Saturday, April 18, 2018 || By Michael Romain || @maywoodnews
Maywood officials are looking to join forces with Bellwood, Broadview, Melrose Park and Cook County in order to create the West Regional Enterprise Zone Collaborative — an expansion of the current Maywood Enterprise Zone that was created back in the late 1980s in order to bring new businesses into the village.
Reeling from the collapse of the manufacturing sector in the 1970s and 1980s, with large employers like American Can Co. and Canada Dry having closed their doors, Maywood took advantage of a state tax incentive program designed to boost economic development and job creation in blighted communities.
Established on July 1, 1988, the Maywood Enterprise Zone was among the first of its kind that formed in the state, said Angela Smith, the village’s business coordinator, during a regular meeting in February. Currently, there are more than 90 enterprise zones in Illinois.
Smith said that the zone, which encompasses all of the village’s 2.8 square miles, was a success and was instrumental in attracting new large employers to town.
“It helped build our St. Charles business district,” Smith said. “Cintas and Aetna Plywood, along with the Walgreens [on 1st Ave. and Lake St.], have taken advantage of the program. In addition, some large commercial multifamily buildings have taken advantage of the zone, which gives them a sales tax exemption for building materials.”
Businesses seeking to move into, or expand their operations in, an enterprise zone may also get tax breaks for investing in new equipment. If companies are large enough, local governments may even exempt their taxes on gas, electricity and water usage — depending on how much new investment and how many new jobs they can certify in the enterprise zone.
According to a Feb. 6 memo drafted by Smith and David Myers’, the village’s community development coordinator, since its creation in 1988, the Maywood Enterprise Zone “has reported project investment of approximately [$30 million], which has resulted in 700 jobs and the retention of approximately 900 jobs.”
The Maywood Enterprise Zone, which was renewed in 2008, is set to expire again at the end of this year. Village officials said that they’re looking to apply for enterprise zone status again.
In order to satisfy new state requirements that prioritize larger zones encompassing multiple municipalities, the village is seeking to expand the boundaries of the current enterprise zone to include most of Bellwood, Broadview, Melrose Park and certain nearby areas in unincorporated Cook County, including the sites of the shuttered Maywood Park Racetrack and Loyola University Medical Center. ‘
A map of the possible boundaries of the West Cook Regional Enterprise Zone. | Village of Maywood
“The state has committed to collaboration and moving forward, there will be very, very few [single municipality] zones,” Smith said in February. “About three years ago, the south suburbs got together [to expand what was once just one zone in Alsip]. Now, they are a zone of 36 communities.”
Smith said that Maywood will need to show a similar commitment to collaboration in its renewal application. Partnering with Bellwood, Broadview and Melrose Park, she said, seemed a natural fit.
“The zone has to be continuous for 15 square miles, so we came together because they are our neighboring communities,” Smith said.
“Melrose Park is the largest industrial [area] on the north [boundary of the proposed zone],” she continued, “and Broadview is the largest industrial on the south boundary, so we came together in order to really promote that industrial [factor] and actually have more of an impact on the region.”
During that regular meeting on Feb. 6, where Smith presented the proposal, the Maywood Board of Trustees voted unanimously on a resolution authorizing the execution of an intergovernmental agreement for cost-sharing and startup activities related to the creation of the West Regional Enterprise Zone.
The newly expanded zone will entail the creation of a five-person startup committee, with one designated representative from each government. Smith, who is already Maywood’s enterprise zone coordinator, said that she would be designated Maywood’s representative on the startup committee.
She said that her counterparts in the other communities will likely round out the committee, which will be responsible for selecting a consultant that will assist the group with identifying the zone’s specific boundaries, preparing the enterprise zone application and reaching out to area businesses to inform them about the tax benefits that come with being located in the zone, among other duties.
Each government participating in the zone will contribute 20 percent each to the cost of applying for enterprise zone status. If approved by the state, the zone will be funded over the long-term, in part, by a small fee imposed on enterprise zone-certified projects.
Enterprise zones, however, are not without their critics. According to Good Jobs First, a national policy organization that provides data on corporate tax subsidies at the state and local levels across the country, subsidies related to enterprise zones can often be costly and their effectiveness hard to quantify.
“[Enterprise Zone] subsidies cost state and local treasuries a lot of lost revenue, and like many subsidy programs, it is often unclear whether the developments would have happened in the area anyway,” the organization points out. “Critics of enterprise zones fault the program for failing to create new jobs; if companies do come to an area, they typically relocate existing jobs from one site to another.”
Good Jobs First also criticized the tendency among many states to expand enterprise zones, thus undercutting their intended purpose.
“Many states have loosened their zone criteria to the point that virtually any area in the state can qualify, and the zones no longer serve their original anti-poverty intent,” the organization reported.
“Rather than targeting the neediest neighborhoods and encouraging new investment, the designation of the zone’s geography often involves political favoritism and gives subsidy windfalls to companies that were already there.”
Village officials did not address any of those criticisms at February’s board meeting and could not be contacted over the weekend.
According to annual reports related to the enterprise zones that were released by the Illinois Department of Commerce and Economic Opportunity, between 2014 and 2016, the state has lost at least $300 million in revenue due to incentives for businesses in enterprise zones, and similar areas — such as High Impact Business zones designed to encourage large economic development activities.
The number of jobs gained or lost during that time has varied (the jobs information is self-reported by businesses), and has ranged from a net job loss of 2,184 in 2015 to a net job gain of 967 in 2016.
A chart, based on DCEO data, detailing the employment and financial impact from businesses receiving tax incentives within enterprise, and similar zones, in Illinois. | VFP
Between 2014 and 2016, the number of jobs retained due to incentives doled out within the Maywood Enterprise Zone ranged from seven in 2016 to 18 in 2015, according to the DCEO data. In 2015, 31 jobs were created based on businesses receiving incentives from being in the zone.
A chart, based on DCEO data, detailing the employment and financial impact from businesses receiving tax incentives within the Maywood Enterprise Zone | VFP
In the DCEO reports, Connie Beard, the director of the Illinois Department of Revenue, points out that “one year or several year’s data does not tell the story of success or failure of any individual Enterprise Zone. Zones have a 15 year life and should not be evaluated based on a one year snapshot of of activity.” VFP
For more local news, ‘Like’ our Facebook page