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Today’s must-read

Tuesday, Oct 27, 2020

* John Lippert and Natalie Moore at the BGA

Amazon has been quietly cutting such deals in and around Chicago since 2015, winning tax breaks and public incentives to build 36 warehouses as part of its nationwide effort to expand its own distribution system, cut its dependence on rival shippers like the U.S. Postal Service and bolster its famous promises of next-day delivery.

To help pay for its vast expansion, the company and its developers have won at least $741 million in taxpayer-funded incentives in northeast Illinois alone, according to a Better Government Association/WBEZ investigation.

An examination of public records from more than two dozen municipalities provides new details in Amazon’s six-year effort, revealing a patchwork of nondisclosure agreements, a lack of transparency during negotiations and suburbs pitted against each other to secure the most favorable deal.

The BGA/WBEZ analysis found the company received far more tax breaks from communities of color — like University Park.

Amazon collected less than $100 million in public incentives for the 15 warehouses it built in predominantly white communities but won more than $640 million in taxpayer incentives for the 21 projects built in communities with larger nonwhite populations, the examination found. Many of those communities are either mostly Black, mostly Latinx or have higher concentrations of low-income residents, and with municipal budgets already short on cash.

Records show the three largest incentive packages Amazon received — totaling $512 million — all came from predominantly Black suburbs. By contrast, the company built warehouses in at least seven mostly white communities that reported offering no public incentives at all.

- Posted by Rich Miller        

26 Comments
  1. - Donnie Elgin - Tuesday, Oct 27, 20 @ 11:32 am:

    The two largest incentives ( University Park and Markham) were allowed using TIF’S which have to meet the “blight” standards and the “but for” tests. These tess are intended to demonstrate that the economic development within a proposed TIF district would not otherwise have happened but for the TIF.


  2. - Froganon - Tuesday, Oct 27, 20 @ 11:36 am:

    There’s nothing like the good ole Free Market/s
    It’s time for the legislature to set some ground rules mandating transparency, and public review. A state tax that automatically kicks in when a local government gets carried away would help. Legislation thwarting municipalities from undercutting each other would help too. Lot’s of wishful thinking here.


  3. - dr - Tuesday, Oct 27, 20 @ 11:44 am:

    the old saying “the rich get richer, and the poor get poorer” really has aged well over time


  4. - SouthSide Markie - Tuesday, Oct 27, 20 @ 11:53 am:

    This shouldn’t be a shock because it isn’t just Amazon. It is essentially how every large scale non-residential development in predominantly minority South Suburban municipalities has happened since tax increment financing came into vouge in the late 1980’s. Developers have the advantage because there is more land to develop than there are developers to build on it. A piece of vacant land in someplace like UP is probably competing with land in Bolingbrook or Aurora or other places with lower taxes and what is seen as a “more attractive” community. The way to get a particular parcel of land noticed by developers in a community that they would not otherwise look at is to embed a huge incentive into it. It levels the playing field for that community versus others (and was the original purpose behind tax increment financing). Elected leaders (and generally community members) are thrilled with the tax revenues and jobs that they get because “Half a loaf is better than none.” They’re betting on the long term benefit that the community will reap in a couple of decades after the incentive burns off. Given that they don’t have much else to work with it, it’s a good bet.


  5. - 1st Ward - Tuesday, Oct 27, 20 @ 12:01 pm:

    Burying the lede… “Even with the tax breaks, the warehouse will boost Markham’s annual tax collections by $6 million, Agpawa said. Village residents will have a shot at the 1,000 jobs. And the warehouse had already attracted other developers who wanted to add a gas station, a restaurant and a hotel.”

    Further, the story glosses over the statement of the Markhem warehouse “Markham billed as a robotics showplace”. Is this a test warehouse for robotic warehouse applications and widgets? If so, there will be some high paying engineers at this location increasing the economic value of this warehouse compared to the others.

    The article doesn’t reference the size of the other warehouses but states Markham’s is a “behemoth” which would make the Matteson one a “behemoth” too given they are both the same size. The wording leads me to believe the others are smaller in size thus lower tax incentives would make sense.


