Cities across the country are racing to win the affections of Amazon as it seeks a home for what could be the largest corporate relocation project in modern history.
The project, Amazon’s new HQ2, has city officials salivating over the chance to attract 50,000 high-wage jobs, billions of dollars in direct investment and millions more in related economic activity.
But some are concerned that cities will offer too much to win the company over. Amazon has proven adept at milking their hosts for tax incentives and credits in the past. A report this week by Washington Business Journal found that Amazon has secured more than $1.2 billion in incentives and breaks from state and local governments over the years.
“This is a textbook auction. This thing is going to be taught in business schools,” said Greg LeRoy, who heads Good Jobs First, which keeps tabs on the deals local governments make to attract big companies. “The risk is that somebody’s going to overspend to pay Amazon to do what they were already going to do anyway.”
Already, some cities have gone to creative lengths to attract the HQ2 site.
The city council in Stonecrest, Ga., a suburb of Atlanta, voted to change its name to Amazon if the company locates there.
Kansas City Mayor Sly James bought and reviewed 1,000 products on Amazon produced in his home city, including wind chimes, a child’s Halloween costume, a breakfast cereal made at a local General Mills factory and a cat litter made by Arm & Hammer.
Economic development officials in Winston-Salem and Greensboro, N.C., have urged residents to ask Alexa, the voice on Amazon’s Echo device, whether the Triad area should win the new headquarters in order to influence the company’s data team.
Beyond the gimmicks, cities are finalizing bids ahead of Thursday’s deadline. Amazon’s request for proposal lists incentive packages as a “key driver” in its headquarters decision, though they will not be the only factor as finalists are named.
An Amazon spokesman declined to comment on the record for this story.
The company has a long history of seeking and winning breaks from local governments. Texas forgave a $269 million sales tax bill the company owed after it pledged to spend $200 million on new facilities in the state, which brought 2,500 new jobs. Illinois officials gave the company $82 million in tax credits, and the Ohio Tax Credit Authority approved a package of $81 million over the course of 15 years.
Kentucky officials offered $75 million for Amazon to expand operations at the Cincinnati/Northern Kentucky International Airport in exchange for 600 new jobs that average $26 an hour, according to a database of megadeals maintained by Good Jobs First.
The Business Journals tally showed Oregon officials had given more in tax incentives to Amazon, $213 million, than any other state. Texas, Maryland, New York and Tennessee have all given incentives valued at more than $50 million.
Observers say the impulse to throw big incentives at Amazon comes from the slow job growth in the wake of the recession, especially outside the handful of large metro areas that have accounted for most of the recovery. Fewer companies have built huge headquarter facilities in the years after the recession, making the Amazon project a rare opportunity.
“You’ve got this very depressed supply of deals and heightened demand in the form of anxious public officials,” LeRoy said. “The HQ2 deal is the bombshell, we’re waiting to see what happens.”
The company maintains at least 257 sorting and distribution centers in 33 states, and Amazon officials say the incentives they win are worth the cost to local governments.
Amazon has facilities in 44 counties with fewer than 1 million residents, which employ an average of 3,600 workers. Those workers in turn support an estimated 2,600 indirect jobs, like restaurant workers and dry cleaners, according to Amazon’s internal figures. Since 2011, the company says it has invested $100 billion in infrastructure and wages.
Dozens of cities are competing for the project — the Seattle Times, Amazon’s hometown newspaper, found more than 100 cities in the United States and Canada that publicly expressed interest in the new headquarters — but only a handful are likely to truly compete.
That’s because the winning city would need a major international airport, a workforce that is trained and capable of filling the thousands of new jobs, and the infrastructure necessary to accommodate all the new traffic.
But every city vying for the project, even those with little hope of winning, are generating stories about the search in local newspapers — just before the holiday shopping season.
“They have this sophisticated site location department that they created five years ago. They’re getting an enormous amount of earned media. This is just an earned media bath,” LeRoy said. “It could really turn into this giant sales stunt.”