While the rebuilding of Lower Manhattan after the September 11, 2001 attacks rarely makes national headlines these days, an article in yesterday’s Daily News reminds us how lopsided the negotiations are between New York’s economic development officials and major firms like Goldman Sachs. 

Goldman Sachs is moving its headquarters from one side of Lower Manhattan to the other, adjacent to the World Trade Center site on publicly owned property also known as Battery Park City. After plenty of politicking, construction is underway.  

The politicking goes back to shortly after 9/11 when the firm had concerns that its new entrance would be located at the entrance of a then proposed tunnel.  Not surprisingly, Goldman executives thought this could be a security risk.  When these concerns fell on the deaf ears of then-Governor Pataki in 2005, the firm did what any self-respecting, Fortune 100 Company that wants attention from economic development officials would do. It publicly threatened to relocate. 

In response the Governor took the tunnel off the table, created a timetable for the rebuilding, and along with Mayor Bloomberg tried to smooth things over with new subsidies which rose leaps and bounds from the initial proposal of $1 billion in post 9/11 “Liberty Bonds” to $1.65 billion in Liberty Bonds sweetened with cash grants and tax breaks. 

What the Daily News uncovered yesterday, updated today and was picked up by The New York Times is a provision found in SEC documents that taxpayers would be penalized possibly up to  $320 million if a timeline negotiated between officials and Goldman execs for rebuilding isn’t met. 

Over and over again, large firms like the ones “anchoring” Lower Manhattan’s rebuilding say tax breaks are not factors in location decisions. Subsidy watchers should not be surprised that Goldman took advantage of the lack of leadership in Lower Manhattan’s rebuilding by demanding more subsidies to get the attention of officials to address larger planning issues. 

If you are a researcher or campaigner concerned about economic development accountability, the place to be this week is the national conference of Good Jobs First outside Baltimore. Gathered here are activists who are seeking to remake the relationship between the public and the private sectors.

Some of the most impressive presentations came this morning in a plenary session put together by the Partnership for Working Families (PWF). Madeline Janis, head of the Los Angeles Alliance for a New Economy, and Phaedra Ellis-Lamkins, who runs the South Bay AFL-CIO and Working Partnerships USA, described remarkable changes that have taken place in parts of California. Union-sponsored non-profit organizations, working with community allies, are turning the tables on developers who used to have the red carpet rolled out for them. Now the right to build large subsidized projects is being made contingent on providing benefits to the community ranging from apprenticeship programs and living-wage jobs to affordable housing, more green space and air pollution abatement. Janis and Ellis-Lamkins seemed to be describing a parallel universe in which the common good takes precedence over monied interests.

Their themes were echoed later in a presentation by Cecilia Estolano, chief executive of the Los Angeles Community Redevelopment Agency, a remarkable public official who is converting the agency from what she said was a “cookie jar” for developers into a promoter of projects that bring about broad improvements in living standards.

The good news comes not only from California. For example, Deborah Scott of Georgia Stand Up recounted how her group cajoled local officials in Atlanta to provide for community participation in major development projects taking place adjacent to an old rail line ringing the city.

I was unable to attend the PWF workshops (one of five tracks) because I was giving presentations of my own — in my capacity as research director of Good Jobs First — in workshops on advanced research techniques relating to subsidies and corporate taxes. Joining me in the latter were Matt Gardner of the Institute on Taxation and Economic Policy, who told us how to unearth the real tax rates of major corporations (which are often well below what the company claims), and Michael Mazerov of the Center on Budget and Policy Priorities, who described his proposal to compel corporations to disclose abbreviated versions of their state tax returns.

This is only a sample of the provocative ideas swirling around this conference. Wish you could be here.

(This item is being crossposted on Dirt Diggers Digest.)

After decades of taxpayer-funded “smokestack chasing”, many states are now trying to lure Hollywood film projects with big subsidies. In a remake of beggar-thy-neighbor competition, states in every region are matching and surpassing special tax breaks for the film industry. Meanwhile, as these tax giveaways become more common and so less effective, the actual economic and fiscal payoffs of this subsidy-driven competition remain in doubt.

Still, starry-eyed state officials have been rushing to launch new incentive programs to attract film productions, or extend or expand existing ones. The Michigan legislature recently fast-tracked a package of film industry subsidies, including a fully refundable 42% tax credit for production costs for Governor Granholm’s signature. New York recently tripled its film tax incentive to compete against Connecticut and other neighboring states.

