Texas Cities Won’t Disclose How Much Taxpayer Money They’ve Offered Amazon
Amazon has asked for tax breaks and public subsidies, but Texas cities are refusing to make their proposals public.
Amazon’s much-anticipated second headquarters, HQ2, has led to a nationwide bidding war, as 238 cities—including a handful in Texas—submitted bids ahead of the October 18 deadline. With a project that will bring an estimated 50,000 jobs to its new home, the competition should come as no surprise. But those jobs won’t come cheap.
Amazon asked cities to outline possible incentive packages in their bids, and it’s likely that the winning city will give the tech giant billions in taxpayer dollars. Texas residents might want to know that number: After all, their cities are offering taxpayer funds as a bargaining chip for the online retail giant. But when asked by Texas Monthly, the cities or economic development organizations in charge of submitting local proposals for HQ2 in Texas were unwilling to share their bids, including information on how much they may be offering Amazon in any publicly-funded incentives.
Nearly all of Texas’s major cities have submitted bids for HQ2, from major cities like Dallas, Houston, and Austin to the smaller El Paso, Frisco, and Milam County (a joint bid from Rockdale and Cameron). Texas Monthly contacted every city in the state that publicly submitted a bid. In each case, representatives from the city or the local business development organizations declined to provide copies of their proposal or details of the tax plan.
“As is normally the case when submitting a regional response to an economic development opportunity, we have committed to responding cities that the DRC will not make the response public,” said Darren Grubb, a spokesperson for the Dallas Regional Chamber, which worked with the Dallas-Fort Worth area to submit a bid. “I can tell you that we were diligent and comprehensive in answering each of the questions outlined in the RFP [Request For Proposal] to provide all the data and information that was requested. The incentive proposals of individual cities are not for the DRC to disclose.”
“I am not able to share a copy of the proposal,” Clint Pasche, spokesman for the Greater Houston Partnership, said in an email. The Greater Houston Partnership, which coordinated the bid proposal, is the region’s designated economic development organization. “The specifics of our proposal are confidential but it does contain a competitive package of local and state incentives. These incentives are still subject to the appropriate approval processes that were described to Amazon in the proposal.” Pasche also said that signing a non-disclosure agreement with Amazon was a condition of submitting their bid.
“Sorry to say that the bid and details are confidential,” Mike Berman, spokesman for the Greater Austin Chamber, said. “This is customary practice for economic development projects, especially when the Greater Austin Chamber coordinates a response for the region, so the information and details are not publicly shared.” Berman also said that language asking for confidentiality was in Amazon’s RFP. “It’s common practice, especially at this beginning stage of the process, in economic development,” Berman said of bid proposals being kept from the public. (Austin officials later revealed that no local economic incentives were included in the city’s bid.)
“The writen [sic] proposal and website is proprietary only to Amazom [sic] at this time,” Kara Clore, director of the Rockdale Municipal Development District, said in an email. “Milam County did include the potential for phased in ad valorem tax abatement as well as Chapter 313 incentives.” When asked how the written proposal was proprietary to Amazon, Clore responded, “our policy is that each proposal is unique to a project. We do not publish proposals as they are preliminary. Once a project moves further in the process then aspects of a proposal become public as they are negotiated with the governing entities.”
Catherine Ross, a spokesperson for Frisco, wrote in an email that “it is not our practice to comment on the specifics of any potential economic development projects.”
A spokesman for El Paso’s Borderplex Alliance also said the proposal could not be released to the public. Jon Barela, the CEO of Borderplex Alliance, wouldn’t even reveal to the El Paso Times the proposal’s page count. “In the economic development business, responses to proposals almost universally are confidential until a company takes it to the next level for serious discussions,” Barela told the Times.
Many of these cities claim that Amazon’s RFP and NDA agreement forbid the public release of the proposals and incentive offers. But multiple sources have disputed that Amazon stipulated that the bids must be kept confidential. (An Amazon representative declined to comment on the record for this story.) Some cities across the country have released their entire HQ2 proposals, including specific outlines detailing incentive plans.
