Oregon's hostage crisis
Carla Axtman
Ever since Governor Kitzhaber's announcement calling for a special session this Friday, I've been a skeptic. It's in my nature to question things on the best of days. But this particular event appears to make no sense--except that Nike has decided that they're going to hold the entire state of Oregon hostage to their personal temper tantrum.
Is there some sort of legislative momentum around changing the single sales factor that has been flying way under the radar? I've been asking around, and I have yet to find a single person who can count more than 5-10 votes in the entire legislative body to even consider the question. I can't understand why we are having to call the legislature into a special session to set up a guarantee on a policy that nobody is seriously considering changing, despite Chuck's honorable efforts to the contrary.
As one of only two Fortune 500 companies headquartered in Oregon, Nike has a lot of mo-jo to wield, and they apparently like to wield it as a metaphorical gun to the head of any level of government that gets in their way.
When the City of Beaverton attempted to annex Nike into the city, the company not only aggressively fought the annexation, they worked to end the career of the mayor. They then took the City to court and continued the beat down, squeezing six figures in court costs and judicial reprimands against Beaverton.
Nike also got the Oregon legislature to pass a bill that forbids the City of Beaverton from ever annexing the land. In testimony to the legislature in 2005, Nike officials said that they required this legislation for "long term certainty to invest, grow and create jobs in Oregon.." . The company also used their trademark threatening language to bully the legislature into compliance:
Until Nike has long term assurances on the status of its campus and other properties, Nike has placed a moratorium on investment, expansion plans, and other property transactions. Nike recently announced it will not execute documents related to completion of a land-sale agreement due to the uncertainty created by the City of Beaverton's annexation actions. The approximately 50 acre land parcel, known locally as Murray Woods, and located near the intersection of Murray and Jenkins Boulevards was under consideration by a major health care provider to provide service in the area. The property has many other uses, so until certainty is provided Nike needs to retain this land.
In addition, Nike was finalizing plans for an expansion of its North Campus, compromised of four new buildings. The buildings would provide new office space for 1200-1500 employees in two buildings, as well as an additional child care center and a parking structure. These plans are now on hold. Over the past seven years, the company has more than doubled the square footage at its World Headquarters.
Shorter Nike: Give us our way or the jobs and investment get snuffed out.
In 2005 one of Nike's big poker chips in the game was a plot of land (cited above in their testimony) that would be sold in order to create a new medical facility (jobs!). The legislature passed the bill and it was signed into law. And behold, no medical facility has been built on that land.
And then in 2009, Nike slashed 500 jobs in Oregon. So much for that certainty from the legislature for shiny new Nike jobs in our state.
So what's the rush? Why not wait until the regular session (which starts in a month) to push this through? The Oregon House's current 30/30 split is still intact, and shifts to full Democratic control in January. Perhaps Phil Knight believes that the Democrats won't give him his pony if they have a chance to actually sit down, review the proposal and talk with constituents about it? If that's the case, then this is nothing more than a way to circumvent the will of Oregonians who just voted to put the legislature in Democratic hands.
Is that really how we're going to make public policy decisions in our state?
Apparently, Nike is being woo'd by other states for their expansion. Oregon has one of the best tax climates for business in the United States as it is. Letting Nike bully us into giving them a special guarantee (that they essentially already have) is complete BS.
They should have to wait until the regular session like everyone else. And give the legislature and Oregonians an opportunity to make a thoughtful decision that isn't rushed by the Nike goon squad.
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10:32 a.m.
Dec 13, '12
Thanks for the context, Carla.
10:52 a.m.
Dec 13, '12
I want Nike here. I want other corporations to headquarter here. If this policy aids in those outcomes, I am for it.
As to "what's the rush?" If this legislation is needed to keep Nike here or to attract new businesses to the state then my question is, "Why wait?"
The governor has the authority to call the legislature into special session for any reason whatsoever. If he feels that he can pass this with greater certainty now, or that it is to the state's benefit to take this off the table in the next legislative session, then that it is well within the authority of his office to call the legislature into session.
Generally speaking, the kinds of arguments I have been reading here this week lend credibility to Republican claims that many Democrats don't understand or are not interested in economic development.
The correct response when a company says it wants to do a multi-million dollar expansion that will result in several hundred new high paying jobs being created is to say "Great! How can we help?"
Kitz gets that, even if some others do not.
10:56 a.m.
Dec 13, '12
So you're for allowing a corporation to force the hand of government to give them a policy guarantee on a policy that's already in place and in no jeopardy of changing--set up in a special situation that could easily be resolved by early spring of next year (a mere 3 months away)?
We've already been down the "we promise to bring more jobs and shiny investment to Oregon" with Nike before. And they cut jobs and the awesome projects don't come to pass.
12:03 p.m.
Dec 13, '12
Neither of us were involved in any part of these negotiations, so I don't know whether your characterization of events is fact or fiction.
In either case, I don't think it's unreasonable for a company that is planning a $150 million dollar expansion to ask for some assurances that the policies they are operating under won't change for some determined period of time before they commit.
I don't think it's unreasonable for the Governor to take steps to increase the likelihood that the deal gets done. And I believe that this is an important signal to other businesses that Oregon is serious about business recruitment and retention.
I also believe that giving the Governor and his permanent professional staff some tools to negotiate with in order to recruit Fortune 500 companies into the state is a good idea.
At base level, I trust the governor with regard to what needs to be done in order to promote long-term economic development in this state. And I like that this helps to set the tone that the Governor is going to drive the agenda in the next legislative session. I think some of the negative response to this is that we are so unused to a leader who is not content to play behind the scenes.
