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October 30, 2017Edited by
Jeff MuskusPHOTO ILLUSTRATION BY 731; PHOTO: CAROLINE TOMPKINS FOR BLOOMBERG BUSINESSWEEK Businessweek.com
LOOK AHEAD ○ Facebook, Google, and Twitter
executives will testify to Congress
about Russian election meddling○ Alibaba is likely to report strong
revenue growth once again, though
some investors doubt its numbers○ Apple reports earnings. Analysts
will be looking for signs of further
iPhone X production delaysAmazon
Gets a Good
Deal in Ohio.
Maybe
To o G o o d
○ The jobs payoff is uncertain
for millions of dollars in tax
incentives and grantsThe emergency responders of Licking County, Ohio,
are under strain. At least once a day, a medical unit
from West Licking Fire Station 3 makes a run to the
Amazon.com Inc. warehouse 3.1 miles away, in the
township of Etna, about 20 miles east of Columbus.
The calls for routine medical issues that occur in
grueling warehouse jobs come at all hours, says Steve
Little, the fire district administrator. Shortness of
breath. Chest pains. Myriad minor injuries. During
the busy holiday season, he says, the warehouse
sometimes issues multiple emergency calls a day.
Amazon isn’t helping cover the costs. Under the
deal the company negotiated in 2015 with local offi-
cials and the state’s private economic development
agency, JobsOhio, it’s paying no property taxes
to Licking County for 15 years. As part of a two-
warehouse deal, the state gave Amazon $17 million in
tax incentives, and JobsOhio handed over $1.5 million
in cash, funded with income from the state’s liquor
monopoly. The new facilities are “almost a million
square feet we have to protect, but we get no extra
money,” Little says. “We have no voice in these deals,
and we get no cash. Our residents are being forced to
pay instead.” In November, voters in Little’s district
will be asked to approve a five-year, $6.5 million prop-
erty tax levy to keep the fire department operating.
While most big companies extract tax breaks from
states and municipalities where they’re looking to
expand, in Ohio Amazon has become something of
a poster child for incentives that make it tough for
public services to accommodate the added strain
its facilities bring. In four deals struck through
JobsOhio since 2014, the company has received at
least $123 million in tax breaks, plus $2.9 million in
cash grants. The terms of a fifth agreement, whichRepublican Governor John Kasich announced in
September, haven’t been disclosed because the
deal hasn’t yet been signed by the state’s Tax Credit
Authority, a five-person panel composed mostly of
local business leaders.
The deals have required Amazon to create surpris-
ingly few jobs. And JobsOhio’s lack of transparency
is part of the problem, says David Yost, Ohio’s state
auditor. He says that “$123 million is a lot of money,
and you ought to get a lot for that. It’s really hard
to know how much the state of Ohio paid per job.”
Ohio’s job-growth rate has trailed the U.S. average
for 57 consecutive months; in August it was about
1.1 percent, compared with the 1.5 percent national
rate. In 2013, after Yost, a Republican, threatened
to compel JobsOhio to show him more numbers,
Kasich pushed a bill through the state legislature strip-
ping public officials of the right to audit the agency’s
books. A private auditor now conducts an annual
review, which is partly redacted before publication.
“JobsOhio is succeeding where public efforts
failed,” says agency spokesman Matt Englehart.
“Amazon has shown confidence in Ohio’s talent by
investing and creating jobs here.” If a company fails
to live up to its deals, Englehart adds, its incentives
can be revoked, and its funding clawed back. Amazon
didn’t respond to requests for comment for this story.
In 2014, after negotiating with JobsOhio, Amazon
agreed to spend $1.1 billion to build three data centers
in the state in exchange for a 15-year exemption
on state and local property and sales taxes, up to
$77 million. The value of the tax breaks will increase
proportionately if Amazon spends more on construc-
tion or expansion of the data centers from now to- JobsOhio negotiated a $4 million tax credit
to offset payroll costs in exchange for a promise of
120 total jobs at the three data centers. It also gave
Amazon $1.4 million in cash.
As part of the first deal, municipalities that wanted
a data center had to offer supplementary blind bids.
David Meadows, economic development director
of Hilliard, says the Columbus suburb gave Amazon
$5.4 million in further incentives to land one. Nearby
Dublin handed over $7.3 million, including 68 acres
valued at $6.8 million and sold to Amazon for a
T E C H N O L O G Y
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