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Sometime later this year, the Fort Wayne, Indiana, city council will vote on whether to give a 10-year, $16 million property tax break to the builder of a new warehouse. There is an issue, however, one that goes beyond the potential loss of public money. The city council members – the people expected to decide if this is a worthy use of government money – don’t know who the beneficiary of their largesse is.
Really. Rumor has it that the warehouse will belong to Amazon, but no one will confirm it, so who knows? It could be just a rumor. The city council doesn’t know which corporation it might be subsidizing, because the few officials who have been let in on the secret — including the mayor — have signed non-disclosure agreements preventing them from divulging the corporation’s identity. As a result, city council members are expected to make their decision knowing nothing about the business they are deeming so necessary, they need to offer it millions of dollars to open up in their jurisdiction.
This is not just a giveaway. It’s a corruption of good governance and local democracy. City council members – you know, those people elected by voters – are expected to vote based on hope. “I’m sure it’s probably something that’s going to be very exciting. They say up to a thousand jobs, you know, all these things coming. The taxpayers and the citizens, though, will be on us to make sure we specifically know what we’re voting for,” as one council member said.
There’s no national data on how prevalent non-disclosure agreements are in government economic deals with private business interests, but once you start looking, examples pop up everywhere. The city council of Gallatin, Tennessee, approved nearly $20 million in tax breaks for “Project Woolhawk,” only finding after the fact the company was Facebook, which was worth more than $700 billion at the time. You can find the agreements in New York, Minnesota, Ohio, and Maryland.
Amazon, in particular, seems to make them a part of its standard operating procedure everywhere it goes. Their non-disclosure agreements often cover more than just local economic development office officials or city council members and mayors. Amazon forced non-disclosure agreement for its HQ2 search onto university researchers, urban planners, a hotel concierge and the waitstaff at an Indianapolis restaurant where the local chamber of commerce met to discuss their city’s bid.
These agreements prevent officials from discussing anything about the state of negotiations between the government and the anonymous-to-the-public corporation, other than vague details about the type of project and maybe the overall cost. Most of the time, they only allow officials to publicly release information once the deal is done and confirmed.
Why do corporations insist on all this secrecy? To prevent pushback from the public. In 2017, correspondence with a local official in San Jose, Google confirmed that the goal of the agreements was to prevent public relations problems in the community that might arise once word got out that Google would benefit from subsidies. “The NDAs are to discourage that,” a Google employee wrote, referring to public opposition to the project.
The truth is, a random tech project with a silly name isn’t as outrage-inducing as one with the name of Facebook, Google, or another multi-trillion-dollar firm, so corporations would prefer the former be the subject of debate. Corporations push these agreements so often that local officials often just accept them as a matter of course. “It’s customary now, when mega-Fortune 500 companies come, that they prefer that you not divulge what they’re doing,” said the manager of the Village of University Park, an Illinois community that gave subsidies to a company eventually revealed to be Amazon. “It happens all the time.”
Even the Fort Wayne council members aren’t questioning the existence of the non-disclosure agreements. They just think they should be among the small group of people in the know. “I’m happy to sign a non-disclosure, but either way, I don’t want to be put in a position where I’m asked to make a decision without knowing what I’m deciding,” as one council member put it.
But these agreements are an outrageous assault on the public’s right to know what’s being done in their name. The use of these agreements is ultimately about power, who has it, and who does not. This is literally about whether and how public resources will be distributed, and what sort of negotiating stance public officials take when faced with a powerful corporation asking for money and other favors. No one is asking for these corporations or officials to divulge trade secrets or sensitive personal info on their employees. Instead, corporations want the power to extract concessions from elected officials without the countervailing power of public scrutiny being applied.
It’s impossible for citizens to effectively engage with their government if that government won’t even disclose the names of the entities with which it is doing business. Concerned voters are left fighting ghosts and vagaries instead of real institutions and specific policy choices.
There is a very simple solution to this problem: ban it. Elected leaders can simply cut this strategy off at the knees with legislation that is just a couple of pages long. Illinois Rep. Michael Halpin has a bill to do so in his state, and New York Sen. Michael Gianaris has one too. Several New York City council members have also proposed doing so. If any enterprising Indiana lawmakers who happen to read this piece want to introduce a bill, that’d be great. I’ll even email you the language if you want.
This post initially appeared in a slightly different form on the author’s Substack, Boondoggle.
Pat Garofalo is the author of The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs, the Boondoggle newsletter, and the director of state and local policy at the American Economic Liberties Project.