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buck. New Albany provided a 15-year tax exemp-
tion on $10 million in new investments. That agree-
ment calls for 25 full-time Amazon jobs but describes
the detail as a “good-faith estimate” that cannot “be
construed in a manner that would limit the amount
or term of the tax exemption.” New Albany officials
declined to comment.
The second deal, in 2015, included the jumbo
warehouse in Etna and another in nearby Obetz. The
following year, JobsOhio gave Amazon a $270,000
tax credit to convert a former Chrysler plant in
Twinsburg, about halfway between Cleveland and
Akron, into a sorting facility. Amazon promised only
10 full-time jobs, plus 300 part-time or seasonal ones.
Even so, the city kicked in a seven-year, 50 percent
property tax exemption, worth roughly $600,000.
“About 65 percent of that money would have gone
to the school district,” says Larry Finch, Twinsburg’s
director of planning and community development,
though he adds that the deal should still be consid-
ered a win. In May, Twinsburg passed a property
tax levy of $6.9 million, or $241.50 per $100,000 of
home value, to fund its schools.
Earlier this year, Amazon’s fourth deal with
JobsOhio secured $11.6 million in tax breaks to open
another two warehouses. Kasich announced the fifth
and latest agreement, to make a warehouse out of
a shuttered mall in the Cleveland suburb of Euclid,
on Twitter on Sept. 28. “Congrats to Euclid on the
big win!” he wrote.
Kasich has good reason to promote JobsOhio’s
deals. In 2010 privatizing the state’s economic devel-
opment agency was a big part of his campaign-trail
plan to stem Ohio’s loss of manufacturing jobs. He
argued that a private company staffed with seasoned,
well-paid executives could negotiate better than a
public agency would. “They will be given the power
to negotiate, all the way down to crossing the t’s and
dotting the i’s,” he said at the time. The first bill Kasich
signed into law after taking office created JobsOhio.
If the agency were directly funded with public
money, it would be subject to public records laws.
Kasich came up with a financing scheme that allowed
JobsOhio to avoid that requirement. He arranged for
the state to sell to the agency its liquor monopoly,
which dated to the end of Prohibition. The price:
$1.4 billion, mostly in payments to bondholders, for
a 25-year lease of a business that had been contrib-
uting $250 million annually to state coffers. JobsOhio
also agreed to make supplemental payments if liquor
profits exceeded certain thresholds, which they have.
Since 2013, JobsOhio’s annual salary costs have risen
from $2.5 million to $11.5 million. The 83-employee
agency’s president, John Minor, has a salary of
$445,000, three times Kasich’s.
“Prior to the formation of JobsOhio, public offi-
cials had to be more open about what they were offer-
ing to companies like Amazon,” says Dennis Murray
Jr., an attorney in Sandusky who as a Democratic
state legislator tried to fight JobsOhio’s takeover ofCity Pros Cons
Atlanta ○ Major flight hub; home to Amazon delivery
partner United Parcel Service Inc.○ Inadequate mass transit for
a widely dispersed metro areaAustin ○ Low cost of living; high quality of life; young
workforce; low-regulation state with no
state income tax; home to recent Amazon
acquisition Whole Foods Market Inc.○ Small metro area compared
with others on this listBoston ○ Proximity to Harvard and MIT; flight hub;
relatively low cost of living; home to Amazon’s
robotics subsidiary○ Officials have refused to
negotiate incentives for nowChicago ○ Strong, diverse talent pool; major flight
hub with access to mass transit; heavy tax
incentives○ Not a tech hubDenver ○ Flight hub; high quality of life; young,
educated workforce looking for tech jobs○ Conservative on tax breaksDetroit ○ Low rent; three big universities nearby ○ Conservative on tax breaks;
subpar mass transit; small
tech scene
New York ○ Young, diverse workforce; strong university
ecosystem; proximity to advertising and
fashion industries○ High costs of living and
housing; limited space for
constructionPittsburgh ○ Robotics hub; close to major distribution
points; large workforce with manufacturing
background○ Far from other major metro
areas and tech centersTo r o n t o ○ STEM-centric workforce with lower
salaries than U.S. counterparts○ Backlash from President
Trump
Washington○ Highly educated workforce; strong public
transit; Amazon CEO Jeff Bezos owns the
city’s top newspaper and its largest house○ Expensive housing market;
limited building spaceComplaints about strained public services haven’t hurt Amazon
much in the search for its second headquarters. Some 238 cities
applied for the honor, and the promised $5 billion in spending,
before the Oct. 19 deadline. As the company begins narrowing
its options ahead of a 2018 decision, here are 10 likely finalists.
—Natalie Wongthe liquor franchise. “Now, by the time the public
finds out, the deals are finished. They don’t have to
sell it.” Timothy Keen, Kasich’s budget director, says
the private agency is better suited to the task than its
public counterpart was.
As economic development agencies have been
privatized in other states, some auditors like Yost
have tried to push back. Timothy Keller, auditor
for New Mexico, successfully lobbied the private
Governmental Accounting Standards Board to adopt
a nationwide rule that requires governments to start
publishing annual tax incentive totals by the end
of this year to get the bond-rating benefits of GASB
certification. “We have created this self-enforcing
cycle of competition between state governments to
lure companies,” he says. “Hundreds of millions of
dollars have been thrown away.” But the new rule
won’t require states to show how many jobs they
get in exchange for tax breaks or whether the jobs
are desirable. And it might not apply to privateA Second Home for Amazon
TECHNOLOGY Bloomberg Businessweek October 30, 2017