Chicago STATE/COMMONWEALTH/PROVINCE/LOCAL Please complete the section below for all State/Commonwealth/ RFI Response: Province and Local Incentives. Organize your responses by specific jurisdictions. If there are different incentives for real Incentives estate sites, organize your response accordingly. 1. TAX INCENTIVES - FOR EACH OF THE FOLLOWING, PLEASE PROVIDE THE RELEVANT PERCENTAGE (E.G. A XX% INVESTMENT CREDIT OR XX% REDUCTION IN REAL PROPERTY TAXES), MAXIMUM LENGTH OF INCENTIVE (E.G. 10 YEAR CREDIT PERIOD OR 20 YEAR ABATEMENT PERIOD), ELIGIBILITY REQUIREMENTS (E.G. WHAT CONSTITUTES ELIGIBLE INVESTMENT UNDER AN INVESTMENT CREDIT), INITIAL AND ON-GOING COMPLIANCE OBLIGATIONS (SUCH AS PREVAILING WAGE REQUIREMENTS, ANNUAL REPORTING, ETC.), ANY CAPS (ANNUAL AND/OR AGGREGATE), CARRYFORWARD (IF ANY), REFUNDABILITY, TRANSFERABILITY, AND ASSIGNABILITY (E.G. TO MEMBERS OF AN AFFILIATED GROUP). Given the updated project assumptions provided by Amazon, the incentives that we outlined in October 2017 have been updated. INCENTIVE ORIGNAL AMOUNT UPDATED AMOUNT Economic Development for a Growing Economy, $1,320,000,000 $1,394,275,000 EDGE High Impact Business Program, HIB $172,500,000 $337,000,000 Real Estate Tax Incentive $61,400,000 $143,260,000 R&D Tax Credits - $195,000 Total Existing Incentives $1,553,900,000 $1,874,730,000 Capital Investment for Infrastructure Improvement $450,000,000 $450,000,000 Total Incentive Package $2,003,900,000* $2,324,730,000* *Does not include $250M in local education, workforce and neighborhood investment grants to make the economic benefits of the HQ2 project accessible to all of our community a. Payroll withholding tax rebates/grants (existing or potential) See EDGE description on next page. Incentives Section 1 Proprietary and Confidential b. Job creation tax credits (existing or potential) EDGE Tax Credits Overview & Estimated NPV Gross Value: $1,394,275,000 Estimated NPV (16 Years): $721,385,000* *Includes value of $1500 per employee annual training expenses associated with 10% annual credit for eligible training costs. Income tax credit incentive provided to non-retail companies which commit to new full-time job creation and project investment. Income tax credits are equal to 50% of the amount of Illinois payroll tax for newly created full-time employees. • Tax credits are only associated with newly hired full-time employees at the specifically identified project location(s) which pay Illinois personal income taxes. • Full-time employees are defined as those who work not less than 35 hours/week and receive full employee benefits. • Applicant cannot receive more in credits than the project investment. Eligible Training Costs Annual Credit supplement The EDGE program provides an annual tax credit (for 10 years) equal to 10% of eligible training costs associated with newly hired full-time employees. Employees who are part-time, seasonal, contractual or temporary are not eligible to participate in ETIP sponsored training activities. To be eligible to participate, a person must be a full-time Illinois-based employee of the company, working from a specifically identified location as documented in the EDGE agreement. Eligible Company types and Functions Generally, manufacturing, assembly, warehousing and office/support functions are eligible to receive this benefit. The following types of entities are not eligible for participation: Units of local, state or federal government; local, state, or federal governmental agencies; local, state or federal operated facilities; businesses primarily engaged in retail sales/services/merchandising, hospitality, restaurant food service, construction and trades; retail banking, financial management service/sales, insurance service/sales, hospitals, physician practices, healthcare facilities, nursing homes, hotels, fitness centers, charities/not-for-profit services. Eligible Training Costs Typically, eligible training costs include: • Curriculum development • Training materials (including scrap product costs) • Trainee domestic travel expenses • Travel outside the United States (unless the Taxpayer receives prior written approval for such travel by the Department Director based on a showing of substantial need or other proof that such training is not reasonably available within the United States). Travel expenses shall not exceed amount identified as US Government reimbursement limits. • Instructor costs (including wages, fringe benefits, tuition and domestic travel expenses) • Rent • Purchase or lease of training equipment Primary Eligibility Requirements In our RFP incentives response letter signed by Governor Bruce Rauner, Mayor Rahm Emanuel, Cook County Board President Toni Preckwinkle, Senate President John Cullerton, House Speaker Michael Madigan, Minority