State argues tax incentives offered to Amazon must remain secret

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Revealing the tax incentives offered in the state’s failed bid for Amazon’s second headquarters would put Connecticut at a competitive disadvantage, officials with the Department of Economic and Community Development argued during a Freedom of Information Commission hearing this week.

James Caley, an assistant attorney general representing DECD, said disclosing the incentives could allow other states and businesses to figure out Connecticut’s strategy, thus the information should be exempt as a “trade secret” under the state’s FOI law. 

The Record-Journal filed an appeal with the commission in January seeking the full proposal offered to Amazon as part of the state’s effort to recruit the online retailer to open its second headquarters in Hartford or Stamford. The state released the proposal, but withheld two pages detailing economic initiatives offered as part of the pitch.

DECD cited two exemptions under FOI law in withholding information about the incentive package. The DECD said the document was still a preliminary draft and that the information qualified as a trade secret. Caley argued the document should be considered a draft because it would be subject to revisions as part of negotiations with Amazon.

Mike Savino, the Record-Journal’s local & state editor, argued that the information should not be considered a “preliminary draft” because it was shared with Amazon. He added that the incentives are no longer subject to negotiations because Connecticut is no longer being considered by Amazon. 

“The preliminary draft exemption is supposed to be for documents that are subject to revision, and it’s meant to basically protect the process, the inner workings of a department, before they get to the step of a final proposal,” Savino said, citing past court rulings. “The fact that they sent this to Amazon is an indication that it’s no longer a preliminary draft. They felt it was ready to send to Amazon.”

To justify the trade secret exemption, the state needs to establish that it derives economic value from withholding the information and that the information is subject to reasonable efforts to maintain secrecy.

Nandika Prakash, a senior economist with DECD called by Caley as a witness at the hearing, explained that DECD uses a computer model from Regional Economic Models, Inc., or REMI, when calculating the economic benefit that a business move or expansion could bring the state. The model is used to ensure that incentives offered do not outweigh the economic return. 

Caley argued disclosing the incentives would give the public insight into the state’s model and negotiating strategies.  

Savino said the state would be required under FOI to disclose the finalized negotiated incentives if Connecticut was chosen by Amazon, so the initially-offered incentives should not be treated differently. 

“The governor’s office and DECD routinely share these details when such bids are successful,” Savino said at the hearing. “I don’t see why it should be different just because this particular bid is unsuccessful.”

Savino also noted that other states and cities have publicly disclosed their incentives in response to FOI requests. The city of Boston published its entire proposal, including incentives, online earlier this year. “So the notion that Connecticut (would be at a disadvantage), I don’t agree with that argument,” he said during the hearing.

Caley responded by saying negotiation strategies are publicly known in other states and cities.  

Both sides have the opportunity to submit post-hearing briefs by July 13, after which the FOI commission will issue a decision by January.


Twitter: @MatthewZabierek


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