Fast Company: How companies like Amazon and Facebook fleece communities out of billions
On the floor of the Kansas Legislature in early February, lawmakers held a brief debate over a piece of legislation called the Attracting Powerful Economic Expansion Act, or APEX. The bill would provide a substantial tax incentive—estimated at a total of $1.2 billion—to attract a large corporation to build a production plant within the state. The name of the company, though, was a secret.
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“You kept hearing them say ‘the firm,’ ‘the firm,’ ‘the firm.’ It’s because these people in elected office deciding what to do with $1.2 billion in public money had literally no idea which company they were talking about,” says Pat Garofalo, director of state and local policy at the nonpartisan American Economic Liberties Project. “They didn’t even know where the factory was going to be. The few people that had those details signed NDAs.”
Nondisclosure agreements like those signed in Kansas have become a disturbingly common part of the way economic development happens in communities across the country. Companies from Amazon and Google to Facebook and any number of unnamed manufacturers regularly use NDAs as part of their negotiations with the cities where they plan to build warehouses, offices, and factories. Tax incentives to lure companies are often covered by these NDAs, leaving taxpayers in the dark about what’s being built and how much it’s costing them.
A new campaign, Ban Secret Deals, is calling for an end to the use of NDAs in economic development dealings. Launched by the American Economic Liberties Project and a coalition of policy and advocacy groups spanning the political spectrum, including the Center for Economic Accountability and Good Jobs First, Ban Secret Deals advocates for legislation banning NDAs at the state and local levels. It’s calling on everyday citizens to sign a petition urging state legislators to take action.
“Governors, mayors, city councils, and economic development department officials sign these deals with corporations which say that they, public officials, are not allowed to disclose anything about the deal, oftentimes including the identity of the recipient, until it’s finalized and essentially a done deal,” Garofalo says. “We think that’s hugely problematic.”