Fargo City Commission Needs to Reconsider FedEx Tax Deal

In an editorial published today the Fargo Forum admits that it was wrong for the City of Fargo to hand out a tax exemption to FedEx after the company told the city commission that they’d move even without it.

But the paper also claims that there was no intention to use the incentive to lure FedEx from another North Dakota, Grand Forks, where the company has operated a facility for decades.

“In point of fact, a FedEx official was clear when asked if the company would have made the move to Fargo without the tax break,” the paper writes. “He said yes. In other words, FedEx made a business decision back in February that was not related to the possibility Fargo would grant the property tax reduction.”

But this doesn’t jibe with what the company has said on the record. For one thing, Grand Forks Herald reporter John Hageman says a FedEx spokesperson told him that the incentive was a factor in their move:

Here’s an excerpt from Hageman’s July 23 article:

Jack Pfeiffer, a FedEx spokesman, said “the business incentive offered by the city of Fargo was a key factor in our decision to expand our operation and further invest in the area.” FedEx is planning more than $6 million in capital projects in Fargo, according to a letter Pfeiffer sent to Mahoney that the mayor provided to the Herald.

What’s more, FedEx actually issued a statement through Fargo Mayor Tim Mahoney’s office (see it here) the entire purpose of which was to communicate the fact that the tax incentive was a factor in their decision to move:

FedEx, along with the City of Fargo commissioners who voted in favor of the incentives package, can’t have it both ways. As I’ve noted before, they’re between a rock and a hard place.

If the incentives weren’t a factor in FedEx’s move from Grand Forks to Fargo then the Fargo City Commission is guilty of giving away tax dollars for no good reason at all.

If the incentives were a factor that’s even more problematic, because now you have Fargo using economic development policy to poach a business from another North Dakota community.

The Forum chooses to believe the first scenario – and appropriately chastises the city leaders who voted for the incentives deal while praising commissioners Tony Gehrig and Tony Grindberg for opposing them – but that scenario isn’t in keeping with public record which is clear and easily verified.

At the very least the Fargo City Commission should revisit their vote on the tax incentives and hopefully rescind them. After that they should initiate a thorough review of the policies surrounding when these sort of incentives could be invoked.

At the state level, lawmakers should look at prohibiting economic development incentives for companies considering intrastate moves.