The necessity and efficacy of film industry subsidies has become a dogma for their proponents in state government and in the film industry. Seeking renewal of the Illinois Film Tax Credit (a 20% rebate on qualifying in-state expenditures), Governor Rod R. Blagojevich recently touted a seven-fold increase of film industry spending in the state from a low of $23 million in 2003 to a record $155 million in 2007, while claiming 26,000 film project jobs in 2006.

However, Blagojevich did not report the cost of the state’s subsidies to the film industry, the quality and duration of the jobs created, or the tax revenues generated by film projects.

In fact, the number of critics of state film incentives seems to be growing. A 2006 analysis by the Federal Reserve Bank of Minnesota concluded that while such incentives are indeed popular, “neither will you find much evidence that, as a strategy, incentives do anything better than break even at the public box office.” While noting that film industry incentives do seem to bring film projects to states that have few, a Federal Reserve Bank of Boston study noted that they are also costly, particularly since film production does not generate significant economic activity in other business sectors.

Meanwhile, the high cost of film tax credits is becoming clearer. Massachusetts’s new refundable tax credit, which even reimburses unprofitable film companies with no tax liability, is expected to soon exceed $100 million annually. The chief economist of Louisiana’s state fiscal office describes the state’s film $50 million-a-year film credit as a “government subsidy program” whose costs exceed its benefits, while Connecticut and Rhode Island are reportedly re-examining the real costs versus benefits of their film subsidy programs. Cities like San Francisco hurt by competition from other regions are trying to find ways to support homegrown film producers. Perhaps these small steps towards rationality will eventually inspire other states and cities to restrain this particularly unprofitable interstate competition.

Today’s guest blog is by Stacy Mitchell, author of the highly recommended book Big-Box Swindle and a keynote speaker at our conference next week.

Wal-Mart wants your rebate check. So does Home Depot. But spending it at a big-box store will only further gut the U.S. economy.

As these companies expand, they continue to decimate two pillars of the middle class: small business owners and unionized manufacturing workers. In exchange for all the family-supporting livelihoods they take away, the chains leave us with nothing but very low-paying jobs working in their stores.

It’s a raw deal and a vicious cycle of ever-widening working poverty.

Yet cities continue to welcome, and often subsidize, the construction of more big-box retail. This is not economic development. It’s more like economic colonialism. Studies show that only about 14 cents of every dollar spent at a big-box store stays in the local community —compared to about 50 cents of a dollar spent at a locally owned business.

The chains manage this feat of wealth-extraction by keeping local payroll to a brutal minimum, requiring none of the local services (such as banking, printing, accounting, etc.) that independent retailers need, and carrying virtually no products produced or grown anywhere near the store.

Perhaps most disturbing of all, the rise and continued growth of mega-retailers have been driven in large part by public policy: Billions of dollars in development subsidies for big-box stores. Massive tax loopholes that favor chains over local businesses. Diminished rights for workers and communities. Transportation and planning policies that mandate sprawl. An utter failure to enforce antitrust laws. And the list goes on.

Fortunately, there’s a growing and increasingly effective grassroots movement to withdraw government backing for big retailers and build an economy that supports the common good.

These are a few of the successes so far: Arizona passed a bill last year that bars subsidies for big-box stores and shopping centers. Several states have eliminated a major tax advantage for chains and more are weighing legislation now (including Massachusetts and Colorado). Maine recently enacted a landmark law requiring economic impact studies for retail development.

But perhaps the biggest success of all was that every one of these victories was made possible by exciting, and potentially powerful, new coalitions among independent business alliances and labor and environmental groups.

I’ll be talking about these exciting developments at next week’s Good Jobs First conference — a great forum for building and expanding these ties.

Today’s guest blog is by Jon Zerolnick of the Los Angeles Alliance for a New Economy, who will be speaking at our May 7-8 conference.

We have gotten accustomed to taking our victories where and when we can get them: often marginal improvements and often for small beneficiaries (a handful of workers here, a small community group there). So it is rare (for me) to be able to write of a major victory. But at LAANE, working as part of the Coalition for Clean and Safe Ports, we were just part of something pretty huge: a major victory both for workers and for the environment.

Because of their actions taken last month, the Los Angeles Board of Harbor Commissioners will not just be reforming the broken, dysfunctional port trucking industry; they will be rebuilding it from the ground up. Some 16,000 exploited truck drivers at the Port of Los Angeles (the largest port in the country) have for decades been misclassified as independent contractors. They have finally won long-sought employee rights, which will lead to improvements in pay and working conditions as drivers now have, at long last, the right to organize. People living in the communities around the Port have won meaningful new truck standards that will improve air quality as we get filthy, dilapidated trucks off the roads in favor of newer, cleaner trucks.

