Searching for Minnesota’s Amazon bid

By Matt Ehling and Mike Kaszuba

Four months after Amazon announced plans to build a second corporate headquarters – setting off a nationwide competition – Minnesota has concealed its Amazon bid through the use of a nonprofit whose board includes representatives of many of the state’s top companies.

The state’s Department of Employment and Economic Development (DEED) has outsourced the job of submitting Minnesota’s proposal to Greater MSP, a business promotion non-profit, that in turn has submitted the bid to Amazon on the state’s behalf.

Since DEED has stated that it does not hold the full bid – and because Greater MSP claims to have a non-disclosure agreement with Amazon – neither entity has provided the document in response to requests made by St. Paul non-profit Public Record Media (PRM).

DEED spokesman Shane Delaney told PRM that “Greater MSP took on the task of compiling Minnesota’s response and submitting it to Amazon.”  He said the arrangement came about after the state and Greater MSP assessed “the requirements of the Amazon” request for proposals and decided to “perform duties that best fit each organization’s strengths.”  Delaney, in a subsequent e-mail, stated that DEED did not have a full copy of the state’s bid.

A spokesman for Greater MSP declined to make the Amazon bid public.  “We reviewed your request,” Mike Brown, Greater MSP’s vice president for marketing and communications, wrote in a December e-mail to PRM.  “We aren’t able to release the proposal for two reasons.  First, we are under an [non-disclosure agreement] with Amazon which we believe covers content in the proposal.  And second, we are still in competition for [the headquarters] and so want to prevent competitive information from being shared with other regions who are also competing.”

Meanwhile, other governments have been more transparent.

Shortly after Amazon announced the competition, both Republican and Democratic leaders in New Jersey – including Governor Chris Christie – announced a $7 billion tax-incentive package to persuade Amazon to build in Newark.  The tax incentives would include an estimated $1 billion in city property tax abatements, and an estimated $1 billion in savings for Amazon employees from a city wage tax waiver.

Amazon’s website is reporting that it received 238 bids from localities across North America seeking to be the site of Amazon’s second corporate headquarters.  The giant on-line company had global sales of $43.7 billion in the third quarter of 2017 and Jeff Bezos, Amazon’s chief executive, was recently reported to have a net worth that has topped $100 billion.

Access to public data in Minnesota

In Minnesota, access to government information is overseen by the Minnesota Government Data Practices Act.  The law defines “government data” very broadly – broadly enough to include the state’s Amazon bid.  The Data Practices Act also presumes that all government data is public, unless it is classified as “not public” by state or federal law.

Under Minnesota law, no legal classification would make the state’s entire Amazon bid unavailable for public access.  Thus, if it was held by a government agency, the document — or much of it — would need to be produced in response to a public record request.

Don Gemberling, who was instrumental in drafting Minnesota’s Data Practices Act, said he is puzzled at DEED’s handling of the Amazon bid.  If the state wanted to keep the bid private, he said, the most straight-forward way would have been to ask the state Commissioner of Administration for a “temporary classification” to make the data non-public.  It would be “the obvious way to protect the bid” from becoming public for competitive reasons, he noted.  Gemberling is the former director of the state Department of Administration’s Information Policy Analysis Division (now the state’s Data Practices Office).  He currently serves on the advisory board of PRM.

Instead, Gemberling said, the state has had to “come up with hokey arguments.”  He said the state’s claim that Greater MSP submitted the bid and not DEED, and Greater MSP’s claim that it cannot release the bid because of a non-disclosure agreement with Amazon are at best confusing, and perhaps at odds with Minnesota’s data practices law.  “What you’re getting, it seems to me, is a whole bunch of hokum,” Gemberling added.

DEED:  Greater MSP holds state’s Amazon bid

On October 19, PRM submitted a request for the Amazon bid to DEED, the state’s economic development agency.  The request sought — among other things — all data submitted by the State of Minnesota to Amazon in response to the company’s request for proposals (RFP).  It also asked for “any and all data, including any RFPs, submitted by Amazon to the State of Minnesota between January 1, 2017 and October 19, 2017.”

On December 7, DEED responded to part of PRM’s request by providing three pages of material.  The response highlighted the state’s relationship with Greater MSP, which promotes business development in the Twin Cities area.  “Minnesota’s complete proposal to the Amazon HQ2 RFP was submitted by Greater MSP, an organization that partnered with DEED on this project,” an agency spokesman wrote.

The material included a two-page letter from DEED Commissioner Shawntera Hardy, who listed a “variety of tools” that could be used to financially assist Amazon in building in Minnesota.

“The initial phase of your Request for Proposal, for example, suggests 500,000 square feet of office space and we estimate, 2,500 employees.  An expansion of that size would typically generate a state award of $3-5 million from existing DEED programs, in addition to local support as specified in the site proposals,” Hardy wrote.

But Hardy then outlined the state’s “unique public private partnerships” that went beyond typical financial assistance packages and benefited two large Minnesota projects:  An expansion of the Mayo Clinic in Rochester and the $498 million public subsidy given to build a new Minnesota Vikings stadium.  “In 2013,” Hardy stated, “the Legislature authorized $585 million in state and local public infrastructure funds over 20 years to support the city of Rochester and the Mayo Clinic’s anticipated growth.  “In 2012,” Hardy added, “the Legislature authorized $498 million in state and local resources to support the construction of the $1.1 billion publicly-owned U.S. Bank Stadium.”

