Andrew L. Wang, reporting for Crain’s details a proposal in front of the Chicago City Council to approve a tax-increment financing grant to Experimur LLC, from the Emanuel administration. The novel idea is to use TIF money like venture capital.
The city is making a bet on Experimur’s future with what city officials call a “unique profit-sharing concept.” The city would receive 10% of the company’s profits above an unspecified amount, according to the report. If the company is sold, the city would receive 10% of the sale price, after customary deductions such as taxes and depreciation, the report says.
The profit provisions “are there to provide an opportunity for the city to recoup the initial financial assistance in the event the company outperforms expectations or is acquired by a larger company,” said a spokesman for the housing department.
A spokesman says the city could include profit-sharing agreements in other TIF deals “in similar circumstances and capacity for growth.”
TIF deals with the prospect of repayment out of company profits are very unusual, said attorney Sam Polsky, whose firm Polsky & Associates Inc. advises clients on TIFs.
“I’ve never seen it before,” he added.
Read the whole story at Crain’s Emanuel uses TIF as VC fund for testing firm – Government – Crain’s Chicago Business.