Perhaps most important, this multi-year campaign has forged essential new ties between the labor & environmental communities. We’ve gotten beyond the tired old dichotomies of jobs versus environment to a new place where we not only support one another, but where we understand that it is the same forces (of global capital) that hamper progress for all of us.

(I should note that though this was a major victory, we still have much work to do. We will be focused on defending against the expected frivolous lawsuits. We will have to ensure that everything is implemented properly. Most important, we have to lead the way so that LA’s sister port, the Port of Long Beach, scraps their trucking scheme — which fails to address the true underlying problem — and replaces it with a comprehensive solution as LA did. We will then work to make sure that we can replicate at Ports around the country the gains we’ll be seeing here in Southern California.)

I’d urge you: in whatever corner of this movement you find yourself, building and strengthening these ties between different groups is going to be critical as we all move forward to build a more sane, sustainable and just society.

See you May 7 and 8 at the Good Jobs First conference!

Today’s guest blog is by Mary Beth Maxwell, executive director of American Rights at Work and speaker at our May7-8 conference.

These are hard times for U.S. working families. We are suffering the highest inflation rates in over 20 years. Oil prices today rose to over $118 a barrel, up nearly 80 percent in a year. As Steven Greenhouse’s new book The Big Squeeze documents, working families are getting squeezed while oil companies make record profits.

Americans are rightfully asking a simple question – why does our government continue to dole out corporate subsidies in these tough economic times?

We’ve seen thousands of jobs shipped overseas by the same companies who receive taxpayer-funded corporate welfare. The sub-prime shenanigans of Wall Street have cost thousands of working men and women their piece of the American Dream. Wages have remained stagnant despite surging inflation, and employers continue to prevent workers from achieving their economic goals.

Although workers can’t always rely on their employer to give them fair pay for a hard day’s work, they can count on union representation to fight on their behalf. That’s what most employers want their workers to forget — just ask employees of the retail food industry, where union members earn 31 percent more than non-union employees. Overall, unionized grocers contribute more than twice as much to health insurance premiums and pension coverage than non-union chains.

Corporate giants like Wal-Mart pay their workers poverty wages and then have state governments subsidize their corporate irresponsibility through public assistance programs. The unionbusting retail giant will stop at nothing to prevent its employees from getting a fair shake –that’s why workers in the United States need laws that level the playing field.

That’s why the Employee Free Choice Act is vital. Set to be reintroduced in Congress next year, the bill will give workers a more direct path to freely and fairly form a union if they so choose. Since employers often resist organizing campaigns with illegal tactics to intimidate and scare workers, this legislation will also hold anti-union employers accountable for violating federal labor laws through tougher penalties and greater enforcement.

That is, if lawmakers have the conviction to pass the legislation. While the Employee Free Choice Act overwhelmingly passed the House this session, Republican leadership in the Senate killed the bipartisan bill there. Members of Congress will soon have the opportunity to hear from Americans wanting their elected leaders to take another step toward income parity through passage of this legislation. While corporate subsidies run amuck and the cost of necessities like rent, gas, and health care continue to rise, working families can’t afford another stalemate of this critical bill in Congress next year.

Today’s guest blog is by David Ewald of Ewald Consulting; he will address both the Big-Box and Smart Growth tracks of our May 7-8 Conference.

Since September 2005 I’ve been involved in an anti-subsidy battle around the country. Cabela’s, a competitor in the hunting, fishing and camping retail space, relies on public subsidies according to its public statements to cover about 30 percent of the construction costs for its stores. It has been a challenging and rewarding effort that was kicked off by Gander Mountain, the #3 player in the same industry that refuses to take incentives.

Well, this was another tough week for Cabela’s as for the third year in a row they were forced to give back money to the city of Buda, Texas for failing to meeting the job targets they promised in order to receive more than an eye-popping $60 million in subsidies. Let’s hear it for clawbacks!

The apologists for the failure to meet the targets point to the weak economy for retailers right now. Isn’t that one of the main points to make when arguing against subsidies? When government partners with retailers such as Cabela’s they are accepting some of the risk inherent in the company’s business cycle. I’m not amazed when the shortfalls occur. What does amaze me is the public statements made by the public officials who continue to be swayed by Cabela’s promises of economic development and great returns for the community.

Bass Pro is a privately held company that engages in some of the same activities. In just the past few weeks the city of Augusta, Georgia has taken preliminary steps to give Bass about $25 million in subsidies to build a store there. This is amazing given the current state of the economy!

I’m looking forward to talking more about this on May 7 and 8 at the Good Jobs First Conference. In the meantime, visit www.sayno2outdoorsretailsubsidies.com for more information on the effort.