New Jersey Governor Chris Christie offered Amazon $7 billion in tax breaks. The state of Georgia is ready to put $1 billion on the table. Maryland is reportedly offering a $2 billion incentive package. Memphis’s city council pre-approved the city’s $60 million cash incentives offer, and Philadelphia’s city council is publicly considering a tax exemption of up to $2 billion over ten years. New York City has made clear that it is not offering a special incentive package as part of its bid, which was released to the public last week. The city of Worcester, Massachusetts, released a detailed proposal outlining its offer of $500 million in tax incentives, while the nearby town of Leominster included 400 acres of public land and $405 million in tax breaks. Chula Vista, California, publicly outlined a similar proposal, presenting $400 in incentives.
Multiple sources intimately familiar with the bidding process confirmed that Amazon’s non-disclosure agreement did not prohibit bidders from making their proposals public, and said that if local jurisdictions in Texas want to share information regarding incentive proposals, that’s their choice. (The sources requested anonymity due to the sensitivity of the bidding process.)
Eric Crockett, director of economic development for the City of Chula Vista, California, confirmed that Amazon did not prohibit the city from releasing its bid. “There was nothing in the RFP that required confidentially [sic],” Crockett said in an email. “Many jurisdications [sic], including San Diego, have NDAs with Amazon but they are for specific projects, not blanket agreements for all things Amazon, especially when they go public themselves with their request. Bottom line, at least in Cali, is that the proposals are property of the public and should be disclosed.”
Pasche, the spokesperson in Houston, sounded perplexed as to why so many other bids were made public, reiterating that Amazon’s confidentiality agreement prevents the city’s bid from being released. “We are wondering the same thing—you would have to ask the other entities offering incentives as to why they are releasing the info,” he said. “The NDA expressly prohibits the release of confidential information related to the proposal—if the financial details of the proposal are not confidential, I’m not sure what is.”
Other cities claim that keeping proposals confidential is the industry standard. Nathan Jensen, a professor at the University of Texas and an expert on government economic development strategies who has been closely following the HQ2 bid process, disagrees in this case. “For many states there are laws that shield the disclosure of information both to protect company trade secrets and to not allow competitors to swoop [in] during the middle of negotiations,” Jensen says. “What is unique here is that locations are refusing to share their bids (which contain no trade secrets) and that this is an open call for proposals so there are already 100-plus locations making bids.” He believes Amazon’s non-disclosure agreement prohibits cities from making public additional information that Amazon shared with individual cities during the process, but that communities have always been free to make their bids and incentive offers public. “The normal logic of non-disclosure doesn’t clearly apply here,” he says. “The fact that many cities have elected to provide this information tells us that it is definitely possible.”
Jensen also noted that many bids have been submitted by local Chambers of Commerce, rather than directly by the city, as in Austin and Dallas-Fort Worth. These organizations are not directly subject to public records requests, providing another barrier to the public if the bid is not voluntarily released.
For local elected officials, keeping a bid under wraps has clear benefits. Transparency, Jensen speculated, could “allow opposition to mobilize.” For example, local businesses might complain that the city should spend its resources on existing businesses rather than offering huge incentives to Amazon, or school districts might view large tax breaks as threats to their revenue stream. The bids could even be used as ammunition against an incumbent politician during a campaign.
“My speculation is that there are few benefits for politicians to release this information now,” Jensen says. “Once Amazon decides a location the bid can be revealed along with a press statement. The winning location can tout their offer as swinging the investment. The losers can frame their bids as not paying too much, making a great offer, or some other aspect that resonates with their constituency. Holding the bids until Amazon picks a location is a form of message control.”
For local leaders, withholding bids may help control the message. But for constituents who want to know exactly how their cities are using their taxpayer dollars to attract big business, the secrecy keeps them in the dark.