Last week, Amazon announced they are seeking proposals from municipalities to build a second headquarters away from their original Seattle location. They expect to spend $5 billion to fully build-out the campus that would house “as many as 50,000 high-paying jobs” and be the same size as the Seattle campus … over the next 15 to 17 years. They also figure their gravitational pull will bring in “tens of thousands of additional jobs and tens of billions of dollars in additional investment in the surrounding community.” High-paying is defined as jobs exceeding $100,000 per year in salary.
The Amazon FAQ section had this (frequently asked) question and answer:
Why is Amazon choosing its second headquarters location via a public process?
We want to find a city that is excited to work with us and where our customers, employees, and the community can all benefit.
In this case, “excited” means, “How much free money in tax breaks and incentives can a city give to minimize Amazon’s expenditures?” A bidding war seems the best and bloodiest approach for Amazon to minimize their spend. Or as I put it, how far can a city pull its pants down?
Amazon is well versed in minimizing spending on silly things like taxes. Simply search “Amazon tax evasion” and a plethora of links appear. In fact, Amazon’s first choice for its original headquarters wasn’t Seattle, but an Indian reservation near San Francisco that would have resulted in dramatically lowered taxes. California put a stop to that and sent Amazon packing for Seattle.
Even though Amazon largely changed how they structure their European operations to avoid tax, any municipality researching their desire for Amazon’s HQ2 should really unpick the company’s approach to paying whatever taxes the “winner” might be getting.
Another consideration are the implications for the local economy. It’s the old “good news, bad news” effect. In the bad news column, injecting 50,000 high-paying jobs into Dallas would result in higher-cost real estate for everyone. The tens of thousands of adjacent jobs Amazon claims would be created will make that burden even heavier for lower-paid jobs outside the Amazon bubble. Certainly they’ve helped put Seattle on the unaffordability map.
While Amazon’s current HQ is in an urban setting, the company said HQ2 can be either urban or suburban. From a Dallas perspective, the type of urban environment Amazon would want doesn’t exist here. There simply isn’t enough housing, public transportation, or vibrancy in downtown Dallas. The patchwork of Deep Ellum, Bishop Arts, Design District, Uptown, and Downtown just wouldn’t cut it without Amazon expecting to some serious heavy lifting from the City of Dallas (unlikely).
There’s the potential for them to look at Dallas Midtown, but that would again mean bootstrapping a neighborhood even less vibrant than downtown Dallas (they haven’t even begun building yet). Of course there’s recent corporate favorite Legacy West if the boonies are an option.
Where all Texas locations fail is in the public transportation and political arenas. We have way too little public transit, and Amazon’s workforce would seemingly be of the generation not wanting to drive everywhere and sit in traffic.
Amazon is also not a fan Texas politics. In fact most of the tech sector isn’t a fan. Texas’ bathroom bill saw many companies, including Amazon, publicly speak out against the measure. I can’t imagine them selling out those beliefs so quickly to locate in Texas. In fact, it’s more likely they’d move Whole Foods out of Texas first.
On the upside, I don’t see northern cities making the cut either. Amazon plans to let workers fluidly transfer between HQs and I don’t see harsh winters being a draw over sunshine for dreary-weathered Seattleites.
Not Dallas — Austin
While I doubt Texas has a chance of landing HQ2, Austin is the best, slim bet. Amazon purchased Whole Foods in August for $13.7 billion and so will already have a major presence in the city. Additionally, even without Whole Foods, if any Texas city had a shot at landing Amazon, it’s Austin (remote as that may be). It’s the state’s tech-savvy epicenter with 425,000 university students churning out graduates into an area that defines Texas vibrancy. It remains to be seen if Austin, already creaking under the weight of its rapid growth, congestion, and escalating housing costs, will want Amazon.
But that’s assuming decisions might be made impartially, without the quantity of pants pulling-down that is guaranteed to swing this bid to the city performing the most lucrative naked chicken dance.
And Dallas? Dallas can’t even pull its pants down far enough to get the Rangers or the Dallas Cowboys into Dallas.
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