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Amazon’s second headquarters search hits crunch time; one group warns ‘it’s a race to the bottom’

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SAN FRANCISCO — And you thought cleaning up before the in-laws come over is nerve-racking. The 20 finalist cities in Amazon’s second headquarters search are in the midst of a grueling series of visits by company executives as each makes its play for the high-tech jobs bonanza the Seattle company has pledged.

So far, Amazon staff have visited about half, with more trips scheduled for April and beyond. The company plans to make a decision by Dec. 31, barring some huge upset, and once it’s made, hiring in the anointed town will begin in 2019.

The continent-wide beauty contest (Toronto’s in the mix) comes even as a group of influential economists and planners have created a petition urging cities to reject the retail behemoth’s demands for incentives.

Amazon launched a public search for a second headquarters site on Sept. 7. It asked North American cities to send in proposals, saying it preferred candidates with a business-friendly environment, a highly educated labor pool, strong transportation options, cultural fit and a good quality of life. 

It’s a potentially rich catch. Amazon plans to spend $5 billion building the new headquarters and says it expects to hire 50,000 well-paid high-tech workers to work there.

The 50,000 jobs are just the beginning, says Enrico Moretti, an economics professor at the University of California-Berkeley. All those highly-paid workers will themselves need doctors, teachers, waiters, carpenters, designers and shop clerks.

“My research suggests the indirect job number could be four to five times larger — on the order to 250,000,” said Moretti.

That wasn’t lost on the nation’s cities. A stunning 238 locations submitted preliminary bids. Amazon sorted through them and in January announced a short list of 20, 19 in the United States and one in Canada. 

But the process since then has been cryptic. Cities have signed non-disclosure agreements and in general fought to keep information about their offerings private, in part because they don’t want other cities to know what they’re offering.

Amazon also isn’t saying much.

“Amazon is working with each HQ2 candidate city to dive deeper on their proposals and share additional information about the company’s plans,” said spokesman Adam Sedo. 

The William Shatner welcome mat

Atlanta got its Amazon close-up last week. It has touted its educated workforce, low housing costs and business-friendly government. However, it’s also been dinged by one group, No Gay, No Way, for not having legal protections for the LGBT community.  

Not everyone in Atlanta is onboard with the possibility of a horde of Amazonians arriving in town. Graffiti by an anonymous group began to appear in early March with messages such as “Destroy Amazon” and “NO HQ2” and fliers that read, “The robots are coming. Stop them before it’s too late.”

Austin and Dallas got their Amazon visits at the beginning of March. Texas Gov. Greg Abbott said he believes either city would be a “perfect fit” for Amazon, touting his state’s excellent workforce, low cost of living, reasonable regulation, low tax rate and ease of doing business. 

Chicago hosted the Amazon team for two days the week of March 19. One blip in the process was a pre-tour graffiti clean-up blitz that mistakenly destroyed a piece of wall art by French street artist Blek le Rat on a building in the Logan Square area. It’s across from Lincoln Yards, a 70-acre riverfront site that’s one of Chicago’s prime contenders for the Amazon placement. 

Chicago was not above playing hardball. It hired actor William Shatner, aka Capt. Kirk, to narrate a video suggesting America’s Second City for Amazon’s Second Headquarters. Amazon CEO Jeff Bezos is a serious Star Trek fan, so much so that he had a bit part in the movie Star Trek Beyond.

Denver had a 10-person group tour the city the last week of January. Little has been revealed about the visit beyond word that the Amazon team took a ride on the light-rail train from the Denver airport into town, according to the Denver Post

New York City and Newark are rumored to be gearing up for an Amazon foray in April, according to Bisnow, a local business news site. The Star-Ledger reported the trip was originally slated for the first week of March but weather — in fact, a blizzard — caused it to be rescheduled.  Both New York City and Newark, which are just 12 miles apart, are considered to be on the short list of finalists.  

Philadelphia got a visit, but it’s not exactly clear when Amazon came. Mayor Jim Kenney told the Philadelphia Inquirer only that the Seattle team came for about a day and a half, but wouldn’t say when or what they did, beyond that they didn’t meet directly with him.

The Washington, D.C., area has three separate areas vying for the Amazon headquarters: Washington, D.C., itself, Montgomery County, Md., and Northern Virginia. All three got visits the first week of March.

Both Virginia and Maryland are offering up cities near to D.C. Virginia suggests Alexandria and Arlington, while Maryland has focused on the White Flint area of North Bethesda, which is near a Metro station with a direct link to Washington, D.C.

Washington, D.C., has been seen as a front-runner in the fight to get Amazon, for several reasons. One is its proximity to the federal government, which would give the Seattle company more of a hometown advantage as it fends off suggestions that the rapidly growing enterprise be tamed by regulation or taxation

Another is simply that CEO Jeff Bezos already has a house there — though it’s hardly just a house.

The $23 million, 27,000-square-foot mansion used to be a museum and is the largest private home in the District of Columbia. It is within blocks of the homes of both Barack and Michelle Obama and Jared Kushner and Ivanka Trump. The historic neighborhood, Kalorama, has long been home to diplomats and the power elite.

As yet, there’s no word of when other contenders, including Boston; Columbus, Ohio; Indianapolis; Los Angeles; Miami; Nashville; Pittsburgh; Raleigh, N.C.; and Toronto, will get their visits. 

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Race to the bottom

Despite cities falling all over themselves to win Amazon’s affections, a number of economists, policymakers and other experts think municipalities should think hard about the tradeoffs involved.

In January they launched a petition calling for a non-aggression pact for HQ2. Addressed to elected officials, it asked them to pledge to reject tax giveaways and monetary incentives to lure Amazon to their cities. The research shows incentives are often wasteful and counterproductive, diverting money that could more profitably be used for public service that spur broad economic development.

“It’s a race to the bottom,” said William Riggs, a planning strategist and professor at the University of San Francisco. “You don’t want to run your community into the red because you’ve subsidized” Amazon, he said.

Cities seem willing to sell their souls to attract Amazon. But it’s simply creating a long-term relationship fraught with peril.

“When the tax breaks expire, does that mean Amazon is going to just pick up and go to another city?” asked Riggs.

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