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November 2009 :: Volume 61

New Markets Tax Credits in Chicago



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 World Business Chicago in China to Attract Green Business

In late October, Tom Bartkoski, Director of International Business Development at World Business Chicago and Jennifer Xu, Research Associate, traveled to China to promote Chicago as a global business center, targeting Chinese renewable energy companies looking to enter the North American market.

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PC Mall, Inc. / SARCOM Officially Open Chicago Office

PC Mall, Inc., a leading supplier of technology solutions to business and consumers, recently celebrated the grand opening of the new Chicago office of its subsidiary, SARCOM. The company relocated to downtown Chicago, expanding on existing employees already based in Arlington Heights.

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 Chicago by the Numbers

World Business Chicago tracks a number of indicators from month to month to gauge the strength of several aspects of the Chicago area economy. These include employment in major sectors, residential and office real estate data, price and purchasing indexes, and auto/truck sales.

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World Business Chicago in China to Attract Green Business

In late October, Tom Bartkoski, Director of International Business Development at World Business Chicago and Jennifer Xu, Research Associate, traveled to China to promote Chicago as a global business center, targeting Chinese renewable energy companies looking to enter the North American market.

During the ten-day trip to Shanghai and Beijing, WBC coordinated with John Thomson of the Chicago-China Economic Development Center to secure meetings with a number of leading Chinese companies focused on wind power, solar energy and auto manufacturing. Discussions emphasized Chicago’s business advantages including its unrivaled access to the North American market, strong manufacturing and R&D base, skilled workforce, and commitment to environmental sustainability.

WBC staff toured several large-scale industrial parks and manufacturing facilities, which provided a first-hand look at the rapid development of China’s energy sector.

News travels fast. Chinese solar companies are already aware of Exelon’s plans to build the nation’s largest urban solar-power plant on Chicago’s South Side. The $63 million facility is expected to power 1,200 to 1,500 homes annually and be operational by late December 2009.  

WBC distributed information on the growing roster of foreign-owned wind power companies that have made the Windy City home—there are twelve, including eight North American headquarters of some major players such as Acciona, Nordex, and Suzlon. This has propelled Chicago to the forefront of a massive movement to increase the nation’s wind power generating capacity.

“Chicago combines a strong talent base with easy access to top wind farm locations, as well as international business centers,” said Tom Bartkoski.  “The concentration of numerous wind power company headquarters and related operations in Chicago, many foreign-owned, has coincided with the rapid expansion of the industry in the US.”

Global wind-turbine production is already a $50 billion annual market, and global revenue for the solar industry surpassed $37 billion in 2008.  With more than 400,000 already employed in green-related jobs, Chicago is poised to meet the surging demand.

WBC also represented Mayor Richard M. Daley and the City of Chicago at a global business summit hosted by Mayor Han of Shanghai focused on the global economic crisis.

Mr. Yin, a representative from the Shanghai Foreign Affairs Office, escorted WBC staff to the event, where WBC presented a letter from Mayor Daley to Mayor Han expressing great interest in building upon Chicago’s 24-year Sister City partnership with Shanghai to spur economic development in both cities.  

To reciprocate, WBC greeted a 27-member delegation led by Mr. Yin at O’Hare International Airport in mid-November.  The group of business and governmental leaders attended the Chicago-China Green Building and Technology Summit organized by the Chicago Sister Cities China Committee on November 17.  WBC president, Rita Athas, gave opening remarks.

World Business Chicago’s ten-day mission coincided with President Obama’s first visit to China since taking office in January.  During a town hall meeting in Shanghai, President Obama noted the value of more than 200 friendship cities between the US and China.  When asked about the Shanghai-Chicago partnership, he responded:
 
"I was just having lunch before I came here with the Mayor of Shanghai, and he told me that he has had an excellent relationship with the City of Chicago -- my home town -- that he's visited there twice. And I think it's wonderful to have these exchanges between cities."

