Illinois Legislative News: August 5, 2024
Third Reading Consulting Group
Gov. J.B. Pritzker’s long-term goal of making Illinois the “undisputed leader of quantum computing” became a reality on July 25 as PsiQuantum and the state jointly announced the construction of a quantum computing campus in Chicago. PsiQuantum, a California-based quantum startup, will become the anchor tenant of the South Works campus being built at the old U.S. Steel production plant on Chicago’s Southeast Side lakefront. The campus will encompass multiple buildings and the world’s first commercially useful, utility-scale quantum computer. Quantum computers, which rely on quantum mechanics principles, can perform complex calculations and operations at unprecedented speeds compared to present day computing technology. Other companies, such as IBM and Google, have already constructed proof-of-concept quantum computers. However, a fully reliable, fault-tolerant computer has yet to be built.
The South Works site was chosen for both its proximity to water and electric resources necessary to operate a quantum computer, as well as its symbolic history. The former steel mill used to exemplify the economic prowess of the Rust Belt and American innovation. “U.S. Steel is a symbol of American dynamism. The history of Illinois is not lost on [PsiQuantum],” noted PsiQuantum co-founder Pete Shadbolt. Chicago Mayor Brandon Johnson hopes that constructing the campus in the same location as the former steel mill will allow South Works to regain its place atop the industrial meccas of the United States and bring new development to an area of Chicago that has struggled to find its footing ever since heavy industry left. PsiQuantum estimates the campus will be fully constructed in 2027. The South Works facility is expected to bring in around $20B in investment from both the public and private sectors and could potentially create thousands of jobs over the next decade. This development occurring in Illinois could position the state to become a leader in quantum computing for years to come.
Illinois’ FY 2025 budget (SB 251) allocated $500M to fund a quantum research and application campus. The state plans to spend $300M of that funding on the South Works campus, with $200M of the South Works funding going to a cryogenic plant to serve the cooling needs of PsiQuantum and other potential quantum developers. Additionally, the Department of Commerce and Economic Opportunity (DCEO) awarded PsiQuantum a $92M Manufacturing Illinois Chips for Real Opportunity (MICRO) income tax credit for the estimated 154 newly created jobs. The campus could also be eligible for the state’s new enterprise zone tax incentive for quantum computing development, which was recently passed in the DCEO Omnibus (HB 5005). The enterprise zone would include a 20% tax credit for all construction, full-time, and part-time employees, and exempt qualified tangible personal property expenses from the 6.25% state sales tax, Chicago Non-Titled Use Tax, all locally imposed Retailers’ Occupation Tax, and Public Utilities Act Fees. In addition to the state resources, Chicago’s Housing and Economic Development Board and Cook County each pledged $5M to the project.
The Cook County Board of Commissioners is making efforts to certify the campus as a Class 8 property, enabling the site to receive a lower property tax assessment value. TheClass 8 certification is designed to promote industrial and commercial development in areas experiencing severe economic stagnation. It would cut the normal industrial property tax assessment from 25% of market value to 10% for 30 years, potentially saving $175M in property tax payments. Despite the potential incentive, the campus is still expected to generate an estimated $100M in new property tax revenue over the next 30 years. The combined incentive package from the state, Chicago, and Cook County is estimated to be worth more than $500M, according to a PsiQuantum press release.
In addition to state and local funding, the Defense Advanced Research Projects Agency (DARPA), a subsidiary of the U.S. Department of Defense responsible for technologicaldevelopment, has pledged up to $140M to fund proposals from other quantum companies locating on the South Works campus. Illinois plans to match the $140M DARPA investment through the FY 2025 quantum budget allocation. In exchange for this historic investment across multiple levels of government, PsiQuantum is investing at least $1B into the South Works project. The public funding and tax incentives are warranted, given that the quantum campus is estimated to have a $60B impact on regional GDP over the next decade.
Important Upcoming Dates – Statewide
November 5 – 2024 General Election
November 12-14 – Veto Session Week 1
November 19-21 – Veto Session Week 2