Regarding the McCall quote... I agree that we don't necessarily want more smokestacks. But corporate headquarters? That's the poster child for the kinds of enterprises that Governor McCall was arguing for when he gave that quote.
And don't kid yourself, Tom McCall would have done this deal in a minute.
12:19 p.m.
Dec 13, '12
One other point... if what you are saying is true, then the legislature is giving up absolutely nothing to get this expansion commitment from Nike.
If there was no plan in the works to change how this sales factor is calculated then a 5 year prohibition on changing that sales factor costs nothing. And if Nike doesn't live up to its obligation, the legislature is not obliged to either.
So what's the downside?
Also, one correction to my earlier comment: Nike is committing to a $440 million expansion, not a $150 million expansion.
12:33 p.m.
Dec 13, '12
The legislature is giving up the cost of a special session: $20-40k, to do this. Nike won't be bearing that cost, we do.
Especially galling as this could easily have been managed during the regular session, which is just a month away.
Nike has committed to the legislature to create jobs here before if they received assurances, only to slash jobs just a few years later. Their commitments ring hollow.
12:54 p.m.
Dec 13, '12
So this post is really all about the $20,000-$40,000 cost? Is it just possible that the Governor knows something you don't about the timing issue(s)?
1:44 p.m.
Dec 13, '12
I don't like the waste of taxpayer dollars. I don't like the waste of legislator's time. I don't like the fact that a company with a history of not dealing in good faith is bullying our elected officials (again).
I take the Governor at his word when he says that the timing has to do with Nike's claims that other areas are trying to woo them for an expansion. Why don't you?
1:27 p.m.
Dec 13, '12
Have you read the bill? It's pretty clear that if Nike or any other corporation that takes advantage of the bill doesn't live up to its obligations, the state can collect the difference figure for any taxes owed..
1:43 p.m.
Dec 13, '12
Collect what taxes? Nobody is asking to change the policy, Sal. That's the point. If Nike chooses not to live up to their promise, the legislature has no recourse unless they change a policy that there is no stomach to change.
Nike is dragging legislators into a session to get a guarantee on something--dangling jobs and cash--when they've done similar things in the past and haven't kept their word.
I don't like the Governor and the legislature to be bullied by a company that doesn't deal in good faith and doesn't keep it's promises, wasting legislature's time and taxpayer dollars.
6:41 p.m.
Dec 13, '12
Sal, in testimony today Nike indicated they would not welcome any continuing obligation on jobs, ie if they could show they hit 500 new employees for just one day they were done.
Maybe that doesn't matter because of the scale of the Nike project, but it matters a lot for anything else and especially anything else bound for 40 years.
2:29 p.m.
Dec 13, '12
"And if Nike doesn't live up to its obligation, the legislature is not obliged to either."
What is the legal basis for this presumably naive statement? In a draft bill I have seen, Nike can sue the state but Oregon cannot sue Nike for failing to deliver. Does anybody know of a revision of this giveaway?
12:25 p.m.
Dec 13, '12
I'm fine with giving them assurances. I'm not fine with them holding the state hostage to their personal tantrum, forcing our hand to hold a special sessions just a month before the regular session gavels in. It's absurd.
The smokestack is a metaphor for big business, Sal. It's not just literal. It means we shouldn't be bending over backwards to give away the store--or at the very least we should be extremely thoughtful and deliberative when we're considering how business operates in our state.
McCall may have in fact done this deal. But I find it hard to believe that McCall would have called a special session 30 days before the regular session to do a deal for a piece of policy that nobody is considering changing.
12:44 p.m.
Dec 13, '12
Agreeing not to change a tax calculation for 5 years in exchange for a $440 million expansion and 500 new jobs at Nike plus another 3000 construction jobs is not "giving away the store". The smokestack reference was not used by the Governor McCall as a metaphor to signify blanket disdain for big business. It was Tom McCall saying that we were going to pursue reasonable clean air, clean water, and land-use regulations in Oregon, even if it meant that some companies might not want to operate here. I am glad that the Governor called this emergency session. I want to see him drive his agenda, and I see no upside to subjecting this deal to the kind of horse-trading and hostage taking that we are used to seeing in the legislature.
10:57 p.m.
Dec 13, '12
Given Nike's track record, I - and a few others at least - am not fine with their assurances.
Nike craps in its own nest while Oregon flies with her own wings.
1:08 p.m.
Dec 13, '12
Don't kid yourself--we have no idea what Tom McCall would have done.
11:00 a.m.
Dec 13, '12
To quote the great Tom McCall: "Oregon is demure and lovely, and it ought to play a little hard to get. And I think you’ll be just as sick as I am if you find it is nothing but a hungry hussy , throwing herself at every stinking smokestack that’s offered.”
11:52 a.m.
Dec 13, '12
Don't negotiate with economic terrorists.
12:00 p.m.
Dec 13, '12
Phil Knight has a history of bullying:
Nike's Chief Cancels a Gift Over Monitor Of Sweatshops
12:19 p.m.
Dec 13, '12
McCall had a way with words always getting his point accross we could use a few more like him.
4:39 p.m.
Dec 13, '12
Is this the same Phil Knight who pledged to fund an arena in his son's memory and then — in a $200 million bait & switch — hit the taxpayers up to bond construction and poured his and his buddies' money into endowing the UO athletic enterprise? The same fellow who threatened to withdraw all support from his alma mater if its president did not order students to disassociate from a campaign seeking to prevent UO apparel from being manufactured in overseas sweatshops? THAT Phil Knight? C'mon, what more do we need to now?