Agency orders release of incentives to lure Amazon
Office rules proposal isn’t protected info
A state agency has ordered the release of the incentives that Pennsylvania is offering to Seattle e-commerce giant Amazon to locate its second headquarters in Pittsburgh or Philadelphia.
In a decision released Wednesday, the Pennsylvania Office of Open Records ruled that the state’s incentive proposal was neither a trade secret nor confidential proprietary information protected from release under the state’s Right-to-Know law.
The office acted on an appeal filed by the Pittsburgh Post-Gazette after the state Department of Community and Economic Development earlier denied the newspaper’s Right-to-Know request for the information.
In its ruling, the office ordered DCED to turn over the incentive proposal within 30 days. The department has the right to appeal the decision to the state’s Commonwealth Court.
The state is believed to be offering as much as $1 billion in incentives for Amazon’s second headquarters, called HQ2, although that has not been publicly disclosed.
Michael Gerber, DCED spokesman, said the department is reviewing the open records office decision.
“This is a highly competitive process. Revealing possible incentives at this stage of the process would allow other states to adjust their own incentives accordingly and put Pennsylvania at a competitive disadvantage,” he said. “The implementation of any incentives would require legislative approval, so it would get a full public vetting prior to being enacted.”
In arguing to keep the incentives secret, the Department of Community and Economic Development maintained the proposal was a trade secret and confidential proprietary information because it “contains the framework for a wholly new economic development program specifically designed within the agency for the HQ2 project.”
It also contended that bids submitted by Pittsburgh and Philadelphia — both among the 20 finalists for HQ2 — amounted to “opening offers in what will be a long negotiation process with the various applicants and with the ultimate winning city or region.”
Disclosing the incentive
proposal not only would be “potentially fatal” to the chances of landing Amazon’s second headquarters, with its promise of up to 50,000 jobs and $5 billion in investment over 17 years, but could harm its efforts in competitions for future economic development projects, the department argued.
In ordering the release of the incentives, Kelly C. Isenberg, appeals officer for the open records office, rejected such arguments.
Part of the definition of a trade secret under the Rightto-Know act, she noted, involves information that derives “independent economic value” from not being generally known to or readily ascertainable to others who can obtain economic value from its disclosure or use.
Ms. Isenberg questioned how the incentives would provide economic value to other jurisdictions competing for HQ2 given the state’s contention that its proposal is an “opening offer” subject to change.
“Amazon knows the contents of each proposal, and will likely negotiate with other jurisdictions ‘to apply it to their proposals to match ... the unique features and structure of DCED’s incentive proposal’ if the department’s incentive proposal is indeed the most attractive to Amazon,” she wrote.
“Additionally, in its response to the request, the department states that the incentive proposal will be released if any of the proposals where it is contained is accepted by Amazon; this statement undermines the department’s argument that knowledge of this information will undercut future negotiations with other prospective companies.”
The agency had not demonstrated how the release of the incentives would harm its competitive position, Ms. Isenberg found.
“Contrary to the department’s claims, it is not ‘competing’ against other jurisdictions when offering incentives: it has not made a bid to Amazon, but instead provided an economic incentive package for entities to include in their own Amazon proposals,” she wrote.
Last month, Pennsylvania filed a lawsuit to block the release of the state incentives after the open records office ruled in favor of the Morning Call newspaper in a similar case.
Meanwhile, Pittsburgh and Allegheny County have gone to court to keep secret the region’s bid for HQ2 after the state open records office ruled that the proposal should be made public.
Like the state, the city and county have argued that releasing the details would put the region at a competitive disadvantage in the high-stakes battle for the economic development prize.
The competition to lure Amazon has touched off a bidding war with cities or states offering billions of dollars in subsidies. Maryland leads the pack offering $8.5 billion in incentives — the largest of the publicly known bids. New Jersey is second at $7 billion.