Philly has now spent more than $500,000 on its secret Amazon HQ2 bid

Meanwhile, the city fights five separate legal battles to keep its proposal out of public sight.

Amazon HQ's front door

Amazon HQ's front door

Robert Scoble / Flickr
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The financial details of Philly’s proposal to win the second Amazon headquarters remain one of the city’s most fiercely guarded secrets. But one thing is for sure: the price tag for the proposal itself keeps getting bigger.

City-affiliated agencies have now sunk more than half a million dollars to date on various campaigns to woo the ecommerce giant, officials tell Billy Penn.

That figure includes the previously reported $245,000 spent on research, marketing materials and ad blitzes during phrase one of the proposal process. Since landing on Amazon’s list of 20 finalists in January, the Philadelphia Industrial Development Corporation, the city’s nonprofit economic development arm, has put another $300,000 behind the city’s chances to secure the coveted headquarters.

Total price tag to date? $545,000.

What it was spent on

“95 percent of this total was invested in research, data analysis, and development of assets that have already been used in other efforts and will continue to be of use attracting business and talent to Philadelphia well beyond the Amazon HQ2 process,” said Jessica Calter, PIDC’s vice president of marketing communications.

The agency emphasized that the spending came from “PIDC resources” — not taxpayer dollars.

Founded in 1958, PIDC is a joint venture between the city government and the Chamber of Commerce, with the express purpose of incentivizing investment and job growth. The nonprofit says it has invested $16 billion into economic development projects over the past six decades.

All told, PIDC has picked up most of the tab for the city’s Amazon campaign. (Visit Philly, which is funded largely by the city’s hotel tax, spent $85,000 of its own money on bus wraps and a social media campaign in Seattle — an effort to promote Philly’s beauty angles to the Amazonian bigwigs.)

During the first phase, PIDC funded the ultra-glossy video component of the city’s pitch to Jeff Bezos, as well additional marketing materials. For phase two, they’ve spent it on other largely “reusable” resources, like recruitment efforts in tech sector talent. Among the 5 percent of so-called non-reusable expenditures: $25,000 in legal fees and about $10,000 in meals, transportation and other expenses.

Critics say the city has already spent too much money and energy on attracting a company whose presence would raise rents and attract a legion of tech bros to Philly. Business boosters say Amazon would be an economic blessing for the poorest big city in the country — and these bid-related expenses are a drop in the bucket compared to Amazon’s promised 50,000 jobs.

But the proposal itself, which likely promises billions in tax breaks and other perks, remains the white whale for Philly’s Amazon watchdogs. And the city has shown no interest in handing it over without a fight.

“It’s not a great direction for public economic development to be going,” said Kati Sipp, principal at New Working Majority, a consulting group that helped organize workers during the Amazon bidding wars last year. “Obviously, citizens have the right to know what is in this economic development deals, especially in this case where the company is owned by the richest man on earth.”

The trade secret defense

Mayor Jim Kenney’s administration submitted its proposal for the coveted Amazon headquarters in October 2017. Since that time, the city has received 20 public records requests under Pennsylvania’s Right-to-Know law seeking details about the various tax breaks and other incentives offered to the online retail juggernaut.

For comparison, attorneys for the Kenney administration have fielded 1,320 total public records requests in that same period. But to date, the city has either denied requests for the Amazon bid or supplied heavily redacted records, which leave out financial specifics.

The argument for withholding details of the incentive packages is that they could hurt the city’s competitive standing both for the project at hand as well as future business-luring efforts. And they promise to release the details … if Amazon ends up picking Philly.

“If Philadelphia were selected for Amazon HQ2, any new incentives would require legislation, which includes a public process,” said Lauren Cox, spokesperson for the Department of Commerce.

In short, it’s a trade secret — and while it doesn’t just apply to Amazon, the scope of the perks the city likely offered has attracted a growing pool of critics, including transparency advocates.

Of the 20 individuals and organizations that submitted requests for the proposal, five have taken the city to court with appeals, a Kenney spokesperson confirmed. (Taxpayers are passively picking up the tab for this litigation, too — though an exact figure is impossible to pin down. Unlike private sector attorneys, the salaried Law Department attorneys do not track time spent on individual cases and appeals.)

One of the appeals was filed by Megan Shannon, an attorney specializing in insurance recovery at Offit Kurman law firm. Shannon argues the public has a right to know what the proposed incentives are before a decision is made. Should Amazon choose Philly, she says, residents would be bound to this clandestine arrangement.

Last week, Shannon filed a motion for “extraordinary relief” with the state Supreme Court arguing to force the city’s hand to release the records.

“The trade secret exemption is supposed to protect companies who submit bids to local governments by preventing their competitors from accessing their bids. It’s not meant to shield the City from disclosing what it’s doing with taxpayer money,” Shannon told Billy Penn.

While other cities and states have disclosed parts of their bids, Philly is not the only Amazon suitor to make a case for concealing its records. In Pittsburgh, officials said their pitch to Amazon was protected by a non-disclosure agreement with Amazon, and that divulging details could similarly damage their shot in the Hunger Games-esque national competition.

Governments are usually the ones receiving business bids — not making them. But in the eyes of Pennsylvania’s Office of Open Records, this arrangement doesn’t circumvent state records laws.

“A confidentiality or non-disclosure clause in a contract, settlement agreement, etc., cannot trump the Right-to-Know Law,” Erik Arneson, executive director of the OOR, told The Incline, sister publication to Billy Penn.

In response to appeals filed over Philadelphia’s HQ2 bid, the OOR has ordered the city to comply and hand over the records, according to the Inquirer. The city is now fighting the OOR’s rulings in court, effectively prolonging the release of the records for the foreseeable future.

Amazon is expected to announce its second home before the end of the year.

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Amazon, Business