The Need for a Better Deal for Workers & Residents in Inland Southern California: A Case Study of QVC Inc.’s 2015 Operating Covenant Agreement with Ontario, California

Author(s): Allison, Juliiann; Cline, Nathaniel; Reese, Ellen | Abstract: Workers and residents in Ontario are not benefiting as much as they could from the city’s economic development projects. Ontario’s politicians have overlooked the community building potential of economic development projects found in other California cities where politicians have engaged residents in negotiations to incorporate community benefit agreements (CBAs) or project labor agreements (PLAs) into public agreements with developers. The model CBAs and PLAs in other California cities that we review show how they involve community stakeholders in on-going monitoring and oversight of the completion and implementation of the economic development project. Here we contrast these “best practices” for economic development as well as Measure JJJ in Los Angeles City with the 2015 operating agreement between the City of Ontario and QVC, Inc., an on-line and shopping channel retailer, regarding its distribution center located in Ontario. That agreement establishes Ontario as the “point of sale” (or location of sale) for QVC goods stored in its Ontario distribution center, allowing the city to collect sales tax revenue when consumers purchase those items. In exchange, the City has agreed to return to QVC an astounding 55% of total sales tax revenue collected, up to $500 million and 60% thereafter, in addition to 60% of sales taxes on QVC’s purchases of goods and equipment. The political process also lacked transparency and inclusivity, which limited the ability of local community stakeholders to be involved in crafting the agreement. This operating agreement is an example of just how little local officials expect from developers and retailers. We argue that this “low road” approach to economic development contributes to the city’s high level of poverty, keeps the city’s tax base low, and fails to capitalize on civic engagement to improve the quality of life for workers and residents.