Over 100 Chicago area companies currently have operations in China, including Boeing, United Airlines, AON Corp., Deloitte, A.T. Kearney, Motorola, and Abbott Laboratories.  While in Shanghai, WBC met with Board Member representatives from AON Corp. and Deloitte, as well as other Chicago companies, Harris Bank, Sidley Austin LLP, and Corn Products International.

The trip underscores the importance of strengthening Chicago’s many ties with China.  Over the past five years, total trade with China increased 160% from $13 billion to $33 billion through the Chicago Customs District alone.  The two economies will remain inextricably linked and World Business Chicago will continue to coordinate with the Chicago-China Economic Development Center and State of Illinois to promote Chicago’s position as a global business center and leader in green initiatives.



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PC Mall, Inc. / SARCOM Officially Open Chicago Office

PC Mall, Inc., a leading supplier of technology solutions to business and consumers (NASDAQ: MALL), recently celebrated the grand opening of the new Chicago office of its subsidiary, SARCOM. The company relocated to downtown Chicago, expanding on existing employees already based in Arlington Heights. They immediately hired 70+ account executives in the new facility, with intentions to hire more from Chicago’s skilled labor pool.

The private grand opening celebration included a ribbon cutting, training sessions and other festivities. Representatives from more than 20 major technology manufacturers, including Adobe, Cisco, Dell, HP, and Symantec attended. World Business Chicago’s Dan Lyne, and Rona Jeongco of the City of Chicago, both joined in the ribbon cutting, alongside SARCOM CEO, Robert Rich.

"PC Mall and SARCOM are excited about the launch of our new downtown Chicago location. With this move, we are on track to create a significant number of new service jobs in the city, and we are grateful to Mayor Richard M. Daley and World Business Chicago for their outstanding support and encouragement," said Mr. Rich.

Located in the heart of downtown Chicago at 111 N. Canal Street, the office has over 28,000 square feet and will serve as a new executive, sales, and marketing hub for several PC Mall subsidiaries, including SARCOM, PC Mall Sales and PC Mall Gov.

“We’ve noticed a strong trend of companies such as SARCOM moving their offices downtown, in part to accommodate and attract highly qualified employees,” said Rita Athas, president of World Business Chicago. “The city offers a uniquely skilled talent pool, is easily accessible, and has one of the world’s most diverse economies, where nearly every industry can flourish. We welcome SARCOM as one of our newest additions and look forward to working together.”

SARCOM currently has more than 600 highly trained engineers working onsite at 320 of the Fortune 500 companies. The company also assists many Chicago area companies with their technology needs.

“We’re very pleased with our new location and our ability to hire many qualified account executives in such a short period of time,” said Frank Khulusi, CEO of California based PC Mall, Inc. “Locating a sales and marketing office in Chicago gives us access to a well qualified and educated labor pool, and we look forward to hiring a significant number of new account executives across all three businesses in the coming months. The new facility is cost effective, contains a state of the art Unified Communications System, excellent training facilities and is located near Chicago’s excellent public transportation system, all of which made it an excellent choice for us.”

Earlier this month, PC Mall / SARCOM unveiled itself to Chicago as an exhibiting partner at the first annual Chicago Tech Expo. Led by Commissioner of Chicago’s Department of Business Affairs & Consumer Protection, Norma Reyes, the TechExpo introduced and connected small business owners to technology solutions to help grow and evolve their businesses. In line with PC Mall & SARCOM’s focus, the event provided relevant training and education to teach business owners how technology can improve operations, minimize time spent on administrative tasks, market their businesses and increase sales.

The Tech Expo was the beginning of a great partnership for Chicago and PC Mall / SARCOM. We welcome SARCOM’s team to Chicago’s vibrant business and technology community.


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Chicago by the Numbers

World Business Chicago tracks a number of indicators from month to month to gauge the strength of several aspects of the Chicago area economy.  These include employment in major sectors, residential and office real estate data, price and purchasing indexes, and auto/truck sales.  