Greater MSP’s role in economic development

The state’s unique relationship with Greater MSP has heightened the profile of the relatively new business nonprofit.  Using extensive interviews and government documents, PRM’s reporting in 2016 described an organization that featured many influential corporate executives, but whose overall profile was not widely known.

Created in 2010, Greater MSP is led by business heavyweights.  Its board chair is the head of US Bank, and top officials from Health Partners, Cargill, Target, Ecolab, Medtronic and other leading Minnesota companies are on the board.  Greater MSP also opened offices in Shanghai and Munich, and was asked to help in the search for a new director of the Metropolitan Airports Commission.

Though Greater MSP would not disclose specific amounts to PRM, many public entities at the time confirmed to PRM that they had given money to the organization, and were listed as “investors” on the nonprofit’s website.  Records showed that, among others, Hennepin County gave $150,000 in 2014, the Metropolitan Council contributed $150,000 the same year, and the University of Minnesota gave $75,000 in 2015.

“Privatization” and public data access

By not holding the final bid, DEED would have no document to provide in response to public record requests.  However, the state’s data laws still reach private vendors that contract with government agencies to perform government work – such as compiling economic development proposals for government entities.  Under the Data Practices Act, if a government entity contracts with a vendor to perform a “government function,” the vendor is also covered by the Data Practices Act – at least to the extent of the government work it has agreed to perform.

PRM subsequently asked DEED about the existence of any contracts it held with Greater MSP.  DEED’s Delaney responded in the negative, saying via e-mail that DEED had “no overall contract” with Greater MSP.  PRM then submitted a second data request to the agency, seeking data that would show a working relationship – such as payments, invoices, terms of work, memoranda, or similar.  At present, that request is pending.

In 2016, PRM submitted data requests to government entities seeking information about the activities of Greater MSP.  Those requests produced records of payment from counties and cities to the non-profit.  In correspondence acknowledging the payments, Greater MSP categorized the transactions as “contributions” and noted that “no goods or services” were received by the donors.  Such language is standard legal boilerplate included in donor letters issued by non-profit organizations (including PRM).

In other documents obtained from government entities, Greater MSP appears to have contracted to perform specific tasks, such as providing Ramsey County with access to a software portal, for instance.

Greater MSP’s non-disclosure agreement with Amazon

On December 15, PRM contacted Greater MSP to seek access to the state’s Amazon bid.  Six days later, Greater MSP’s Brown told PRM that the organization would not be releasing the state’s bid, due in part to its non-disclosure agreement with Amazon.

Greater MSP has signed non-disclosure agreements with government-related entities in prior instances, including one in 2014 with UMore Park Development, LLC, a company wholly owned by the University of Minnesota’s Board of Regents.  The school formed the limited liability company to oversee the management and development of its UMore Park property.

During its work with UMore Park, Greater MSP reportedly had a client interested in locating a business on land owned by the university.  The non-disclosure agreement featured warnings about the release of “confidential” or “proprietary” project information to third parties.

Past advisory opinions by the Minnesota Commissioner of Administration have indicated that non-disclosure agreements executed between private companies and government agencies cannot bar access to data classified as public by Minnesota law.  In a 2014 advisory opinion, the Commissioner of Administration held that the Minneapolis Star Tribune could have access to data contained in contracts between the Minnesota Department of Public Safety and a manufacturer of surveillance equipment, even though the two entities had signed a non-disclosure agreement.  In the opinion, the Commissioner noted that one exception to public access related to contract data classified as “trade secret” by Minnesota law.  In the case of the state’s Amazon bid, “trade secret” status would likely not apply, since the bid would largely be comprised of economic incentives offered by government entities.

Recent history:  Guarding the Super Bowl bid

The State of Minnesota’s Amazon bid is not the only high-profile economic development proposal to be subject to secrecy measures.  Four years ago, the state submitted its bid for hosting Super Bowl LII – a bid that ultimately secured the 2018 event for U.S. Bank Stadium in Minneapolis.

In the case of the Super Bowl bid — as opposed to the recent Amazon proposal — the information was explicitly classified as “not public” by Minnesota law.  The Data Practices Act permits “terms of rentals” for publicly operated convention centers like U.S. Bank Stadium to be kept from public access until after an event has been held.  In July of 2014, the Minnesota Sports Facilities Authority (MSFA) told PRM that it would provide access to the Super Bowl bid document only “after the 2018 Super Bowl occurs.”

In June of 2014, a list of terms required of the state by the National Football League was published after it was leaked to the Star Tribune newspaper.  The 153-page document showed that the NFL – among other things — wanted free police escorts for team owners, 35,000 free parking spaces, presidential suites at no cost in high-end hotels, free billboards across the Twin Cities, and even a requirement for NFL-preferred ATMs at the stadium.

An official on Minnesota’s Super Bowl host committee told the Star Tribune that the group had agreed to a majority of the conditions, but declined to elaborate.

The NFL also asked that neither the league, its affiliates, nor its member clubs “be subject to any state, county, city or other local taxes, including income, gross receipt, franchise, payroll, sales, use, admission, or occupancy taxes” as a result of holding the Super Bowl in the city.

Other pledges by local governments for the Super Bowl were reported by PRM in July of 2014.  For instance, a draft letter from the MSFA — the owners of U.S. Bank Stadium – asked local officials to “devise a comprehensive prioritization plan” for snow removal “based on the NFL’s lodging and schedule needs.”  Such a plan would make sure that “teams are able to get to their practice sites in a timely manner” and that “major arteries will be cleared based on a pre-identified Super Bowl Week Weather Plan.”