  6. - SouthSide Markie - Tuesday, Oct 27, 20 @ 12:11 pm:

    == There’s nothing like the good ole Free Market ==

    There’s been nothing like the good ole Free Market to help the South Suburbs. That’s why they need to be able to give incentives. There’s been nothing like the good ole Free Market to help the African American community. That’s why we have Affirmative Action. Both are there to level the playing field, to make mitigate outside influences on the so-called Free Market and make it equitable.


  7. - Dan Johnson - Tuesday, Oct 27, 20 @ 12:12 pm:

    It should be illegal for any tax subsidy deal to be private. The same standards for spending public budgets of transparency should apply for spending public dollars in the form of a special tax break.


  8. - JS Mill - Tuesday, Oct 27, 20 @ 12:17 pm:

    I guess the days of private enterprise are over. I was re-reading Adam Smith and this does not sound much like capitalism and a lot more like… (gasp) socialism.


  9. - City Zen - Tuesday, Oct 27, 20 @ 12:17 pm:

    ==As towns like University Park and Markham embrace the new Amazon jobs, critics argue the jobs don’t compare to what unskilled workers could earn in steel mills that dotted the suburbs south of Chicago a generation ago.==

    And the black spots that dotted the lungs of those unskilled workers.


  10. - Anonymous - Tuesday, Oct 27, 20 @ 12:18 pm:

    ===The two largest incentives ( University Park and Markham) were allowed using TIF’S which have to meet the “blight” standards and the “but for” tests. These tess are intended to demonstrate that the economic development within a proposed TIF district would not otherwise have happened but for the TIF.===
    This location would definitely qualify. It was a hodgepod of abandoned houses. I was helping someone look for sites about 7-8 years ago. They thought it would take too much to clean up even with incentives.

    Also, the story mentions the EDGE credits, but I wonder how many of the locations are also in opportunity zones.


  11. - SouthSide Markie - Tuesday, Oct 27, 20 @ 12:20 pm:

    Got to question the kind of sloppy reporting where BGA identifies Charles Durham as Markham’s attorney. Chuck Durham is a lot of things, including a world-class financial advisor to municipalities for over 30 years. He is not (and probably would never want to be) an attorney.


  12. - Anyone Remember - Tuesday, Oct 27, 20 @ 12:30 pm:

    “… (gasp) socialism.”

    According to the Austrian School of Economics (the people who thought Milton Friedman was a flamin’ liberal), the US has been Socialist since Calvin Coolidge signed the Flood Control Act of 1928.


  13. - DuPage Saint - Tuesday, Oct 27, 20 @ 12:31 pm:

    How can towns or villages have non disclosure agreements? And if they can this should be made illegal.


  14. - SouthSide Markie - Tuesday, Oct 27, 20 @ 12:44 pm:

    == How can towns or villages have non disclosure agreements? ==

    They can’t and they don’t. The final deal has to be disclosed publicly. In a written agreement which has to be approved in a public meeting in order for it to be binding upon the municipality. Otherwise, the municipality could be sued to prevent it from providing the incentives and the developer would get nothing. The negotiations leading to that deal are what is being kept confidential. Which is legal and true for negotiations over large scale developments anywhere in the Chicago area. Without that confidentiality, there is the threat of a bidding war over the property that is the proposed site of the development.


  15. - Blue Dog Dem - Tuesday, Oct 27, 20 @ 1:10 pm:

    I often wonder, if in the long run, dealing with Amazon and WalMart, doesn’t increase the blight in a given area.


  16. - Glenn - Tuesday, Oct 27, 20 @ 1:27 pm:

    Small businesses have been hurt by COVID-19 shutdowns and the summer looting, but if I was to bet I’d bet Amazon has sunk more businesses than these two combined.


  17. - Watcher of the Skies - Tuesday, Oct 27, 20 @ 1:33 pm:

    ===The two largest incentives ( University Park and Markham) were allowed using TIF’S which have to meet the “blight” standards and the “but for” tests. These tess are intended to demonstrate that the economic development within a proposed TIF district would not otherwise have happened but for the TIF.===

    Those tests are, of course, a joke under our current laws.

    ===Elected leaders (and generally community members) are thrilled with the tax revenues and jobs that they get because “Half a loaf is better than none.” They’re betting on the long term benefit that the community will reap in a couple of decades after the incentive burns off. Given that they don’t have much else to work with it, it’s a good bet.===

    Absolutely.