Senate Leader Bill Brady, and Minority House Leader Jim Durkin, we calculated the gross value to be $1.32B. With the newly provided Project schedule in this RFI, we have adjusted the estimate to $1.33B. In order for Amazon to fully utilize these credits, we will need to make a handful of modifications to the EDGE statute regarding company classification, project length, carry forward, timing, and the application of the credit against individual income tax. We look forward to discussing during your visit the appropriate timing for implementing these legislative modifications. Incentives Section 2 Proprietary and Confidential Timing of Approvals Approvals are generally provided within 2 weeks of receipt of a complete EDGE application. Clawbacks All credits are subject to 100% clawback should the company cease operations within 10 years of the anniversary of the agreement, with the intent to relocate another state. Refundable/Transferable/Carry-Forwards/Carry-Backs • No carry-back provisions. • Not refundable • Transferable only upon State approval. c. Investment tax credits (indicate whether investment by a developer, if any, would count) High Impact Business (HIB) Overview & Estimated NPV Value: $337,000,000 Estimated NPV (20 Years): $205,000,000 Per our RFP submission, we calculated the gross value of HIB to be $172.5M. With the newly provided Project schedule outlined in this RFI, we have adjusted the estimate to $337M. HIB supports large-scale economic development activities by providing tax incentives (similar to Enterprise Zones) to companies that make substantial capital investments in operations and create or retain an above average number of jobs. HIB designations are not available to locations within existing Enterprise Zones. Businesses may qualify for the following benefits: • Investment Tax Credit provides a 0.5% credit against the state income tax for investments in qualified property (simple attachment to annual tax return). • Building Materials Sales Tax Exemption provides a 6.25% exemption for qualified sales of building materials, including those for remodeling, rehabilitation, or new construction. The purchaser obtains an exemption document from IDOR which is presented at the time of materials purchase. • Manufacturing Machinery & Equipment Sales Tax Exemption (5-year certificate, renewable) provides a 6.25% exemption against purchases of CONSUMABLE items used in the manufacturing process (i.e. abrasives, lubricants, fuel, etc.). • Utility Tax Exemption (5-year certificate, renewable) provides a 5.1% exemption against electrical, natural gas and telecommunications taxes. Primary Eligibility Requirements Eligible projects must invest a minimum of $12 million and create 500 full-time jobs before benefits are made available. Investments must take place at designated locations in Illinois, outside of an Enterprise Zone. Timing of Approvals Approvals are generally granted within 2 weeks of receipt of a complete HIB application. Explanation for Uncertain or “Non-Guaranteed” Incentive Not applicable. Incentives Section 3 Proprietary and Confidential Clawbacks None. Refundable/Transferable/Carry-Forwards/Carry-Backs Credits are not refundable or transferable. d. Research and development tax credits and any other incentives available in connection with R&D activity conducted by or in conjunction with universities in the State/Commonwealth/Province. R&D Tax Credit Overview & Estimated NPV Gross Value: $195,000 Estimated NPV (3 Years): $173,745 for each $1M annual increase in Illinois R&D spending. Provides income tax credit benefits to companies making investment in research and development in Illinois equal to 6.5% of qualifying research expenditures that exceed the baseline amount. The Illinois R&D tax credit is modeled after the federal R&D tax credit, including the federal definition of qualifying research. Eligibility Requirements Baseline • 3-year average of R&D costs in Illinois. • If the taxpayer incurred no qualifying expenditures during a base period year, the qualifying expenditures for that year are zero, even if the taxpayer was not in existence or conducting any business in Illinois during that year. • If the taxpayer conducted business in this State for only part of a base period year, the qualifying expenditures for that year shall be equal to the qualifying expenditures actually incurred, multiplied by 365 and divided by the number of days in the portion of the taxable year during which the taxpayer was doing business in Illinois. Qualifying Expenses • Any federally qualifying R&D expenses that are made in Illinois qualify. • Qualified research is defined in IRC section 41(d) and 41(e) and includes the sum of the in-house research expenses, contract research expenses and basic research