New Business Model: 1. Move To Glendale, AZ 2. Threaten to Leave 3. Collect Taxpayer Money

I have been following the story on this blog of how Glendale, Arizona has been throwing wads of taxpayer money at the Phoenix Coyotes hockey team and at any rich person who might be willing to buy the team.  The city of 225,000 citizens spent nearly $200 million on a stadium, promised to hand a buyer of the team $100 million to help with the purchase, plus hand the new buyer a stadium contract worth about $100 million over five years.  While this all plays out, Glendale paid the NHL $25 million last year to help cover the team's losses and has agreed to pay another $25 million this year.

Wow.  This is just amazing, written all in one place.  But its not just hockey that the small corporate-state suburb on Phoenix wants to subsidize.  Here is the latest recipient of largess:

Bechtel Corp., one of Glendale's largest employers, has agreed to stay until 2018 after city officials offered the company about $1 million in incentives.

By next year, the global engineering and construction company, with the city's financial help, will move from north Glendale to a new, vacant building not far from the city's sports district called the Glendale Corporate Center....

Under the agreement, Glendale would give $576,000 over the next two years to Bechtel for its costs to outfit the building shell for offices.

The incentive package also includes a waiver of $50,000 in city permit fees and a job-retention incentive of $1,250 per employee, up to $400,000. Each eligible employee must earn a salary of at least $50,000 per year.

Glendale offered a sports perk as well.

Bechtel can use the city's suites, both at Camelback Ranch Glendale and Jobing.com Arena, for free twice.

LOL, Jobing.com arena is the hockey rink the city built, so it is giving tickets from its subsidized hockey club to its subsidized engineering firm.  The article includes the usual consultant figures who reliably take money from cities to report on all the indirect benefits and revenues and economic activity that result from their subsidies.

However, these are not the first subsidies paid to Bechtel by Glendale

The corporation first came to Glendale in 2002. Bechtel moved to Talavi Corporate Center from Phoenix after Glendale promised $1 million in incentives. The staff at the time was expected to grow to 500 from 300.

Bechtel's staffing is only at 320 today, not 500, but this failure to actually grow jobs after getting subsidies for job growth is pretty typical of these deals.    My interpretation of this is that this is yet another move to get more tenants around its sports complex, to raise the stakes and apparent costs if the hockey team moves.  Glendale will cry that they can't lost the hockey team, think of all the tenants in the surrounding real estate, when it was the city itself that spent money to put all its eggs in this one basket.

The only funny part of the article is the Talavi real estate folks.  They were thrilled to gain a new tenant in 2002 due to the city's relocation subsidies, but now suddenly think such subsidies are unfair.

Bechtel's landlords at Talavi aren't happy about the move.

"We were actually a little surprised to hear Glendale was offering incentives," said Damon Elder, spokesman for Daymark Realty Advisers, which was negotiating a lease extension with Bechtel for Talavi's owners.

"We would think the city would be fair-minded with all of their corporate citizens. . . . I don't know why the city would be pitting one location against another."

For those of us who simply think of ourselves as residents of the Phoenix metropolitan area, or even broader just as Americans, we are surprised about the earlier subsidy as well, wondering why taxpayers of a small suburb are paying big bucks to move businesses back and forth a few miles across the town line.

But of course, this is not the worst example. A few years ago, Phoenix tried to spend $100 million in subsidies to move a Nordstrom and a Bloomingdales one mile and one freeway exit (out of Scottsdale).

By the way, Glendale's economic development director has made it official, we live in a corporate state:

"[government relocation incentives are] just a modern, Fortune 100 corporate expectation," Friedman said. "If you have a top-notch, world-class company in your community, your absolute goal should be to make sure they are successful and are content in your community and want to remain."

  • Dave Boz

    Compared to the hundreds of millions Glendale is willing to toss away on hockey team, the Bechtel deal seems like a great bargain. But then, maybe if Bechtel started losing money hand-over-fist, Glendale would be ready to hand them a lot more cash.

  • marco73

    If the government didn't have control of so much money, these financial shenanigans wouldn't take place. Hand over cash, waive business fees, steal from one lease holder to enrich another, etc.
    You would almost think that if Bechtel were to say "No, we will run our business our own way, thanks, but let the taxpayers keep that money", that shareholders would file suit against Bechtel.

  • http://www.ianrandom.com Ian Random

    Gee wouldn't it be nice if they waved city fees for small businesses to help them grow into bigger companies.

  • http://www.blog.horton-brasses.com Orion

    You only get the money if you are "wold class, top notch" firm. All of us little firms that, in aggregate, employ many times more people aren't "world class" enough. Live by the subsidy, die by the subsidy.

  • http://harries@free.fr blokeinfrance

    Welcome to Europe

  • Smock Puppet

    > “If you have a top-notch, world-class company in your community, your absolute goal should be to make sure they are successful and are content in your community and want to remain.”

    If you have an economic development director making statements like that, you should chop off his head and stuff it up his ass, the better to make other such morons think twice about their insipid blatherings.

    There are definitely times when I believe the notion of fool-killing should be taken seriously.

  • Smock Puppet

    .

    There was once a time when Nature resolved these issues for us. A moron would come along, and, sooner or later, a wolfpack or a tiger or a mountain lion would see said idiot marching around clueless, pounce, and remove the clearly faulty defective genes from the gene pool.

    Now, a side-effect of our modern civilization, unfortunately, is to remove such inherent corrective action from the process.

    Or, put more simply:

    -----------------------------------
    Too much Tiger Food.
    Not enough Tigers.

    WE NEED MORE TIGERS!
    -----------------------------------

    .

  • Yngvar

    There have to be kick-backs involved.