ZS Associates, a sales and marketing consulting firm called by City staff “Evanston’s largest for-profit employer,” will be relocating from the former Research Park building owned by Northwestern University to the Rotary Building space being vacated by the Pivot Point Academy. The move will take place between March 2015 and January 2017.
According to a staff memo, “ZS has considered several options to relocate its world headquarters including consolidating space at an existing downtown Chicago location, other local communities, and Evanston.” In order to help keep ZS in Evanston, Council voted to provide $300,000 in assistance, in the form of a “forgivable loan,” to the private company.
The move is necessitated by Northwestern’s announcement that it will not renew the ZS lease when it expires at the end of 2019. The staff memo states Northwestern “has indicated its need for the space ZS Associates occupies in the building and the lease will not be renewed.”
ZS negotiated an early termination agreement with Northwestern under which the university will pay $375,000 to terminate the lease as of December 2016. At an Economic Development Committee meeting, Alderman Ann Rainey, 8th Ward, asked that the City Manager seek additional concessions from Northwestern to offset financial assistance sought from Evanston by ZS. Northwestern refused, saying, in an email from NU Executive Vice President Nim Chinniah, “It is my understanding that the ZS [sic] is seeking assistance from the City to support the firm’s staying in Evanston. I believe that is separate and distinct form the agreement between the University and ZS.”
In total, ZS asked for $750,000 in assistance from the City as an incentive to keep its headquarters and 325 employees in Evanston. The staff memo indicates these employees’ annual salaries average $110,000, far above the Cook County average. In addition to the $300,000 in moving assistance, the City will enter into a hotel-tax-sharing agreement with ZS over the next eight years.
Under agreement, ZS will get 50% of the hotel tax they currently account for, which is about “5,000 hotel room nights per year in downtown Evanston” per the memo, then 75% of the hotel tax generated for room nights above and beyond the current rate. In dollar terms, Evanston will share 50% of the first $60,000, or $30,000, in hotel tax generated each year, and 75%, or $22,500, of the next $30,000 in hotel tax, every year for the next eight years. Rebates begin in 2016.
If ZS generates hotel room stays sufficient to reach its maximum tax sharing credit, the total package provided by Evanston would equal $720,000 of the $750,000 requested. Should the expected hotel stays fall short, then ZS will receive less.
Several representatives from Evanston hotels spoke before Economic Development supporting ZS. Local bars and restaurants will also reap the benefit of retaining the current 5,000 annual visitors and any additional visits beyond the current rate. The deal is contingent on ZS maintaining at least 325 employees in Evanston and employing “five participants in the Mayor’s Summer Youth Employment Program each year of the agreement.”
The measure passed unanimously. “This tenant, ZS, must be thrilled with the incentives we’re giving,” said Ald. Rainey. The City is “embracing ZS wholeheartedly.”