Lessons from Amazon HQ2 – let’s invest in our state and create our own
By King Williams
After weeks of rumors, Amazon, the second trillion dollar U.S. company, confirmed that it would be selecting not one but two U.S. cities for its North American second headquarters known colloquially as ‘HQ2’.
The search for HQ2 was publicly announced at 6 a.m. on Sept. 17, 2017, spawning a litany of 238 odd, funny, unique responses, including Stonecrest.
In January of this year, after an initial 238 applicants, Amazon selected 19 U.S. cities and Toronto, Canada as a shortlist candidate for HQ2. Since that shortlist’s inception, Atlanta has hovered near the top of the list with a few experts and analysts selecting Atlanta as the most likely winner.
The prospect of Amazon bringing a prosperity bomb of 50,000 jobs with a starting salary of $100,000, it was enticing for many state and local governments to apply for the prize. Based on Amazon’s requirements, only about 53 applicants actually met the criteria. Downtrodden cities, such as Detroit, were left off the shortlist.
Both winning sites for Amazon’s second/third headquarters are located on the East Coast: the Washington, D.C. edge city of Crystal City, Va., National Landing (renaming an existing place is so Atlanta, hello ‘West Midtown’) and Long Island City in Queens, at the center of three New York City’s metro areas.
Amazon also announced that Nashville, Tn., one of the 20 finalists, had been selected as an Operations Center of Excellence, sounds like a national warehouse management facility if you ask me, but it will be creating 5,000 jobs.
If anything, the Amazon HQ2 contest shows how cities were desperate for economic development following years of neglecting investment in civic programs and infrastructure. Newark offered an obscene package worth more than $7 billion; Columbus, Ohio offered a 15-year 100 percent property tax abatement; the Maryland legislature passed a bill allocating $6.5 billion for its Montgomery County bid, and Chicago offered to actually give payroll taxes back to Amazon if HQ2 moved to the Windy City.
For what it’s worth, the only city to not offer Amazon any financial incentives was Toronto, which still made the shortlist.
The real question is whether Amazon would have moved to New York City and Washington, D.C. anyway? My guess is yes, but having an HQ2 contest created a bidding war where the only winner was Amazon.
Local city, state leaders, Democrats and Republicans alike, fawned over the prospect of Amazon bringing 50,000 high-income jobs to their states/cities/towns. Northern Virginia allegedly spent $1 million on its Amazon bid on top of the tax incentives and promised infrastructure upgrades.
NYC’s Long Island City, the other co-winner, decided not to give any tax breaks to Amazon. But Gov. Andrew Cuomo stepped in, agreeing to pay for subway upgrades and giving Amazon $3 billion in tax breaks.
Also by having Virginia, a swing state, participate in three-way selection bid with Maryland and Washington, D.C., I view this with both caution and optimism for Georgia and metro Atlanta. Gov. Cuomo is a blue state governor who operates as a red state governor, and Tennessee is an actual red state with low taxes. Amazon is playing the entire field.
In its choices, Amazon chose to be a big fish in a much bigger lake rather than being the biggest fish in a small pond. Amazon could have picked Columbus or Indianapolis and become the dominant player in that city, and arguably, the state.
That’s a luxury they don’t have in its headquarters in Seattle, where Starbucks and Microsoft are also based.
The elephant in the room of Georgia’s loss of the Amazon bid is our political leadership. Last spring, Lt. Gov. Casey Cagle, in the midst of a gubernatorial campaign, attacked Delta Air Lines on Twitter – saying he would be against reinstituting an aviation fuel tax break because the airline had dropped a discount for NRA members.
That caused a national flap, which likely hurt Atlanta’s chances to win Amazon HQ2 and perhaps Apple’s second campus as well as other companies looking to do business in Georgia.
In selecting Crystal City and Long Island City, Amazon will be in areas where they can help create the city they please. Both cities have a small number of single-family homes, density, walkable communities, and transit – offering connections to larger metro areas.
Long Island City is only a single train stop from midtown Manhattan. Crystal City, a suburban edge city, is a short transit ride to the nation’s capital. It would behoove the state of Georgia to really start looking at how to make effective mass transit work.
Also, both Washington, D.C. and New York City offer a wide variety of nightlife, activities, and amenities for people of all ages, not just new families. Amazon picked two cities where young people actually want to live – communities with ethnic enclaves that are easily accessible without a car. Plus, these Amazon cities will attract more college grads and foreign talent.
These are lessons for Atlanta. I hope this is a wake-up call for every political leader, developer, and booster in the State of Georgia. The future of economic development will depend on data, demographics and available infrastructure.
Just a thought here but maybe tax breaks are not a good way to finance economic development. At least not to the second trillion dollar US company, those breaks should be going to startups and small businesses. Atlanta offered a package of an estimated $2 billion dollars and would’ve been the largest package given to a corporation in our state’s history, edging the recent $1.9 billion allocated to CIM for the Gulch redevelopment by only $100 million.
If the state is willing to spend billions in order to bring in Amazon, it might be better served to invest in organizations like Goodie Nation, which produces dozens of startups that need funding. Instead of building an Amazon University, that money could be better spent on public education, from early learning to 12th grade, as well as support our historically black colleges and universities, technical colleges, and contribute to programs in STEAM (science, technology, engineering, arts, and math).
The money Georgia uses to recruit companies could get trains running on the entire Beltline, expand MARTA, fix every pothole in the city, provide adequate sidewalks and help fund regional rail…I’m just saying.
Rather than bidding for high-stake corporate out of state headquarters, we would do better to grow from within and invest in Atlanta and Georgia.
FWIW (For What It’s Worth), Here’s the state of Georgia’s actual Amazon HQ2 bid below: