 are formerly open
positions that will now remain unfilled, in addition to others that had been
terminated earlier this year. The beer giant’s headquarters, which has been
based in Chicago’s downtown Loop area since 2010, employs 500 people.
MillerCoors also oversees large Wisconsin and Colorado campuses, as well as
seven breweries across the country. The impact this round of layoffs will have
on each campus has not been disclosed, according to the Tribune.
The Tribune cited challenges such as declining beer sales, a commercial driver
shortage and 10-percent aluminum tariffs imposed by President Donald Trump in
March among setbacks that have challenged the company financially.
 MillerCoors, a joint venture between SABMiller and Molson Coors, tapped Chicago
for the site of its headquarters in July 2008, with the Windy City narrowly
edging out Dallas, Texas. A year later, the Chicago Community Development
Commission voted to award the company $5.7 million in tax increment financing,
or TIF, funds. The subsidy amounted to 27.5 percent of the beermaker’s estimated
total development costs on its Wacker Drive office.
“Not only did Chicago get chosen over Dallas, Tex., in the competition for these
headquarters,” a commission spokesperson said at the time in a press release,
“but our city stands to benefit from the jobs this company will bring and the
new life it will bring to an office building that has experienced a high vacancy
rate.”
While it remains to be seen exactly how many of the planned 350 layoffs affect
Chicago headquarters employees in particular, the $5.7 million in TIF funds city
officials delivered to MillerCoors in 2009 will not be reclaimed.
The trouble with TIFs
TIFs work like this: Local officials identify a “blighted” neighborhood, around
which they establish a designated “TIF district” to incentivize economic
investment in that area. TIF districts freeze the Equalized Assessment Value, or
EAV, of all properties within the district and divert all property tax revenue
generated above that EAV into a private TIF fund. The mayor exercises full
discretion over the TIF fund, awarding the funds to private companies in
exchange for development in the TIF district.
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Given the prerequisites for receiving TIF
incentives, MillerCoors’ headquarters may strike Chicagoans as a
questionable beneficiary of TIF dollars. The Loop neighborhood,
where the site is located, is among the city’s most affluent. But
MillerCoors’ TIF subsidy was no anomaly. Chicago collected $660
million in TIF revenue last year, with nearly half of that revenue
captured by TIF districts located in affluent neighborhoods –
including the Loop. The LaSalle Central TIF district, which is only
12 years old, brought in nearly $57 million in revenue in 2017, the
highest among Chicago-area TIF districts.
Nearly a third of all property tax revenue in Chicago is diverted to
private TIF funds appropriated for the city’s 143 TIF districts. And
with affluent neighborhoods capturing a substantial share of those
funds, it’s evident that the TIF program is not achieving its
intended purpose.
By reallocating property tax revenue to private development, TIF
districts deprive communities of resources that would otherwise go
toward funding core government services. What’s worse, this can
force local taxing bodies to hike property tax levies in an effort
to make up for foregone property tax revenue.
Fortunately, two bills in the General Assembly – Senate Bill 2880,
filed by state Sen. John F. Curran, R-Downers Grove, and House Bill
5230, filed by state Rep. William Davis, D-East Hazel Crest – would
establish a stricter definition of “blighted areas.” Those bills,
which have earned bipartisan support, would be a step toward
limiting abuse of TIFs.
To prevent property tax revenue from being squandered on dubious
development projects, state lawmakers should pursue reforms that
both reduce the number of TIF districts and increase transparency in
the allocation of TIF funds. At the local level, Chicago officials
must aggressively push for reforms that create an environment that’s
welcoming to all businesses – not just hand-picked winners.
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