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Group Forms to Counter City’s Bid for Amazon

Group Forms to Counter City’s Bid for Amazon

When Chicago first bid for the 2016 Olympics – the newspapers, businesses and politicians all said what a wonderful idea. But then a group of concerned Chicagoans formed a group called No Bid Chicago that was against having the Olympics in Chicago.

The politicians and businesses said it was a great idea because it would put Chicago on the international map of prominence to host such a high-profiled event watched by millions all over the world. The No Bid people said past Olympics have bankrupted the city, the mayor would have to raise significant taxes to pay for it and it would tear up the city’s parks and take away use of many of its parks and recreation.

A similar scenario could be brewing today as once again the newspapers, businesses (big ones at least) and politicians are lauding the idea of landing Amazon and its promise of roughly 50,000 high-tech jobs.

However, a group of academics led by urban development expert Richard Florida are demanding that the 20 finalist cities who are competing to get Amazon sign a “Non-Agression Pact” that would not offer the bank in the hopes of landing one of the wealthiest companies on the planet.

Chicago has offered roughly $2 billion and counting in government subsidies, while other cities like New Jersey have offered a whopping $7 billion. People wonder why should cities compete against each other and possibly bankrupt themselves, while they can instead team up to agree on a reasonable offer.

Florida is a professor at the University of Toronto. He has been a critic from the beginning when it comes to offering corporate subsidies for Amazon. Other cities have stated that they would not participate in the bidding because they do not give their small businesses subsidies, and the money would be better spent on enhancing public infrastructure such as financing public transportation and training its workforce via funding education.

“Initially I thought, wow, luring Amazon headquarters could be a good thing,” Florida told the Chicago Tribune. “Then I said to myself this is really getting out of hand. This idea of an auction, pitting city against city, is really getting out of hand.”

Florida and others note that luring big companies to big cities rarely works out that well. The companies can drive up housing prices to make cities too expensive and the jobs created can be filled by mostly outsiders. Companies like Boeing can also easily leave the city and thus the subsidies to attract the company becomes a lost investment.

It appears cities these days are getting more and more desperate to land a big corporation. Chicago Mayor Rahm Emanuel has offered plenty of corporate subsidies via TIF or Tax Increment Financing monies to attract corporations to leave another city and set up shop downtown. People note the city should only be subsidizing areas of the city that are blighted while the number of jobs created is negligible because many workers simply transfer from their previous corporate location.

Plus, the deal is in the details. Chicago gave a company like Republic Windows a lot of tax money to set up shop, but they left and didn’t even pay their workers until they protested. Their contract allowed them to skip town. Amazon has stayed mum on the details of its contract with the city. The last time the city was robbed was when Chicago Mayor Richard Daley made a deal with a private investment company led by J.P. Morgan to buy the parking meters. The new owners quickly quadrupled the prices to make Chicago the most expensive city to park and the city lost $1 billion in the deal. Aldermen who voted in favor of the deal claimed they were strong-armed and didn’t have time to read the contract. While any CEO of a corporation would be fired for such a deal, Daley was instead rewarded after he quickly retired and was hired as a “consultant” to the investment company that bought the parking meters.

Florida created a petition to “Support a Non-Agression Pact” for Amazon which include Harvard University, Brookings Institution and former U.S. Labor Secretary Robert Reich as signers.

Some people are scratching their heads wondering why a city like Chicago which has to close schools and cut its public transportation because of budget problems is offering the store to the richest man on the planet, Amazon CEO Jeff Bezos who is worth $100 billion.

“Why would you want to quote-unquote bankrupt a city?” Florida said. “It smacks to people as just something that looks bad.”