Secrecy surrounding Amazon HQ2 bid keeps Georgians in the dark

The hunt for Amazon's second headquarters remains the buzz among lawmakers at Georgia's State Capitol and business elite.

But it's the absence of information about Georgia's bid to win HQ2 and its promise of 50,000 jobs that's been most confounding to good government groups and tax watchdogs who fear winning the project could come with a staggering price tag.

Georgia’s bid for the once-in-a-generation prospect is a study in contrasts. It’s one of the most public sweepstakes for a headquarters in modern memory, and the company’s open demands led to 238 bids from across the continent. But Georgia’s proposal is also one of the state’s best kept secrets.

What state leaders can offer Amazon at taxpayers’ expense is allowed to be secret under the Georgia Open Records Act. Changes to the sunshine law over the last 15 years allow state leaders to keep offerings to big business under wraps until after the state either lands a project or a prospect looks elsewhere.

State leaders have said the secrecy is needed to protect the integrity of sensitive business location decisions — not just Amazon’s — and to shield a corporation’s secrets from its rivals. The state also argues it doesn’t want to tip its hand to job-hungry neighbors.

But the secrecy among most of the 20 finalists bidding for projects like HQ2 has the perverse effect of juicing up the competition, critics say, and makes it likely that winning states could bid more for big projects than they should.

It also makes it impossible for the public to determine whether the packages of perks are worth it before a deal is done.

“At the end of the day this is the people’s money they’re offering,” said William Perry, who runs Georgia Ethics Watchdogs. “How can you leave the public in the dark when you control their bank account?”

There’s a bipartisan flavor to the critics, with left-leaning groups and conservatives sounding alarms.

Generation Opportunity, a group backed by conservative megadonors Charles and David Koch, launched digital ads last week slamming secretive negotiations and the high-priced giveaways.

A handful of states have released details of their incentive packages. New Jersey officials, for instance, announced that the company could get $7 billion in perks for locating in Newark. Maryland's governor offered $5 billion in incentives if Amazon picks a site in his state just outside Washington. Philadelphia and Chicago also have announced packages with multibillion-dollar price tags for taxpayers.

The state Department of Economic Development denied The Atlanta Journal-Constitution’s requests for records, citing exemptions for active projects. An agency spokeswoman declined an interview request for this story, stating that the department does not comment on active projects. Numerous state and local officials and business executives also are under strict non-disclosure agreements.

The secrecy doesn’t feel right to Nichole Villafane, a Stone Mountain Realtor.

“If you’re keeping something like Amazon incentives away from the voters, what else are you keeping from us?” she said. “At the end of the day it’s our government. We need to know what’s going on.”

‘Level the playing field’

What is known, thus far, is only what officials have publicly said or what has leaked about Georgia's bid. The AJC previously reported it includes more than $1 billion in perks, such as tax credits, grants, worker training and possible transportation improvements.

Experts questioned by the AJC have said incentives built into state law alone could be worth $1 billion to $2 billion, including lucrative tax credits for new jobs. Discretionary incentives, such as so-called “deal closing” grants as well as property tax breaks local governments can offer could take the value of the package even higher.

And there's another wrinkle that could actually provide some sunshine over the high-stakes negotiations. Gov. Nathan Deal has said he might call a special legislative session to hash out additional pot-sweeteners if Georgia is a top finalist for the project.

That would put at least some of the state’s plan under the public microscope, but it could come at the most tension-filled time in negotiations, with lawmakers under pressure not to block the state’s biggest-ever jobs deal.

Georgia residents appear willing to offer the company a bevy of perks to bring 50,000 jobs and the promise of $5 billion in investment. A recent AJC poll found nearly two-thirds of Georgians would support a $1 billion package for Amazon.

In a recent interview, Deal said the open records exemption for major jobs deals has proved crucial to keeping Georgia competitive in the hunt for Amazon and other big-name projects.

“Other states, if they were our competition, could file an Open Records request and find out what Georgia was offering. And we couldn’t find out what they were offering,” he said. “This was to level the playing field. We need to make sure we’re not being taken advantage of by other states trying to one-up us.”

Losing business?

