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San Diego City Council Approves $1.5M Tax Rebate For Illumina

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The San Diego City Council will vote Monday on whether to approve a deal with the medical device company Illumina that will keep its manufacturing facilities in the city for 10 years in exchange for a $1.5 million tax rebate.

The San Diego City Council unanimously approved a deal on Monday to keep the manufacturing facilities of Illumina, a medical device company, in the city for 10 years in exchange for a $1.5 million tax rebate.

Mayor Kevin Faulconer announced the deal last week. Under its terms, the genomic sequencing company will get a rebate on sales and use taxes of up to $1.5 million, plus 3 percent interest compounded annually.

The deal is similar to one struck with Ballast Point and Ale Smith breweries last month, but that deal involved "periodic reimbursement of fees up to a certain cap based on new tax revenues," while the Illumina deal offers a "lump sum rebate of taxes up to $1.5 million cap based on new tax revenues," wrote mayoral spokesman Craig Gustafson in an email.

In addition, he noted the brewery deal involved 50 to 100 jobs, while the Illumina deal involves about 300 manufacturing jobs.

Gustafson said the last time the city offered a rebate agreement to a company was in 2005.

Even though the city is offering a large tax rebate, city documents say the Illumina agreement will generate revenue for the city. The deal requires the city to not collect 70 percent of any net sales tax revenue and 100 percent of any use tax revenue until the rebate cap is reached. After that point, all of the revenue gains will go to the city.

Illumina employs about 1,000 and occupies six leased buildings in San Diego, totaling 560,000 square feet of office and industrial space, according to documents filed with the city.

Like Ballast Point, Illumina considered moving operations to Poway before the tax incentives were offered. It was also considering a move to Memphis, Tennessee, according to city documents.

In a statement last week, Jay Flatley, Illumina's CEO, said the company plans to expand its campus inside the borders of San Diego.

“We’re excited to continue to grow a state-of-the-art campus that will not only contribute to Illumina’s success, but also contribute to the growth of San Diego’s life sciences community, to the advancement of genetic research, and ultimately to help people around the globe realize the benefits of personalized medicine,” he said.

Faulconer also touted the agreement as a way to support middle class jobs and encourage economic growth.

“This agreement keeps hundreds of high wage jobs in San Diego, ensures city residents benefit from over a million dollars in annual sales tax revenue, and strengthens our region’s leadership in biotechnology,” he said.

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