Last week, the frenzy over Amazon's HQ2 search was reignited by reports that the company had decided to split its headquarters to cover two locations: Crystal City, Va., and Long Island City, N.Y. Amazon has not confirmed this plan, so it's too early to start full-on growling over its passing over Philadelphia as a site.
But there was plenty of growling nationally at Amazon's apparent bait and switch — forcing major cities and regions to jump through complicated hoops and offer the sweetest deals possible to lure the company. The company is now privy to detailed data on cities, and it knows what cities, such as Philadelphia, will do to get jobs to come there.
One of the problems, of course, is that virtually no one else knows, least of all taxpayers. The City of Philadelphia is not alone in keeping its Amazon proposal close to its chest, claiming it would lose competitive advantage not just with Amazon but other companies who might want similar deals. (Philadelphia Media Network, owner of the Inquirer, Daily News, and Philly.com, have joined other news organization in the state in a formal effort to have full details of the proposals from Philadelphia and Pittsburgh made public.)
The secrecy of such proposed deals is not a problem related to Amazon alone. Cities like ours routinely offer deals and enticements to lure businesses to bring jobs and other development. And on the face of it, those incentives make sense. But these deals are rarely made public, nor do they always come with strings attached, such as a guaranteed number of jobs. And there is rarely a detailed accounting of whether taxpayer investments were worth it.
It could get worse. A new federal Opportunity Zone program, introduced as part of the Tax Cuts and Jobs Act of 2017, is designed to target neighborhoods in decline, but structured in such a way that investors who are seeking tax advantages can move into a designated zone and develop with very few, if any, strings attached or requirements. There are no reporting requirements, and no promises to create benefits, such as jobs or affordable housing. That means that the program could actually be detrimental to neighborhoods in the city – by fast-tracking gentrification, for example.
The state's own Keystone Opportunity Zones program gives tax breaks to businesses going into specific areas. The state Department of Community and Economic Development runs the KOZ program and makes rosy claims of its success, but there is little in the way of details, such as whether jobs created are permanent, or how much each costs.
Too often, governments get dazzled by the prospect of creating jobs and load up the Christmas tree with giveaways, without proper controls. In the case of Amazon, the benefits of many new jobs could easily be outweighed by the stresses that the company might place on the city, such as rising housing prices or jobs not going to those who need them most. While Philadelphia waits for official confirmation that Amazon is going elsewhere, we might practice breathing a sigh of relief, and start exploring other ways of creating permanent, well-paying jobs for those who need them most.