There are a lot of terrible economic development development deals made by state and municipal governments every year. One has to stand out as the worst.
It seems like every day has some new announcement of a “job creation” subsidy with a price tag in the millions or even billions of dollars, put together behind closed doors and backed by fuzzy numbers that don’t stand up to third-party scrutiny.
At the Center for Economic Accountability, our mission is to advance economic opportunity for all by promoting transparency, accountability and free-market-based reform of state and local economic development initiatives across America. That’s why we took on the challenge of separating the truly toxic from the merely wasteful; comparing ridiculous assumptions and digging into the behind-the-scenes politics and payoffs to find that one special deal that stands apart as the year’s best example of everything that’s wrong with the way American states and cities do “economic development” in the current day.
We began this process in 2018, and formalized it in 2021 with the creation of the Worst Economic Development Deal of the Year Award. The award formally recognizes the “state or municipal government subsidy of a private company that best exemplifies the massive wastefulness and ineffectiveness of government economic development subsidy programs” in any given year.
Over the five years to date the award has mirrored the bipartisan realities of economic development policy in America today by going to both “red” and “blue” states. It’s also reflected the industries driving much of the modern-day growth in subsidy programs by going to deals that involved tech companies, automakers and a professional sports franchise.
And, as we detail below, it more often than not has gone to a deal that hasn’t ended up delivering on its press release promises.
2018: Amazon’s “HQ2” in New York City and Arlington, Virginia
Were We Right?
As of mid-2023, at least three of the five deals we selected as “the worst” have undergone significant restructuring since their original announcements, while a fourth has seen a related bankruptcy:
- Amazon‘s “HQ2” project has shrunk twice since its November 2018 announcement. The first time was in Feburary 2019 when the company pulled out of its New York City subsidy deal to remove itself from what had become a politicized circus, only to turn around and purchase the former Lord & Taylor flagship store on 5th Avenue as its new NYC offices. The second time was in March 2023, when the company announced that it would delay and potentially downsize its Arlington, Va. construction plans. As CEA President John Mozena wrote in National Review, cities across America that made ridiculous bids to try to “win” HQ2 turn out to have been lucky losers.
- After the city of Rock Hill, SC. was unable to sell bonds to finance the Carolina Panthers‘ HQ and practice field for anything better than “junk” ratings when bond buyers were unconvinced of the project’s fiscal viability, construction on the project came to a screeching halt. It is currently in litigation.
- While Rivian‘s deal with Georgia was originally based on the company beginning production there in 2024, the company has since announced that it was pushing back its manufacturing plans at the plant until 2026. However, in March 2023, the company’s CFO told analysts and investors that “We remain confident that our cash and cash equivalents can fund our operations through 2025.”
- The General Motors/LG Chem joint venture plant in Lordstown that technically “won” our 2020 award is by all accounts operating roughly as planned. However, the state’s subsidies for Lordstown Motors to revive the former GM assembly plant have not panned out, as the startup automaker filed for federal bankruptcy protection in June 2023. After that announcement, CEA President John Mozena laid out the long corporate welfare history of Lordstown Assembly – which is now owned by Foxconn – for National Review.