It seems like only yesterday, but nearly ten years have passed since the day I was talking politics on a radio show and an editor from a competing paper made a confession that almost sent me to the floor.
The U.S. Olympic Committee had just selected Chicago over Los Angeles to represent the country in the competition to host the games, and this editor said she was just so proud that little old Chicago had been recognized with such a distinction.
Proud? We were gearing up to write a blank check for two weeks of headaches. Alas, even the press fell for that campaign.
Determined never to learn from our mistakes, here we go again. I’m talking about the efforts by everyone from Mayor Rahm Emanuel to Governor Bruce Rauner to fire up residents as Chicago enters the competition to woo Amazon and become the site of the online retailer’s second headquarters.
On September 7, Amazon CEO Jeff Bezos announced the company had outgrown its base in Seattle and was looking to build what he’s calling HQ2. Cities and states have until October 19 to submit proposals. Basically, they’re vying for the “right” to help pay Bezos, one of the world’s richest men, to build a corporate headquarters. Like he needs a handout! (I never again want to hear any of you mock the gullibility of Trump voters in rural Michigan or Wisconsin for drinking the Kool-Aid.)
As a couple of old friends of mine, WVON talk show cohosts Maze Jackson and Charles Thomas, like to ask about any issue: What’s in it for the black people? In this case, let’s broaden the question: What’s in it for ordinary Chicagoans?
Well, there’s the spectacle of the bid proposal, which is sort of entertaining. Rahm says “all hands are on deck” to win the bid. Rauner vows to win Amazon over with “razzle and dazzle.”
If it’s anything like the Olympic bid, maybe Bezos and other Amazon executives will come to town to hang out with local celebrities. If it’s really like the Olympics, the police will spy on protesters.
The big prize is the jobs. In its request for proposals, Amazon claims it will bring the winning applicant 50,000 jobs that pay close to $100,000 a year.
But later in the proposal Amazon writes, “Please note that the actual average wage rate may vary from the projected wage rate.” Say this for Amazon—it makes sure to protect itself up front.
While 50,000 jobs sounds great, Chicago’s got a checkered history when it comes to companies making good on job promises. The most infamous case was Republic Windows and Doors. In the 1990s, the city gave Republic more than $10 million in tax increment financing money to build a factory on Goose Island that would employ at least 610 people. In 2008, Republic closed the factory but got to keep the TIF cash.
Of course, the city can put “claw back” provisions in any deal with Amazon. That means Amazon would have to return part of whatever subsidies the city pays if it falls short of 50,000 jobs. But in its request for proposals, Amazon writes, “please also describe any applicable claw backs or recapture provisions for each incentive item.” Translation: if you want the headquarters, don’t bother with claw backs.
Amazon also makes it clear that it expects handouts—or, as the company calls them, “incentives.”
“Please provide a summary of total incentives offered for the project,” Amazon writes, including but not limited to “tax credits,” and “free or reduced land costs.”
This is what you might call the show-me-the-money part of Amazon’s request.
“We acknowledge a project of this magnitude may require special incentive legislation in order for the state/province to achieve a competitive incentive proposal. As such, please indicate if any incentive or programs will require legislation,” Amazon writes. “Ideally, your submittal includes a total value of incentives.”
In addition, Amazon requires that applicants “provide a timetable for incentive approvals at the state/province and local levels, including any legislative approvals that may be required.”
Basically, it’s asking that applicants guarantee the “incentives” will be approved even before anyone has a chance to see what they are. Look for a repeat of the parking meter sale in which Mayor Richard M. Daley strong-armed the City Council into approving a deal virtually sight unseen.
In short, bringing Amazon to town will probably cost untold millions in tax credits—money diverted straight from the state’s coffers. That spells a tax hike for everyone else as the state jacks up taxes to compensate for the money it’s giving to Amazon.
Also, Chicagoans can expect to pay tens of millions of TIF dollars in construction and land acquisition costs—and if the headquarters comes to the Loop or Near North Side, we’re talking a lot of money. That’s property tax dollars diverted from the schools—so, instead of sending money to your classroom, you’ll be sending it to Amazon.
Once again, let me remind you that Illinois and Chicago are supposedly broke—at least they’re borrowing millions to pay basic obligations.
We don’t have the political will to pass a graduated income tax to pay our mounting obligations. (Illinois still has a flat tax rate.) So we’re dependent on property taxes and various regressive fines and fees, such as the county’s spectacularly unpopular sweetened beverage tax. Yet we have piles of cash for Amazon?
At some point we have to ask ourselves whether the money Amazon makes for us is equal to the cash it takes from us, as the Beatles might have phrased it. If the Olympic bid’s any indication, I doubt it will be asked, much less answered.
So to return to the original question—the only thing ordinary Chicagoans can expect from the Amazon deal is the bill. v