Tuesday, April 24, 2018

State won't say how much of your money it wanted to give Amazon — that's Gilbert's 'trade secret'

Posted By on Tue, Apr 24, 2018 at 1:26 PM

click to enlarge SHUTTERSTOCK/WIKIMEDIA COMMONS
  • Shutterstock/Wikimedia Commons

Show of hands — who remembers how desperate Detroit came off trying to lure Amazon's second headquarters within its borders? Tidbits of the proposed giveaway for the e-commerce giant still haunt us: Amazon would have been permitted to siphon its employees' state income taxes for 20 years, and would have avoided paying real estate and personal property taxes for 30 years.
But those terms never gave the complete picture. Redacted from the pitch  document obtained by local media outlets through the Freedom of Information Act was the total dollar amount of the giveaways. And the state is still refusing to give up that figure.

In a report published today, the Detroit Free Press says the Michigan Economic Development Corporation has for a second time denied its appeal for the full amount of subsidies offered to Amazon. The MEDC is ultimately hiding behind Dan Gilbert in its refusal to relinquish the information, pointing to a 2016 non-disclosure agreement it signed with Gilbert's Bedrock real estate. As part of that agreement, the MEDC promised it would not divulge any "trade secrets" Bedrock shared while putting together deals. Gilbert's team spearheaded the Amazon bid.

So let's pause for a moment to emphasize something: Gilbert typically goes to the MEDC to secure tax incentives. Tax incentives = your money or money that would go toward paying for services from which you benefit — think roads, schools, etc.

OK, back to why the state thinks you shouldn't know how much public money it (or Gilbert's team, evidently) offered to Amazon: Apparently, the information, regarding the spending of your money or money that you would go toward things you benefit from, qualifies as a trade secret, and therefore would violate that NDA.

What we don't understand is how the steering of public funds qualifies as a secret that belongs to Bedrock. That would indicate that the Bedrock team was given the power to offer up your money or money that would benefit you to get a corporation to come to Detroit (where that corporation would then line Gilbert's pockets by renting office space in some of his approximately 90 downtown buildings). When asked to clarify, MEDC spokesman Otie McKinley said: "Local, regional and state public partners together with private entities such as Rock Ventures/Bedrock developed an attraction package for inclusion in the proposal sent to Amazon for their HQ2 project."

So, yes, a private entity was given the authorization to help put your money on the table. McKinley notes, however, that "at no time were public dollars contractually committed to this project, and had the project ultimately come to Detroit those incentives would have required approval by the Michigan Strategic Fund in a public meeting setting in order to take effect."

At any rate, Gilbert also seems to think that keeping "his" precious trade secret confidential is more important than letting you know how his team apparently envisioned your money should be spent.
“If a future party is completely privy to the details and value of any and all incentive packages previously offered that did not come to fruition, then you can be very confident that the value of that proposal will be the starting point of any negotiation," Gilbert reportedly told the Free Press yesterday.

“In other words, showing the state of Michigan’s hand to all future parties creates no upside for the state, and only hampers the state’s ability to negotiate the best possible future package on behalf of all Michigan taxpayers.”

Again, whose hand is it? If it is the state of Michigan's hand, how does that qualify as Gilbert's trade secret? The state represents you, the people, the taxpayer, the worker whose income tax goes to pay for things we all benefit from — and as such, the state is generally mandated by law to release its dealings to the public should a request be made.

What planet is this? Well, it's planet Michigan – known for its worst-in-the-nation ranking when it comes to government transparency. Our Freedom of Information Act laws are weak, and the state provides especially little information on public money spent for "economic development" purposes. At this very moment, for example, there are numerous undisclosed companies collecting hundreds of millions in cash payments and tax breaks from the state — and our government will not tell us who they are.

But Detroit is actually one of more than a dozen places that has managed to keep the full details of its Amazon bids under wraps. According to a report by the Associated Press in January, at least 15 cities and states would not release the information — many of them also citing "trade secrets" and the possibility that divulging such details could hamper the chance of luring business through future negotiations corporate giveaways.

But releasing the Amazon incentives that never were would help give the public an idea of just how much Michigan would put on the line for the promise of jobs and economic development (promises that are often broken). In December, we estimated that the total amount for Amazon would be well over $1 billion (we came to this conclusion by figuring how much Amazon would get on the state income tax capture alone, by multiplying a conservative jobs estimate of 20,000 by an average salary of $100,000). Most cities whose deals have been made public offered Amazon between $2 and $7 billion.

Further, it's a matter of law and principle. This is your money, after all.

It'll be interesting to see whether the Free Press takes this to court. We called and left a message with the paper's business section and will update this post should we receive a response.

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