    Which brings me to my point:

    The state should set limit on incentives to limit this race to the bottom. Otherwise you end up with a bunch of local FoxConns.

    This is obviously a difficult balance, but if a business wants/needs to be located in Illinois, we repeatedly shoot ourselves in the foot when they play municipalities off against each other. We’re in dire need of revenue at every level, and these deals shrink the pool.


  18. - Ares - Tuesday, Oct 27, 20 @ 1:40 pm:

    Pause the incentives, and request (politely) that all the recipients forgo their incentives until the munis recover from the pandemic. If the recipients refuse, boycott ‘em and bust ‘em up.


  19. - SouthSide Markie - Tuesday, Oct 27, 20 @ 2:08 pm:

    == If the recipients refuse, boycott ‘em and bust ‘em up. ==

    How much economic power do you think that places like Markham have against companies like Amazon? If they did, they wouldn’t need to give the incentives.


  20. - SouthSide Markie - Tuesday, Oct 27, 20 @ 2:16 pm:

    == critics argue the jobs don’t compare to what unskilled workers could earn in steel mills that dotted the suburbs south of Chicago a generation ago.==

    The wages also don’t compare to making nothing. Would the BGA rather have these folks on unemployment? The steel industry left the South Suburbs over 40 years ago. Adapt or die.


  21. - SouthSide Markie - Tuesday, Oct 27, 20 @ 2:40 pm:

    == The state should set limit on incentives to limit this race to the bottom. ==

    Caps on incentives are going to restrict the ability of poor communities to compete for development with wealthier ones. Should there be a cap on what a wealthier community can receive from a development, with excess tax revenues from that development going to poorer communities? (As has been said, “That ain’t gonna happen.)


  22. - Proud Sucker - Tuesday, Oct 27, 20 @ 3:01 pm:

    ===According to the Austrian School of Economics (the people who thought Milton Friedman was a flamin’ liberal), the US has been Socialist since Calvin Coolidge signed the Flood Control Act of 1928.===

    I’ve always felt we have been socialist since the Confederation Congress which set the 1787 NW Ordinance in place to provide for public education. We were then the first country to so do. I know it’s a stretch because the term ’socialism’ wasn’t even coined yet, but we definitely set a policy far from anything Europe had seen.


  23. - Ares - Tuesday, Oct 27, 20 @ 4:34 pm:

    Boycott and bust up works at the national level, as demonstrated 100 years ago, and ever since. It’s gonna happen sooner or later.


  24. - cermak_rd - Tuesday, Oct 27, 20 @ 4:57 pm:

    even if Amazon is broken up it will be a split between retail and services, not the breaking up of it’s retail arm itself. And anyway, remember purchases from Amazon are taxed now so there is no longer an unequal competition between amazon and mom and pop. Fact is, Amazon has much better variety than mom and pop stores have and their customer reviews are awesome for finding which widget one should buy. And since many of the mom and pop operators seem to have an I’d rather endanger my customers than do curbside and stay closed attitude, I am preferring Amazon now.


  25. - Quenton Cassidy - Tuesday, Oct 27, 20 @ 7:40 pm:

    Ares - that’s simply naive. “The people“ aren’t going to rise up against Amazon because Amazon decided not to give back incentive money.

    It’s easy to throw stones at these incentive deals, and in the abstract they are easy political targets.

    But as SouthSide Markie has written very well, it looks very much differently when you are an elected leader in a community that is dying for jobs.

    Considering state government’s record on managing an economy and fiscal issues, perhaps that is the entity least qualified to be telling local elected leaders how much they can offer in incentives. The people in those communities who choose to give up the tax revenue were elected by the people who live in those communities; perhaps some deference should be given to that fact before judging from afar that they are somehow doing the wrong thing.


  26. - thisjustinagain - Tuesday, Oct 27, 20 @ 8:33 pm:

    NDA’s are ILLEGAL under FOIA. Anything having to do with finance is a public record, no matter what the contract says. See FOIA:
    “(5 ILCS 140/2.5)
    Sec. 2.5. Records of funds. All records relating to the obligation, receipt, and use of public funds of the State, units of local government, and school districts are public records subject to inspection and copying by the public. (Source: P.A. 96-542, eff. 1-1-10.). So any deals cut with Amazon are public records.


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