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Cities' Offers For Amazon Base Are Secrets Even To Many City Leaders (nytimes.com)

Posted by BeauHD on from the top-secret dept.

The location for Amazon's second headquarters is shrouded in secrecy, so much so that many city leaders are unaware of the financial incentives their cities used to entice Amazon (Warning: source may be paywalled; alternative source). The New York Times reports: Across the country, the search for HQ2, as the project has been nicknamed, is shrouded in secrecy. Even civic leaders can't find out what sort of tax credits and other inducements have been promised to Amazon. And there is a growing legal push to find out, because taxpayers could get saddled with a huge bill and have little chance to stop it. A primary reason for the information blackout is that, in many cases, the bids were handled by local private Chamber of Commerce affiliates or economic development groups that aren't required to make their negotiations public. Many of the groups are also not covered by Freedom of Information Act or state open-records requests.

But another reason is gamesmanship. Some cities say they want their Amazon proposals to remain confidential to avoid showing their hand to rivals. And Amazon required the finalists to sign nondisclosure agreements that forbid the local groups to release proprietary information about the company. With so much secrecy -- and bids like Austin's that involve unelected officials making promises -- there is the risk that taxpayers and their civic leaders will be forced to accept the proposed terms or live with turning down an enormously lucrative opportunity. Amazon, which is expected to make $235 billion in revenue this year, promises to bring the winning location up to 50,000 high-paying jobs and a $5 billion investment in construction.

4 of 142 comments (clear)

  1. Unelected Officials Usually Not Authorized to Act by brian.stinar · · Score: 5, Insightful

    In my city, different chamber of commerces can promise whatever they want. The city is not bound to respect those promises. If city officials do not want to respect those concessions, I doubt they have to. Then Amazon can move down the list to another city, which likely will.

    If I were Amazon, I would accept promises from all finalists, start with the best promises, and negotiate all deals in parallel. Then, it's possible to use concessions from one party against another party, even out of context. This is probably what Amazon is going to do, since they have people that have studied game theory more than I have working for them.

  2. Pathetic by fastAlan · · Score: 5, Insightful

    This is pathetic, we live in a society where we need to beg corporations to open offices and employee us! What a privilege it must be to have a job! To have the opportunity to trade our most precious commodity, time, for money!

    1. Re:Pathetic by MightyMartian · · Score: 5, Insightful

      Shopping around for factory sites has been going on for a long time. Obviously it's in commercial concerns' best interests to extract the best deal they can get. Heck, Ireland was pulling the same stunt with the entire country, using its status as a member state of the EU and coupling it with a low corporate tax rate, giving big tech firms the EU headquarters they needed along with a willing partner in laundering profits made in the Common Market through what amounted to a nation-wide tax haven. Obviously this went against the spirit of the Common Market, and the EU has shut it down and ordered Ireland to collect the taxes it should have been all along, but sadly such mechanisms don't exist everywhere. It certainly happens in the US and Canada, where pressure is put on state/provincial and municipal governments to drop the tax revenues down, and of course, governments will extract these commitments to do blah blah blah for lots of years, but when it becomes convenient to pull up stakes and move to another jurisdictions even more willing to whore themselves in the race to the bottom, they'll walk anyways.

      --
      The world's burning. Moped Jesus spotted on I50. Details at 11.
  3. What else does it promise to bring? by Anonymous Coward · · Score: 5, Interesting

    ...promises to bring the winning location up to 50,000 high-paying jobs and a $5 billion investment in construction.

    50,000 additional drivers adding to congestion on the streets and freeways? 50,000 jobs that perhaps need 50,000 more units of housing stock that don't exist yet, and which will drive up housing prices until the gap is closed. You can't build 50,000 houses and apartments overnight.

    Hey, don't get me wrong. I'm all for the idea that jobs adding lanes to the freeways will be created. And other jobs building those houses and apartments. And if I lived there I'd love the idea that the value of the home I already own going up (even though it's not worth anything until someone else buys it.) But don't think that all those good things don't come without a lot of bad, or at best neutral, things.

    Personally I'm pretty glad that "my city" dropped out of this race to the bottom. If the winning city gives tax concessions that result in the locals paying for all the infrastructure improvements while Amazon and Bezos laugh all the way to the bank then they have my sympathy on one hand, but also my disdain on the other for being so stupid.

    If you ask me, the smartest thing all these cities could do would be to walk away, en mass. Let Amazon pick a city based on what it needs and the individual merits of the candidate city. And then the city that "wins" will have the power to say "Okay Amazon, here's what you're going to need to do if you're going to bring 50,000 new jobs into this city.

    But they won't.