Chicago-based MillerCoors shedding 350 jobs, despite $5.7M TIF subsidy
MillerCoors opened its Chicago headquarters in 2010. Eight years and nearly $6 million in subsidies later, the beer giant has been hammered by a heavy round of layoffs.
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.
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.