Business

We Still Don’t Know What It Will Cost to Lure Amazon to Dallas. And That’s a Problem.

Whatever incentives regional leaders have included in the bid submitted to Amazon, it has captured the corporate giant's attention.

Earlier this week, Amazon jumped back into local headlines when the Dallas Morning News reported that representatives of the online retail giant liked the potential they saw in downtown Dallas during a visit to the Dallas-Fort Worth area in February.

Local leaders were hush hush about the visit, as they have been throughout the nationwide bidding process for Amazon’s second headquarters (HQ2). Amazon’s solicitation began with fanfare, but the corporate giant toned down the process after their request for bids was criticized by those who saw it as a cynical ploy to drum up tax incentive packages from potential new homes. After 20 finalists were announced in January, urbanist Richard Florida started a petition urging cities to not buy into the incentive arms race.

But that doesn’t mean that the incentives arms race is not going on. Some cities have made their bids public; for example, Grand Rapids, MI was willing to pony up $2 billion to convince Amazon to move its HQ2 there.

So what about Dallas-Fort Worth? Earlier this year, I submitted open records requests to a half-dozen area cities to see if, in their preparations of bid materials to submit to the Dallas Regional Chamber (which organized the regional bid) we might be able to get a sense how much public funding DFW was willing to hand over to win the Amazon HQ2. The request turned up little information. All the cities cited sections of the Texas Government Code which except information related to competition or bidding from the Public Information Act.

Which is more or less what I expected would happen. The open records request was an attempt to make a broader point about how municipalities do business with public funds in this era of incentive-rich corporate relocations.

On the one hand, restricting public access to information involved in business negotiations between cities and private entities makes some sense. We have elected officials that, in theory, we trust with minding the hen house when companies come to town looking for a hand out. And even if Dallas has an uneven history with this brand of economic development, officials require some level of discretion when engaging in private negotiations. Deals have to get done, after all.

And the information won’t remain confidential forever. If Amazon chooses Dallas – or any spot in DFW – the terms of the deal will then have to go through the typical council approval process. And if Amazon chooses to relocate somewhere else, then whatever information area cities prepared for the bid will then become subject to public disclosure under the public information act (with some lingering restrictions related to proprietary information included in any correspondence, says Dallas City Attorney Larry Casto).

But the Amazon bid is not the typical economic development deal. It comes after a string of recent corporate relocations that saw record amounts of public funds handed over multi-national corporations. Many economists and business leaders – even the Koch brothers – argue that the scale of these tax forfeitures doesn’t make economic sense. And the very public nature of Amazon’s orchestrated HQ2 role out necessarily pits American cities in an unusual brand of publicized competition.

Would it be a good thing if Amazon relocated to Dallas? Well, it depends. And part of what it depends on is whether or not the city is willing to give away the bank to lure the company here. Is Dallas willing to give away the bank? We don’t know. And we can’t know.

These are questions that should have been addressed before Dallas got involved in the competition, but because of the way Amazon rolled out its Request for Proposals – and because Texas law restricts the public from having access to the details of a bid that was prepared as part of a public-private collaboration between area cities and the Greater Dallas Regional Chamber of Commerce – we won’t know until Amazon has made its decision.

The Amazon deal is a supersized version of the way economic development works in contemporary American cities, and the circus-like fanfare over the deal amplifies the shadowy nature in which cities make deals using public funds. The size of the deal also amplifies the potential negative fallout if Dallas overpays for a big new corporate neighbor.

Think of it this way. Let’s say Amazon decides to come to Dallas. At that point the city council will have to approve any incentive package that has been already been prepared to kick-start negotiations. If it comes to light that the Dallas Regional Chamber put together a bid that makes zero economic sense for the citizens of Dallas, a political fight will surely ensue. But at that point, it will be all but impossible to frame the terms of the fight correctly.

It won’t be a question of what amount of public investment will see a positive return on the number of jobs Amazon may bring, but rather, whether or not we want to walk away from tens of thousands of new jobs. It won’t be about how do we best invest public resources to sustain long-term economic growth and health, but rather, “Do we want to transform the city forever with a corporate silver bullet?” It won’t be a debate about best business practices, but rather a question of whether you are pro-business or anti-business. The question won’t be, “Is this a good deal for Dallas,” it will be “Should we turn Amazon down?”

To me, those are false terms. The real terms relate to the debate that should have transpired before DFW submitted a bid: do we want Amazon? Sure. I guess. Well, it depends. What is it going to cost us?

But we’re not going to get that debate. We won’t have that debate because of the way Texas law protects public-private business negotiations, and because of the way Amazon turned its HQ2 announcement into a feeding frenzy that ingeniously takes advantage of the way many American cities’ economic development departments have turned into ATMs.

What is it going to cost us? DFW’s regional business leaders know. But we don’t know. And by the time we find out, it may be too late to reverse course.

Comments

  • Alex Muse

    It is interesting how you choose to spin this. Suggesting that ‘waiving’ tax revenue is somehow “paying” Amazon is a stretch. If they don’t come we make less money – so the net gain is positive if they come. There isn’t a dime we “give” them to come.