Chandler Ropes In 2,500 Jobs With Allstate Center SanTan Sun News

Chandler Ropes In 2,500 Jobs With Allstate Center

Chandler Ropes In 2,500 Jobs With Allstate Center
Business
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By Jason Stone

Staff Writer

Chandler’s job market is still in good hands.

Allstate Insurance Company’s plan to lease more space in the city – and possibly build its own corporate center – is creating at least 2,500 jobs in the region.

The Chandler City Council signed off on the deal last month after two years of negotiations with the global insurance giant.

“We think it’s a pretty prudent deal,” said James Smith, Chandler’s economic development innovation manager. “It’s not many times a Fortune 500 company comes to the door. This is a Fortune 100 company.”

Massive incentives to lure Allstate will put Chandler on the books for a little more than $5 million, but because the incentives are performance-based, Chandler isn’t on the hook for any money upfront and assumes little risk in the deal.

Plus, financial studies show it could bring in more than $5.29 million in benefits each year over an eight-year period. That revenue could grow past $6.6 million if Allstate decides to build a permanent campus in Chandler.

“It’s been the goal of this council to diversify Chandler’s economy,” Mayor Jay Tibshraeny said. “Chandler is the innovation and technology hub of the Southwest, and we already have the strong presence in technology. We need to diversify our economy, so we’re not at risk to any downturns in any particular sector of the economy.”

City officials began negotiating with the Illinois-based company in 2017. It already employs 500 people at 217,000 square feet of office space at Park Place in the Price Road Corridor and at the One Chandler Corporate Center.

The development agreement calls for the city to pay Allstate around $5.4 million in fees for job creation and development if the company agrees to construct its own corporate campus. The city is also kicking in nearly $1.5 million for hiring, training and relocating employees to the city.

Chandler will make the payments to Allstate over nine years as long as the company actually creates the jobs. The city is requiring Allstate to reapply for incentive reimbursements every year. Smith said this is Chandler’s way of accounting for the required jobs in the contract.

Plus, if Allstate decides to skip town and build a corporate center or lease space elsewhere, Chandler will get all its money back.

According to the agreement, Allstate must create the jobs within five years. The city will fork over $600 for each job with a base salary of at least $65,000 and $400 for each job that pays below $65,000.

Smith told the City Council that all created jobs would be in addition to the positions the company already has filled in Chandler. The city estimates the payroll taxes generated from the 2,500 positions would result in $102 million annually.

The agreement calls for Allstate to reimburse the city for all payments it received if the company decides to skip town to lease space or build a corporate campus.

Allstate picked Chandler over two other Valley cities and Boise, Idaho. But Councilman Sam Huang questioned whether incentives were really needed to lure in the company and used a recently approved Banner hospital project as an example.

“It was a contributing factor in them choosing Chandler,” Smith said. “Banner is local, and they needed a hospital here locally. Allstate could have gone anywhere they wanted to go in the country. We think it’s a prudent offer that we made.”

Councilman Jeremy McClymonds called the deal “awesome,” while Mayor-elect Kevin Hartke said he was impressed with the company’s commitment to Chandler.

“It shows they’re putting skin in the game and saying we want to be here,” Hartke said. “We believe they’re fully committed to Chandler. One of the important things about that corporate campus is that could really be a commitment for 25 or 30 years.”

Allstate is the fourth-largest property and casualty company in the U.S., behind only State Farm, Berkshire Hathaway and Liberty Mutual. The National Association of Insurance Commissioners reports Allstate has about 5-percent market share of premium income.

Allstate earned $2.4 billion on revenue of $30.3 billion over the first nine months of 2018.

Brad Smith, the senior vice president of business development with the Greater Phoenix Economic Council, said Chandler was a natural fit for the facility.

“(Allstate) found the Metro Phoenix area, the East Valley in particular, and the City of Chandler as a great location for them,” Smith said. “It offers them many opportunities to hire the best and the brightest people they need to hire to succeed as a corporation.”

Huang was the only councilmember to vote against the project. He complained that he didn’t have enough time to investigate the deal, despite Tibshraeny reminding him that the council had been briefed on the project twice over the last 18 months.

“Keep your notes,” Tibshraeny told Huang.

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