Government subsidies for private business are often praised as "win-win" deals -- both by the politicians who grant them and the people who receive them. However these subsidies often take advantage of taxpayers, hiding behind complex public financing deals put together by lawyers and lobbyists.
Several weeks ago, lawyers and lobbyists for Minnesota's Mall of America succeeded in swapping an adjacent parcel of land for a larger, more desirable site owned by the Metropolitan Airports Commission. Through their legal/lobbying effort, the Mall owners gained millions of dollars at public expense.
A look at the history of this deal illustrates how corporate subsidies bilk the public, while taxpayers have little knowledge of what is happening.
In 1988, Bloomington offered to sell a 33-acre site, known as the Kelley farm site, just east of the planned Mall, for $1 as an additional incentive to build the mall. The Bloomington Mayor has been quoted as saying "We gave that to them . . . It was kind of a throw-in."
At that time, there was a pending decision about the nearby airport's future -- whether it would move or expand in its present location. The value of Kelley site would have been affected either way (moving the airport away would hurt the value; expanding in its current location would add development restrictions.)
In 1996, when the final decision on the airport's future was being determined at the capitol, the Mall owners joined a coalition lobbying to keep the airport in its current location. They lobbied for this, knowing it would entail development restrictions, because the economic gains of a nearby airport far outweigh those losses.
Just after the Mall owners successfully lobbied for the
expanded Airport, their lawyers began claiming that the new
runway's height restrictions on development would rob them of development rights. In fact, they claimed that the airport expansion was depriving them of "hundreds of millions of dollars" of development rights on this property that they paid $1 for.
It's outrageous. Lobbyists and lawyers for the Mall fought to keep the airport in place because it is a big economic benefit, and then demanded compensation because it has created economic loss.
By threatening a massive lawsuit, they persuaded the airports commission to swap the Kelley farm site for one that has been appraised for about $10 million more. It was pure greed to demand compensation for a decision they asked for.
The lobbyists and lawyers for the Mall owners had their hands in every part of the process, manipulating the situation to win a subsidy. If public officials weighed the merits of the issue without heavy lobbying from the beneficiary, perhaps an objective assessment would have been made.
Unfortunately, in corporate subsidy deals, the lawyers and lobbyists are omnipresent. Taxpayers, who ultimately pay the bills, are left in the dark. With sweetheart deals like this, it's no surprise that the public is fed up with corporate subsidies.