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CHICAGO-Half of Mittal Steel USA's 10-year lease at 1 S. Dearborn St. is being subsidized by city and state money, according to a tax increment financing plan endorsed recently by Chicago's community development commission. The city is paying $2 million in tax increment financing toward Mittal Steel USA's $6.5 million in tenant improvements to 53,400 sf on the 18th and 19th floors of the building, which Hines Interests hopes to open later this year.
The 10-year lease calls for net lease payments starting at $20 per sf and escalating to $25.60 per sf, with the first year abated. The rent payments under the initial term, which begins in February, would total $12 million.
In addition to the $2 million from the city, the world's largest steel company will get another $7.5 million in state money. In order to get the city's money, Mittal Steel promised to bring 212 jobs Downtown next year, and maintain close to that level during the 10-year lease.
Mittal Steel considered other Downtown locations before deciding on Hines Interests' latest development here, says general counsel Carlos Hernandez. "We did look at a number of sites in Downtown Chicago, and decided 1 S. Dearborn was best for us," he says.
However, Mittal Steel also was wooed by northwest Indiana, where nearly half of the company's work force already is located, as well as Richfield Township, OH, site of Mittal Steel's current US headquarters, he notes. Placing the company headquarters in northwest Indiana would have resulted in 98 jobs leaving Chicago.
Mittal Steel USA will post a letter of credit as a safeguard that it will maintain occupancy and employment levels required for the TIF, says Nori Greenstein of the department of planning and development.
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