City aid helps keep Navteq in Chicago
By Mike Hughlett
Tribune staff reporter
Published June 13, 2007
Fast-growing digital map-maker Navteq Corp. will leave its current digs in Chicago's Merchandise Mart for new headquarters a mile away, helped by a $5 million subsidy from the city.
The subsidy, known as tax increment financing, or TIF, was historically designed to help rejuvenate blighted urban areas. But Mayor Richard Daley on Tuesday defended its use for Navteq, a vibrant firm moving to a gleaming skyscraper, saying TIF will help keep it from fleeing the city.
Navteq employs 550 at its headquarters, and it is expected to add 350 jobs in the next five years at its new home, the Boeing building at 100 N. Riverside Plaza. By January, Navteq's 15-year lease there will take up 230,000 square feet, compared to the 150,000 square feet it occupies now in the Merchandise Mart.
Navteq is one of Chicago's biggest technology success stories in recent years, its sales climbing from $110 million in 2001 to $582 million last year. It went public in August 2004, and as measured by market capitalization, Navteq is the region's 42nd-largest publicly traded company.
A haven for geographers, Navteq produces the digital maps found in car navigation systems and portable navigation devices made by Garmin and other firms. Its software also powers Internet map sites like Mapquest. Navteq and Tele Atlas, a Europe-based firm, dominate the digital mapping business.
In 2001, Navteq moved from Rosemont to the Merchandise Mart. With its lease set to expire in September, the company wanted to move into a larger, more technically up-to-date place.
It mulled moving its headquarters to the suburbs or Michigan or California, home to its largest customers, said Navteq Chief Executive Judson Green. "If we were to make the decision solely where are our customers are, we would not be here [in Chicago]," he said at press conference Tuesday to announce Navteq's relocation.
Green called the $5 million TIF incentive "very important" in swaying the company's decision to stay in Chicago. "We had the possibility of getting incentives in other places," he said, but declined to say if Navteq actually got an offer from another city.
Subsidies for corporate relocations are common. Just last year, United Airlines got a $5.25 million TIF incentive from the city to move its headquarters downtown from Elk Grove Township.
Incentives for corporate relocations have long been criticized by economists as wasteful giveaways, and TIF subsidies in particular are regarded by some critics as overused.
Much of Chicago's downtown -- including high-end office buildings -- is in TIF zones, said Mike Quigley, a Cook County commissioner critical of Chicago's TIF policies. "If you read the statute, a [TIF zone] is supposed to be a blighted area or a nearly blighted area."
Daley, at a press conference Tuesday, said "there's nothing wrong with TIF assistance" for corporate relocations. Without them, companies like Navteq would leave Chicago, he said. "They'd go to Naperville or New York. New York is offering huge bonuses."
Then when a firm flees, Daley added, "there'd be a big headline, 'Why does Mayor Daley let those companies move?' "
Navteq's TIF package will be used to help relocate the company and pay for upgrades in its new building, which is owned by Boeing. In return, Navteq -- in addition to growing its downtown workforce -- will create a job-recruiting program in conjunction with the city and donate $50,000 to non-profit organizations.
Navteq was founded in Silicon Valley in 1985 but moved to the Chicago area in the 1990s while still a fledgling company. Today Navteq has 2,800 employees worldwide and offices in 28 countries. ---------- mhughlett@tribune.com
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