Amazon HQ2

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Winning bids for Amazon HQ2

Amazon HQ2 is a planned new corporate headquarters in Long Island City, New York and Crystal City, Virginia for online retailer and tech company Amazon in North America, to supplement the existing Seattle headquarters. Amazon announced the initiative, along with a request for proposals from governments and economic development organizations, in September 2017, attracting attention from more than 200 cities in Canada, Mexico and the United States.[1] Amazon originally intended to have 50,000 workers at HQ2 and planned to invest $5 billion in new construction.[2] A shortlist of 20 finalists was announced January 18, 2018.[3] On November 13, 2018, Amazon announced that HQ2 would be split into two locations, with 25,000 workers at each: National Landing, a future neighborhood including Crystal City in Arlington, Virginia; and Long Island City, in Queens, New York City.[4]

Background[edit]

Part of the Amazon headquarters in Seattle, under construction in 2015

Amazon.com was founded in 1994 in Bellevue, Washington, and moved to leased space in the SoDo neighborhood of Seattle. As the company grew, it went through a series of office moves around Downtown Seattle, until announcing a move to a purpose-built headquarters campus in the South Lake Union neighborhood, then a light industrial enclave undergoing urban renewal.[5] As of 2017, Amazon occupies 8.1 million square feet (750,000 m2) of office space in 33 buildings, employing 40,000 white collar workers.[6]

Requirements[edit]

Amazon's request for proposals outlined several core requirements, as well as optional preferences.[7]

  • Metropolitan areas with a population of over 1 million
  • Within 30 miles (48 km) of a population center
  • Within 45 minutes of an international airport
  • Proximity to major highways and arterial roads 1–3 miles (2–5 km)
  • Access to mass transit routes
  • Up to 8 million square feet (740,000 m2) of office space for future expansion

Optional preferences include airports with direct flights to Seattle, New York City, San Francisco, and Washington, D.C., urban locations, and proximity to major universities.[8]

The deadline for Phase I bids was set at October 19, 2017.[9] A final site was planned to be selected and announced in November 2018, from a shortlist of 20 cities released in January.[7][8][3]

Bids[edit]

Submitted[edit]

As of October 23, 2017, 238 proposals had been submitted and received by Amazon, representing cities and regions from 54 states, provinces, districts, and territories.[10][11][1] The only U.S. states that did not have a locality that submitted a formal proposal were Arkansas, Hawaii, Iowa, Montana, North Dakota, South Dakota, Vermont and Wyoming.[12] The Canadian provinces of New Brunswick and Saskatchewan also had no regions submit a bid, along with the Yukon Territory. This could be that cities in these regions do not fit Amazon's wish-list of what is seeking in amenities.[13]

Little Rock, Arkansas[14] and San Antonio, Texas[15] later withdrew their submission.

Promotional campaigns[edit]

Sun Corridor, a Tucson, Arizona economic development firm, sent a 21-foot saguaro cactus to Amazon in an attempt to promote the city's bid. The gift was rejected due to the company's corporate gifts policy, instead donating it to the Arizona-Sonora Desert Museum.[16]

The city of Stonecrest, Georgia, a suburb of Atlanta, voted to de-annex 345 acres (140 ha) of land for Amazon to establish its own city named Amazon around its headquarters.[17]

Sly James, mayor of Kansas City, Missouri, purchased 1,000 products from Amazon, which he donated to charity. James wrote 5-star reviews for each one of them, in which every review mentioned positive attributes of Kansas City.[18]

Primanti Brothers, a chain of sandwich shops based in Pittsburgh, offered free sandwiches to Amazon employees if they chose the city as their second headquarters.[18]

The city of Birmingham, Alabama erected several giant Amazon boxes and dash buttons around public areas. The dash buttons sent out pre-generated tweets to lure Amazon to the city.[18]

New York City Mayor Bill de Blasio announced that major landmarks in the city would be lit in orange to promote the city's campaign for HQ2.[18]

For one of Canada's many bids, messages hoping to persuade Amazon to move to Calgary were sprayed onto sidewalks in Seattle's South Lake Union neighborhood.[18] During an Ottawa Senators hockey game, fans were encouraged to "make noise" for the city of Ottawa's Amazon bid.[9]

Contrary to other cities, Little Rock, Arkansas, purchased a full-page ad in the Washington Post "breaking up" with Amazon, where they described their decision to not submit a bid, while also touting the city's positive attributes.[19] A few days after the bid deadline, the campaign flew a banner plane over Seattle with the same message.[20]

Finalists[edit]

Amazon HQ2 final 20 cities

On January 18, 2018, Amazon announced its shortlist of 20 finalists for the HQ2 bidding process. The list focuses mainly on the East Coast and Midwest, with Los Angeles the only selection from the West Coast and Toronto the only one outside of the United States.[3][21][22]

Amazon began tours of its finalist cities in late February. Bidding cities also signed non-disclosure agreements with Amazon for the duration of the bid process.[31][32] According to an Amazon spokesperson, the NDA does not cover financial incentives cities have offered.[33] NBC News reported in May that visits to the 20 finalists had been finished by Amazon.[34] In an interview in September 2018, with the Economic Club of Washington (D.C.), Bezos said, “We will have a decision by the end of the year.”[35]

Winning bids[edit]

In November 2018, The Washington Post and the Wall Street Journal reported that several finalists were in advanced talks with Amazon over the HQ2 decision, including the potential choosing of Crystal City in Northern Virginia.[36] Amazon Director of Economic Development Mike Grella wrote on Twitter that the leaker responsible for informing the newspapers was violating a non-disclosure agreement.[37] Grella also criticized media outlets for speculating on the winning bid for HQ2 based on the travel patterns of Amazon CEO Jeff Bezos, who owns The Post.[38] On November 5, 2018, it was speculated that Amazon was finalizing plans to divide HQ2 evenly among two locations: Crystal City in Arlington, Virginia, Long Island City in Queens, New York City or Dallas, Texas.[39][40][41] Amazon declined to comment on the New York Times and Wall Street Journal reports.[42]

