David: Welcome to the podcast. I'm David Stewart, editor in chief of Worldwide Tax Daily. Cities across the U.S., and one in Canada, are excited to find themselves on an exclusive list. They're among the 20 possible locations for Amazon's second headquarters. In November, the company announced its search for a new location and solicited proposals from local officials.
Joining me in the studio is State Tax Today reporter Lauren Loricchio, who looked into what these local officials are offering for their shot at claiming the 50,000 jobs Amazon says it will create. Lauren, welcome to the podcast.
Lauren: Hi David, thanks for having me.
David: Can you give me a brief overview of Amazon's project?
Lauren: Sure. Amazon's announcement that it was looking for a location for its second headquarters in North America sparked excitement among public officials who wanted the jobs and investment in their community. The company laid out its criteria for the project and request for proposals, which is typically something that a government would do, not a private company. Their list included metro areas with more than 1 million people, a stable and business-friendly environment, urban or suburban locations with the potential to attract and retain strong talent, and communities that think big and creatively when considering locations and real estate. Amazon also said it was looking for economic development incentives or subsidies like grants, tax credits, or bond financing used by governments to attract businesses.
This drew attention from watchdog groups like Good Jobs First in Washington DC, and reporters who wanted to find out what incentives were being offered since they are taxpayer-funded.
David: Where is this process now?
Lauren: Amazon more recently announced its shortlist for the project. The company narrowed the field of contenders from the original 238 to 20. But experts told me Amazon probably already had a shortlist in mind because there aren't many places that actually met their criteria to begin with. According to Good Jobs First, 19 of the bids come from 15 metro areas that include 20 percent of the nation's population, including nine of the 10 largest metro areas. The finalists included places like New York City, Boston, Chicago, and Los Angeles. And there was one non-U.S. city on the list, and that was Toronto.
David: Now, you recently looked into what sort of proposals Amazon received. Tell me what you did to research this story.
Lauren: Well, my initial hook going into this story was to find out what incentives or subsidies were being offered by some of the regions and cities that hadn't disclosed their bids yet. I filed public records requests in 10 of the cities, seeking all records related to their proposals, knowing it would be nearly impossible for me to file and track 238 requests on my own. I chose some strong contenders like Denver, Philadelphia, Atlanta, Austin, and Washington DC — all landed on the short list — and other long-shot candidates like Gary, Indiana, and Toledo, Ohio.
But the story changed when most of the cities and regions denied my public records request. What I found in my reporting was that many of the cities narrowly interpreted their open records laws or submitted their bids through private or quasi-private entities like their local chamber commerce, which aren't subject to open records laws.
The AP also published a similar story a week after ours, but they were unable to get any additional information.
David: Now did any of these cities give you a copy of their proposal?
Lauren: Toledo, Ohio, was the only city that provided us with a copy of their proposal without redacting the incentives. We received proposals from Philadelphia and Washington DC, but they removed information about incentives. Toledo offered the company a package of at least $780 million. The offer included a performance-based grant, a tax exemption, and a capital lease transaction subsidy. The company could also purchase an identified project site valued at $2.7 million for just $1.
David: What reason did the cities give for denying your requests?
Lauren: Most of the cities used creative ways to avoid disclosing the subsidies contained in their bids. Some said the proposals contained proprietary information and cited exemptions under their open records laws. Baltimore's response to our Public Information Act request was pretty clever. The city said it was submitted by Under Armour's CEO Kevin Plank’s development company Sagamore Development. And because the city didn't have a copy of the proposal in its possession, we would have to ask the company for it. Sagamore didn't respond to our request for the proposal, and because it is a private company, it's not subject to open records laws.
David: Is it normal for cities to use methods like these to keep records private?
Lauren: Well, I spoke with three experts on incentives: Kenneth Thomas, a political science professor at the University of Missouri-St. Louis, Greg LeRoy of Good Jobs First, and Tim Bartik of the W.E. Upjohn Institute for Employment Research. They said it's common for governments to submit economic development bids through a quasi-private entity like an economic development corporation or a local chamber of commerce. Thomas said this is done to prevent information on the bids from becoming public. However, Bartik said there is an argument to be made for getting around certain civil service hiring rules. Everyone I spoke with agrees these governments have no good reason to hide the proposals from the public because public money is being used. They cautioned that a large incentive package could mean the winning area would have less money for things like education and other public services.
David: Well, it will be interesting to see how this all turns out. And if you're able to shake any information loose from the eventual winner, we'll be sure to have you back. Lauren, where can listeners find you online?
Lauren: They can follow me on Twitter @LaurenLoricchio, and that's spelled L-A-U-R-E-N-L-O-R-I-C-C-H-I-O.
David: Thank you for being here.
Lauren: Thanks for having me.
David: That's it for this week. You can follow me on Twitter @TaxStew. That's S-T-E-W. If you have any comments, questions, or suggestions for a future episode, you can email us at podcast@taxanalysts.org. Be sure to subscribe to us on iTunes or Google Play to make sure you get the next episode of Tax Notes Talk.
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