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Major Corporations Get Sweetheart Deals From Phoenix Suburb

A Phoenix suburb will pay over $2 million in 2015 to PayPal and General Motors as part of incentive deals that put the interests of big businesses over the needs of residents.

Under the terms of economic development agreements signed with the two companies in 2013, Chandler, Ariz., will give about $1.5 million to PayPal and over $750,000 to GM in exchange for jobs the firms have added at existing facilities in the city, according to The Arizona Republic.

Both arrangements comply with a 2010 Arizona Supreme Court ruling requiring that business subsidy deals create a net public benefit, largely because they only require the city to make payments once jobs have actually been created. (RELATED: States May Have to Disclose Business Subsidy Costs)

“We do operate in a competitive environment,” Micah Miranda, Chandler’s economic development director, told The Republic. “These companies have other options.”

At least in the case of GM, though, the incentives were not necessarily the main factor in its decision to open an IT innovation center in Chandler last year. GM’s deal with the city caps incentives at $1.5 million, a limit that will be reached after three more years, based on projected payouts in this year’s budget.

“GM chose the Innovation Center locations by looking at IT talent-rich areas that also offer a strong community, attractive cost-of-living and a high-tech industry presence,” company spokeswoman Juli Huston-Rough told The Republic. (RELATED: SOLAR SCAMS: Arizona Moves to Protect Homeowners)

Moreover, according to Guru Focus, the expansion of GM’s Chandler facility coincides with a three-year plan to invest $5.4 billion in upgrading locations around the country, suggesting the new jobs very well might have been created even without incentives.

The PayPal deal, meanwhile, may have been a factor in the Chandler City Council’s decision to reject another company’s request to erect a new building on land it had purchased a decade ago, and which happens to be adjacent to the building PayPal occupies, The Arizona Republic reported in March.

Chong Cho, president and founder of Tempe-based First Electronics, had requested a run-of-the-mill zoning adjustment that would allow her to construct a 34,341-square-foot building (without taxpayer assistance) that would have employed 56 new workers.

The city’s Planning and Zoning Commission endorsed Cho’s proposal, saying it was in keeping with the voter-passed “General Plan” for economic development, but City Council ultimately denied her request in a 6-1 vote, saying they preferred larger, higher-density facilities at the location. (RELATED: McAuliffe Sets Record for Business Incentive Deals)

Prior to that City Council meeting, the owners of the property that PayPal rents sent a letter stating their formal opposition, claiming their clients “don’t want industrial next to them.”

“I cannot believe it. That’s my land,” Cho told The Republic. “The building (next door) is too expensive, so that’s why we can’t do that?”

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