Several key trends are evident in this edition of By The Numbers:  
  • Total employment has continued to decrease, although the pace is slowing and several sectors have even achieved recent gains in employment (Government, Education & Health, and Transportation & Utilities).
  • Chicago area unemployment, while showing signs of improvement in August, climbed back to double digits in September; similarly, while the indexes tracked here all made gains in August, they leveled off or made smaller to negative improvements in September.  This mirrors the national trend in consumer confidence and auto/truck sales.
  • While the Chicago Midwest Manufacturing Index was still down significantly from one year prior, it has continued to experience increases from July 2009-September 2009.
  • Office vacancy is up nearly 3 points from September 2008.
In summary, the Chicago area economy has shown slower-than-previous month declines in some areas, but has so far been reluctant to stabilize overall.  

These and other trends are illustrated in this month's table:

Chicago by the Numbers; November 2009 (PDF)


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New Markets Tax Credits in Chicago

Overview

The New Markets Tax Credits (NMTC) program began in 2001 as a federal initiative to generate employment and other benefits for residents of low-income communities.  The program provides income tax credits to financial institutions in exchange for investment in a Community Development Entity (CDE).  The CDE uses these funds to provide low interest rate loans (2-2.5 percentage points below market), high loan-to-value ratios (as high as 95% of development costs), and the potential for partial debt forgiveness to businesses or real estate projects in qualifying areas.

To date, CDEs serving Illinois have been granted a total of 58 NMTC allocations totaling $3.6 billion, or an average allocation of $62 million per CDE.  From 2004-2007, more than 80% of projects using New Markets Tax Credits financing in Illinois were located in Chicago.

How it works:

 The NMTC program involves a series of credits and investment flows:

  1. Banks, nonprofits, private equity firms, state finance agencies, etc. apply for Community Development Entity (CDE) qualification and tax credit allocation.
  2. CDEs are awarded tax credits through a competitive application process.
  3. Investors provide equity to a CDE in return for a 39% income tax credit spanning 7 years.
  4. CDEs use the investor equity to provide financing (low-interest or forgivable loans and/or equity) to projects in low income communities.
NMTC Allocations and Project Highlights

In 2009, 13 allocations were made to CDEs serving the Illinois market, including the Chicago Development Fund (CDF), a CDE established by the City of Chicago in 2005.  This fall Tim Geithner announced an additional $55 million allocation for the CDF.  World Business Chicago works closely with the CDF to provide businesses with New Market Tax Credit assistance to expand or locate operations in Chicago.  The CDF targets industrial projects, grocery-anchored developments in “food desert” areas, and community or cultural facilities.

Chicago Development Fund Project Highlights
  • Imperial Zinc – after a fire destroyed Imperial Zinc’s main production facility in the historic Pullman neighborhood, the CDF provided $6 million in NMTC financing to help build a new 80,000 square foot plant.
  • Gary Comer College Prep – through $21.5 million in New Markets Tax Credits, the CDF is assisting Gary Comer College Prep to expand into a new 45,000 square foot school facility adjacent to the Gary Comer Youth Center with 25 classrooms, four science labs, and a computer lab.  Construction on the new facility is anticipated to finish in August 2010.
  • Community Career Training & Economic Development Center – the CDF provided $9.3 million in NMTC financing for The Greater West Town Community Career Training & Economic Development Center, a job training and placement center for unemployed and underemployed individuals.  Construction on the facility began in September 2009 and is projected to be completed by July 2010.

Several aspects of NMTC allocations to CDE’s serving Illinois are summarized in the following chart: NMTC-financed activities in Chicago ($10k, 2004-2007), allocation to CDEs serving IL ($ millions), and % of total US allocations.

How to Explore NMTC Further

Businesses interested in pursuing NMTC financing should contact World Business Chicago.  In addition, an application including eligibility requirements can be found on the City of Chicago’s website (PDF).



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