I wasn’t just hallucinating in the noonday sun; there was love in the air today.  At a rally on the steps of City Hall stood Bronx residents, elected officials, retail clerks’ and janitors’ union members and plenty of building trades hardhats in support of a Community Benefits Agreement to redevelop the massive, 575,000-square foot Kingsbridge Armory. The landmark facility built in 1917 is slated to be a shopping center with long needed amenities like recreation facilities and entertainment venues.

In New York City, it’s rare to see such a mix of groups back a development project. The political and real estate forces here have perfected a divide and conquer technique that excludes long-time residents and some labor unions from any meaningful input on proposed projects. Indeed, they are cursed as trolls of development.

Not this time.  Members of the Kingsbridge Armory Redevelopment Alliance (KARA), a project of the Northwest Bronx Community & Clergy Coalition, have spent years educating the community about the development process and the potential of a redeveloped Armory. They won a seat at the city’s decision making table - not an easy feat in this town - to ensure the voices of the mostly low- and moderate-income residents were heard from the get go.

This week the city announced a developer had been chosen, with a nod to community involvement for helping with a smooth selection process. Now the hard work begins to ensure that the retail jobs are good jobs - and that badly needed schools are also built in the neighborhood.

Over the years there have been several plans for the Armory that housed tanks, has a huge drill floor and an 800-seat auditorium. Now, thanks to the persistence and inclusiveness of NWBCCC, a good plan is moving forward.

Considering the dismal display of so-called “community benefits agreements” cut privately in The Bronx the past couple of years, those of us working for accountable development in New York are in a spring swoon for the Armory deal.

Come check it out, members of KARA will show off their organizing prowess at GJF conference next month: www.goodjobsfirst.org/conference

Though clawback provisions are now a standard part of many incentive agreements throughout the country, the Amherst Industrial Development Agency has decided they’re not for them. By a 3-2 vote last week, the board of the IDA in the Buffalo suburb of Amherst defeated a motion that would have made clawback provisions standard in all future incentive agreements. They voted down the proposal even though it would not have made clawbacks mandatory; it would have only inserted language into new agreements allowing – as opposed to requiring – the Amherst IDA to recapture subsidies if companies fail to meet their job promises. According to the Buffalo News, the IDA board member who put forth the proposal saw clawbacks as a “tool” the Agency could choose to use – or seemingly ignore – at its discretion.

Clawbacks need to be enforced to be of any use, but the Amherst IDA board vote shows disapproval for even their consideration. While the executive director of the Amherst IDA expressed a general opposition to clawbacks, other members of the board said they couldn’t pass the proposal due to a recent memorandum of understanding among Erie County’s six IDAs, in which they agreed not to unilaterally change their policies without a consensus.

In our report Sprawling by the Lake, we found that IDA incentives in the Buffalo region had a suburban bias, and the hyperactivity of the Amherst IDA was a major reason for this. In the report we recommend consolidation of the county’s IDAs so that investment in the region may be directed where it is most needed. We also recommend other policy options in support of a statewide IDA reform campaign lead by New York Jobs with Justice.

Statewide IDA reform, as well as the ways in which economic development subsidies undermine older urban areas across the country, are both topics that will be covered at the upcoming Good Jobs First conference, May 7-8.

The Minnesota State Senate passed legislation two weeks ago to axe Governor Tim Pawlenty’s signature rural economic development program known as the Jobs Opportunity Building Zones (JOBZ) program. This is the latest development since GJF blogged in February about the state Legislative Auditor’s report concluding that the subsidy program is unaccountable and ineffective.

JOBZ subsidizes companies located outside the Minneapolis-St. Paul metro area and has granted $46 million in tax breaks to 350 businesses since 2004. However, two-thirds of businesses admitted to the Auditor that they would have expanded without the subsidies – including 11 percent which admitted they would have made the same investment in the exact same location.

Still awaiting action by the House, the Senate legislation is part of a larger omnibus tax bill. The bill would not allow new JOBZ agreements after May 1 but would preserve existing ones. The entire package would increase state revenues by $150 million in the 2008/09 fiscal year.

The Senate vote is linked to an ongoing fight between the Democratically-controlled Legislature and the Republican Governor on how to balance Minnesota’s growing deficit. Last week, Pawlenty vetoed funding for a Minneapolis-St. Paul light rail project that he has previously supported. Local observers believe the governor may use the light rail funding as a bargaining chip in exchange for continued funding of the JOBZ program.

Competing legislation that would reform, but not eliminate, the JOBZ program has been referred to the Senate Committee on Taxes.