Chicago Fights FOIA Demands Over Amazon HQ2 Bid

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Michael J. Bologna Chicago Staff Correspondent Ryan C. Tuck Washington Deputy News Director

By Michael J. Bologna

The city of Chicago says it has no duty to disclose the incentive terms of its bid for Amazon.com Inc.’s second headquarters in a brief seeking to dismiss a freedom of information lawsuit brought by a public transparency think tank.

Bill McCaffrey, a spokesman for Chicago’s law department, said the city’s tax incentive proposal is exempt from disclosure under a provision of the Illinois Freedom of Information Act shielding public bodies during certain bidding and procurement processes.

“The City’s bid submission is exempt from production under the FOIA exemption protecting materials submitted as a proposal for a contract or agreement until an award or final selection is made,” McCaffrey told Bloomberg Tax in an email March 23. “This exemption protects the release of materials that would give another party a competitive advantage.”

Chicago expressed these views in a filing in Cook County Circuit Court March 13. The city is hoping to sweep away a lawsuit under the Illinois Freedom of Information Act filed by a nonprofit called Lucy Parsons Labs. Chicago is one of the 20 remaining communities in the sweepstakes for Amazon’s HQ2, which is expected to include a corporate investment of $5 billion and the creation of 50,000 direct jobs.

Chicago pointed to FOIA Section 7(1)(h), which exempts “proposals and bids for any contract, grant, or agreement, including information which if it were disclosed would frustrate procurement or give an advantage to any person proposing to enter into a contractor agreement with the body.”

The city added that the exemption remains available “until an award or final selection is made.”

McCaffrey declined further comment, saying the FOIA dispute remains a matter of “ongoing litigation.”

No Competitive Harm

Attorney Josh Burday, who is representing Lucy Parsons Labs, said Chicago has misrepresented the FOIA exemption, arguing Section 7(1)(h) shields bids that were solicited by the public body, not the public body’s bids to another party.

In addition, Burday said there is no potential competitive harm because the bidding period for the 20 cities seeking to host Amazon has ended. Moreover, several HQ2 bidders, including Boston, Miami, Philadelphia, and Montgomery County, Maryland, have already disclosed their bids.

“The public has a right to be informed about what actions its government is taking,” said Burday, an attorney with Loevy & Loevy in Chicago. “Here, the public has a right to know about a bid with potentially tremendous economic implications.”

Burday said both sides have filed motions for summary judgment, but a decision from the court is unlikely until some time this summer.

Risks For Taxpayers

Lucy Parsons Lab originally filed suit against the city on Feb. 1, alleging the city failed to lawfully comply with a November 2017 FOIA demand regarding the HQ2 bid. The organization asserts the public needs additional details about the bid in light of previous contracts with private industry that harmed taxpayers.

“Rahm Emanuel and the city of Chicago have a history of secretive dealings that put Chicagoans on the hook for millions and potentially billions of dollars,” said Freddy Martinez, Lucy Parsons Lab’s executive director said when the original suit was filed. “Furthermore, instead of taxing massive corporations we are seeing the chronic defunding of schools, mental health clinics, and other essential services. This corporate welfare cannot be allowed to proceed in secret and we intend to expose it.”

While Chicago’s bid remains shrouded in secrecy, some features leaked last fall. The Chicago Tribune reported it obtained a summary of a $2 billion bid and a copy of a letter to Amazon executives from Gov. Bruce Rauner (R), Mayor Rahm Emanuel (D), and Cook County Board President Toni Preckwinkle (D).

The documents reportedly discussed an incentive package that includes $1.32 billion in state economic development tax credits, $172.5 million in sales tax and utility tax exemptions, $61.4 million in property tax discounts from Cook County and Chicago, and $450 million in infrastructure spending. In addition, the package discussed possibilities for an additional $250 million for workforce training.

The case is Lucy Parsons Labs v. Chicago Mayor’s Office , Ill. Cir. Ct., No. 2018-CH-01393, answer and affirmative defense filed 3/13/18 .

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bloomberglaw.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

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