The selections of New York City and Northern Virginia for the HQ2 sites were confirmed early on November 13, 2018.[4][43] Amazon made the official announcement later that day.[44][45][46] In Amazon's announcement, a joint press release was presented by the Northern Virginia bidders that Amazon’s HQ2 neighborhood location would officially be renamed "National Landing", which encompasses not only Crystal City but also the nearby areas of Pentagon City and Potomac Yard.[47] Amazon also announced that downtown Nashville, Tennessee, would be the new "Center of Excellence" for its operations business, adding 5,000 new jobs.[46][48]

The subsidies given to Amazon in New York include performance-based direct incentives of $1.525 billion based on whether the company created 25,000 jobs. This included a refundable tax credit through the state’s Excelsior Program of up to $1.2 billion, calculated as a percentage of the salaries Amazon expects to pay employees over the following 10 years. Additionally, the Empire State Development Corporation would give Amazon a cash grant of $325 million based on the occupancy rates of HQ2 buildings over in the following 10 years.[49][50] Under an agreement with New York City's government, half of the property taxes for the city's HQ2 campus would be waived, and the exempt amount would go to the city's PILOT (payment in lieu of taxes) fund to pay for infrastructure improvements in New York City.[51][52] Meanwhile, Virginia offered performance-based incentives worth $573 million, which included a workforce cash grant of up to $550 million, based on whether Amazon created 25,000 jobs. Arlington County would also give an additional $23 million in cash grants, to be disbursed over 15 years, contingent on the gradual increased revenue from a tax collected from the county's hotel rooms.[49][50] Both states proposed that Amazon be given access to a helipad, and the New York state government also promised to upgrade infrastructure in conjunction with HQ2's construction there.[50] Nashville offered $102 million in performance-based incentives, plus a cash grant of up to $15 million based on each new job added. In addition, the Tennessee government offered a cash grant of up to $21.7 million based on each new job added.[49]

Amazon was said to have chosen New York City as one of the sites for HQ2 because of the city's highly-skilled pool of talent; existing tech, finance and media industries; and strong university system, including Columbia University and Cornell Tech.[53]

Analysis[edit]

Former Seattle Mayor Ed Murray announced that he would begin conversations with Amazon about their long-term plans for the city, while the Seattle Metropolitan Chamber of Commerce characterized the announcement as a "wake-up call" to Seattle to improve the city's business climate.[54] Comparisons were made to Boeing's decision to move their corporate headquarters from Seattle to Chicago in 2001, which came as a surprise to Seattle.[55]

Moody's Analytics published an analysis of bidding metropolitan areas and determined that Austin, Texas, ranks highest among Amazon's criteria, followed by Atlanta, Philadelphia, and Rochester, New York.[56] The New York Times also completed an analysis which found Denver to be the best site based on Amazon's criteria, followed closely by Boston and Washington, D.C.[57] Irish gambling site Paddy Power originally listed Atlanta as the odds on favorite to win HQ2, with 2-to-1 odds,[58] but as of January 2018, lists Atlanta and Austin as sharing 3-to-1 odds of winning Amazon HQ2.[59]

Some of the finalists and rejected bids have used their Amazon proposals to attract investments from other multinational corporations.[60][61]

Criticism and opposition[edit]

Steven Strauss, a visiting professor of public policy at Princeton University[62] and an expert on economic development,[63] in an editorial in USA Today suggested that metropolitan areas should be cautious about bidding too generously to win the Amazon bid.[64] He points to examples where companies have gone bankrupt and/or not followed up on expansion plans and notes that it is possible cities could over pay (the so-called "winner's curse") by providing an overly generous incentive package that turns out to be a money-losing proposition for the municipality if all the promised jobs don't materialize.

Conservative and liberal advocacy groups voiced their opposition to various tax breaks promised by cities in hopes of luring Amazon.[65][66]

In early 2018, New York University Stern School of Business professor Scott Galloway predicted that HQ2 would be located in either the New York metropolitan area or the Washington metropolitan area; with the decision to create two locations, Galloway ended up predicting both correctly.[67] He repeatedly called the competition a "ruse" and a "con".[68] Galloway said that "the game was over before it started", claiming that the proximity to both Bezos' home and the capital made the DC area an obvious choice,[69] and that soliciting bids from places that they never intended to move to was solely to gain tax breaks.[68]

After the HQ2 campus in New York City was announced, officials representing parts of Queens, such as U.S. Representative-elect Alexandria Ocasio-Cortez, Councilman Jimmy Van Bramer, State Senator Mike Gianaris, and Assemblyman Ron Kim, announced their disapproval.[70] Ocasio-Cortez, Van Bramer, and Gianaris all expressed concern that Amazon would receive tax breaks while critical infrastructure, such as the New York City Subway, was deteriorating and the city's public-school and health-care systems were underfunded. In a Twitter post, Ocasio-Cortez raised further concerns about the affordability of housing in Queens, since housing prices around the HQ2 campus in Queens would rise as a result of the campus's construction.[71] Kim and Fordham University professor Zephyr Teachout wrote an opinion piece in The New York Times in which they stated that the city should "not offer incentives and giveaways to an internet giant known for squashing small businesses".[72]

Politico reported that the Long Island City location will be built on land intended for 1,500 affordable homes, to which State Senator Michael Gianaris said, “the more we learn about this deal, the worse it gets.”[73]

References[edit]

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External links[edit]