The state laws preserving secrecy around taxpayer-funded incentives date to Georgia’s bid for NASCAR’s hall of fame. The Atlanta Journal-Constitution fought with Central Atlanta Progress, the business group that led the city’s hunt to be racing’s Cooperstown, for nearly a year to shield details of the incentives.

The business boosters eventually gave up the fight after the Georgia Court of Appeals ruled that the bid, along with the package the city offered to try to land the 2009 Super Bowl, was open to inspection under Georgia’s Open Records Act.

When they were finally disclosed, they revealed little new about the millions the state pledged in taxpayer money to land the attraction. That’s because organizers eventually voluntarily released many details about the bid, including renderings of the attraction, a few months before Charlotte won it.

Still, that prompted a new debate in the Georgia Legislature in 2005 about cloaking state and local economic development negotiations in secrecy. The House quickly embraced the measure but it stalled in the Senate amid a firestorm of criticism.

Among the leading opponents was Casey Cagle, then a state senator and a candidate for lieutenant governor who said then economic development officials have failed to make the case that Georgia lost any business because of transparency laws.

It wasn’t seriously revisited until 2012 when Gov. Nathan Deal and lawmakers approved a sweeping rewrite of the sunshine rules that largely strengthened the public’s access to public documents by increasing fines and penalties on those who violate open records and meetings laws.

But it also included an exemption for the state Department of Economic Development involving incentives dangled to companies seeking to build large new projects in Georgia or expand existing facilities already in the state.

That new law said state incentives offered to projects that cost more than $25 million or would hire more than 50 employees will remain secret until a company commits to the development or abandons negotiations.

At the bill-signing ceremony in 2012, Deal praised news media executives for not opposing the request so Georgia is not “victimized” by competitors who could use the law to find out Georgia’s offerings and top them.

But the secrecy now extends beyond just the state Department of Economic Development.

Lawmakers moved to tighten those rules again in 2016 to include records about large projects held by any state agency. Backers of the secrecy bill said competing states found ways to discover juicy details about Georgia projects by seeking records from other state agencies, such as public colleges that sometimes get involved in business recruitment efforts.

That law change also came after the AJC obtained documents from Georgia Tech officials that offered a glimpse into high-stakes, secret negotiations between the state and financial technology giant NCR.

At the time, the company was negotiating a move from Gwinnett County to Midtown Atlanta, and the records showed it was floating the idea of asking Georgia Tech's foundation to underwrite a move by spending as much as $30 million to buy land for the firm's corporate campus.

The records showed Tech officials found the land-buying proposal too costly, and it wasn't clear whether NCR made a formal request. The company wound up moving near Tech's campus without financial help from the school's foundation — but with more than $60 million in state and local incentives.

Neighbors are competitors

The secrecy laws also remain unsettling for some politicians.

Senate Minority Leader Steve Henson said he wants the governor’s office to “err on the side of transparency” and release the details of the incentives, though he understands the competitive reasons that officials want to keep them under wrap.

“The government should be as open as it can be,” he said, adding that he’ll ask the Deal administration for details on why its kept secret. “I know some areas are sensitive, but I’m always concerned when I see confidentiality around this type of issue when we’re giving away taxpayer dollars and incentives.”

Stacey Abrams, a Democratic candidate for governor, voted for the 2012 open-records rewrite along with all but a handful of state lawmakers. But she said the secrecy could make it more difficult for the public and the news media to hold politicians accountable for what is being offered.

“It’s a balancing test,” said Abrams, who was the House’s top Democrat before resigning to run for governor. “You have to strike a balance between offering incentives that allow you to negotiate in good faith, and make sure you don’t promise things you can’t deliver — especially if they’re going to hurt the very people they seek to help.”

The chief backers of the measure were more effusive. State Sen. Mike Dugan, R-Carrollton, who heads the chamber’s economic development committee, said it boiled down to a need for privacy.

“You don’t want to share those details with our competitors,” he said. “And our primary competitors are our regional neighbors.”

Sara Henderson, executive director of Common Cause Georgia, said she understands the sensitivity of negotiations, but leaders need to be frank with voters about what is being negotiated with their money before the ink is dry.

“We are going to be affected long after Deal has left office and perhaps even the next governor,” she said. “Giving us a ballpark would be better than leaving us in the dark.”