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Lake County OK's incentives up to $530K for semiconductor company

Incentives worth up to $530,000 over five years for AKHAN Semiconductor Inc. were approved Tuesday by the Lake County Board, although some members said the deal spotlights the need for a policy to guide such agreements.

The pacts overwhelmingly approved by the board call for AKHAN to receive up to $500,000 in sales tax rebates over five years, with up to $30,000 in property taxes abated during the same period to relocate to Gurnee from Hoffman Estates. The high-tech company was launched in 2012 as a subsidiary of AKHAN Technologies Inc. by Gurnee native Adam Khan.

Officials were excited to land the high-tech company, which uses diamond film as semiconductors in aviation, defense, telecommunications and other industries. While most semiconductors are silicon based, the diamond technology conducts heat better and uses less energy. AKHAN has an exclusive licensing agreement with Argonne National Laboratory.

The up-and-coming company is considered a catch by local officials, but it took an incentive package involving Gurnee and several taxing agencies to bring Kahn home. State and local incentives total $5.8 million.

"Gurnee couldn't do it alone," Mayor Kristina Kovarik told the county board. "We are really at the threshold of something new."

Board Chairman Aaron Lawlor noted the sales tax agreement is performance based so there would be no incentive if revenues don't meet projections.

Board Member Ann Maine said she couldn't support the package.

"I do not think we should be using sales tax and property tax as a lever for individual businesses," Maine said. "It's a great concept, but I think it puts existing businesses at a disadvantage."

She said the quarter percent sales tax increase approved a few years ago, which is used solely for transportation projects, is a more equitable use of those funds.

The company is moving its headquarters, manufacturing, research and development to 1020 Lakeside Drive - a building formerly occupied by Kenall Manufacturing, which moved to Kenosha.

"If we don't do this, others will, and I'm tired of losing, particularly to Wisconsin," said board Member Steve Carlson, who represents the Gurnee area.

Others said the county needs a policy.

"I agree it is a slippery slope. I'd love to see us collaborate on a regional basis but until that time, this is what we need to do," said Sandra Hart, a board member from Lake Bluff.

Board Member Steve Mandel of Highland Park said he voted against the agreement to make a point.

"In a perfect world, we would not have this arms race of economic development incentives," he said. "We do need to develop a policy."

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