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Fresno’s Amazon pitch sounds so great, Bezos becomes new taxman

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Fresno’s Amazon pitch sounds so great, Bezos becomes new taxman

Fresno’s pitch to Amazon for HQ2 is simple on the surface, but is a lot more complicated than the billions in subsidies offered by competing cities.

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It’s time for Fresnans to put on their James Madison hats and begin drafting an amendment to the city’s constitutional document.

Mayor Lee Brand’s Amazon/HQ2 proposal is the catalyst.

Amazon CEO Jeff Bezos got the attention of city halls all across America when he recently announced plans to open a second company headquarters. Bezos said to municipal governments: Give me your best offer; I’ll pick one of them.

The payoff is an estimated 50,000 jobs and $5 billion of investment, not to mention all the jobs and money created by other businesses feeding from the Amazon feast.

Dozens of U.S. cities have taken the bait. Fresno is one of them.

Brand last month outlined Fresno’s HQ2 proposal at a news conference.

Fresno has many assets to catch Bezos’ attention. We’re at the heart of the nation’s first high-speed rail system. We’re halfway between the Bay Area and Southern California. We have plenty of developable land. We’ve got water. We have a superb university in Fresno State. We have lots of bright, hard-working and talented people. We’ve got a City Hall open for business.

And, Brand said, we could have something he calls the “Amazon Community Fund.”

“The HQ2 project would be transformative on a level rarely, if ever, seen in the United States,” Brand said. “We are offering an innovative and creative opportunity to enhance and build a sustainable community around HQ2.”

The Amazon Community Fund would be a 100-year deal between City Hall and the company. It calls for 85 cents of every tax dollar generated by the HQ2 project to go into a special account.

According to a city news release, the account “will be jointly controlled and administered by a committee of City leaders and Amazon executives to enhance and address community impacts generated by the HQ2 project. Monies generated would be used to provide workforce housing, transportation infrastructure, parks and biking trails, and STEM education in area schools and other core City services.”

America’s biggest cities are offering billions of dollars in direct and immediate subsidies. Fresno doesn’t have billions in extra cash. But Amazon’s second headquarters figures to generate billions – perhaps tens of billions – in various taxes over the next century.

Fresno’s only chance in this game is Bezos’ penchant for taking the long view.

Said Brand: “Locating HQ2 in Fresno would not only build another technology community, it would also offer additional proof that Amazon right now is one of the world’s leading change agents.”

Fast forward to Monday. I received a text message from the producer of Trevor Carey’s show on PowerTalk 96.7. Trevor wanted to know if I’d chat with him about the Mayor’s Amazon proposal. I had to ask for a rain check. I admitted to knowing next to nothing about the Amazon Community Fund.

I added in response: “Aren’t general fund dollars fungible?” In other words, interchangeable.

The answer is yes. Fresno gets most of its general fund dollars from property and sales taxes. All those dollars are thrown into one big pot. They’re all green.

The offer from the Carey show got me thinking about HQ2. I needed to know what’s up. I headed to City Hall for a lesson from Communications Director Mark Standriff.

Standriff gave me the scoop and pointed me to a press release on the city’s website. As we were talking, the Mayor walked by and joined in the conversation.

“What about the City Charter?” I asked.

“Good question,” Brand said. “We’ll cross that bridge when we get to it.”

That figures to be a challenging trek.

You see, there’s the Dan Ronquillo Rule out there. That’s not its specific name in the City Charter. But Ronquillo, the former District 3 council member, neatly summed up the Charter concept when he once said from the dais: “If we get five votes, we can do anything we want.”

The Charter gives authority over the general fund to the City Council. A five-vote decision is veto-proof. All that cash that would be headed to the Amazon Community Fund is general fund dough.

So, how do we square an Amazon Community Fund with billions of general fund dollars “administered by a committee of City leaders and Amazon executives” with Charter Section 1205 that says “After the conclusion of the public hearing the Council shall further consider the proposed budget and make any revisions thereof that it may deem advisable and on or before June 30, it shall adopt a budget”?

I suggest to the Brand Administration that we come up with an answer sooner rather than later. Jeff Bezos didn’t create one of the most amazing companies in the history of the world by being a fool. He’s not going to pick Fresno for HQ2 when the most tantalizing piece of the city’s package – the Amazon Community Fund – is perpetually held hostage to five votes from council members who constantly have their eyes on the wishes of service-hungry voters.

Bezos will want an ironclad guarantee that the billions flowing into the Amazon Community Fund will be controlled solely by a board full (perhaps to the tune of more than 50%) of Amazon executives.

That means amending the City Charter.

Which section is to be changed? And what is to be the change?

What follows is my opinion, and mine only.

We’ve already looked into Section 1205. That might merit an official tweak.

Section 1206 says in part: “At any meeting after the adoption of the budget, the Council may amend or supplement the budget by motion adopted by the affirmative votes of at least five members so as to authorize the transfer of unused balances appropriated for one purpose to another purpose or to appropriate available funds not included in the budget.”

That, too, is a potential landmine for Bezos and Amazon. The annual budget full of appropriations suitable to the Amazon Community Fund board might make it through the annual June budget hearings, only to get thoroughly discombobulated months later by five council members fearful of voter wrath (the Ronquillo Rule).

No, we need a more powerful and fundamental change to the Charter. HQ2 figures to be transformative. Fresno’s governing model needs to be transformed, as well.

I say we amend Charter Section 500. It currently reads: “All powers herein granted to and vested in the City of Fresno shall, except as herein otherwise provided, be exercised by a Council to be designated the Council of the City of Fresno. Said Council shall be the governing body of the City and, subject to the express limitations of this Charter, shall be vested with all powers of legislation in municipal affairs adequate to a complete system of local government consistent with the Constitution of the State.”

We’ve got a primary election coming in June 2018. There’s a general election in November 2018. It’s not too late to put a Charter amendment on the ballot that, should it be approved by voters, might address Bezos’ concerns with our Amazon Community Fund proposal.

I suggest the proposed amendment to Charter Section 500 simply state that “All powers herein granted to and vested in the City of Fresno shall, except as herein otherwise provided, be exercised by a Council under the control of Jeff Bezos and his successors….”

We’ll call it the Hostetter-Bezos Amendment.

I deserve top billing, of course.

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George Hostetter

George Hostetter is a contributor to CVObserver and advisor to The Collegian, the student newspaper of Fresno State.

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