Pumping the Brakes on Amazon’s New Headquarters

by - 2 min read

Pumping the Brakes on Amazon’s New Headquarters

by admin - 2 min read

by admin

 

When online retailing giant Amazon announced that it was seeking a home for its second headquarters, dubbed “HQ2,” cities raced to submit bids and position themselves as the best fit. Every resource was leveraged and every dollar was spent to secure the $5 billion project, which has far-reaching economic and cultural implications. Is this project worth the pursuit? Or will it result in more pain than gain?

What’s the Appeal?

Cities are foaming at the mouth at the prospect of adding some 50,000 jobs to their respective economies. Many of these high-paying jobs will attract young professionals from abroad. The design and construction of the new headquarters will undoubtedly employ large amounts of tradespeople and designers. As employees and prospective employees relocate, it should stimulate the housing and rental markets and rejuvenate neighbourhoods which, in turn, will help local businesses. These factors can propel a city into prosperity. Between 2010 and 2016, Amazon’s original headquarters generated an estimated $38 billion for Seattle’s economy.

What Cities Are in the Running?

Cities and districts in North America have submitted close to 250 proposals for Amazon HQ2. It isn’t just big cities hoping to open its doors. Yes, New York and Chicago have submitted bids, but so have smaller regions like Lehigh Valley in Pennsylvania. The full list of bidders has not been made public, but Boston, Calgary, El Paso, Columbus, and Toronto are some of the places confirmed to still be in the running.

The Downside is Real

It’s easy to get blinded by the infusion of jobs, tax revenue and the civic pride that would come with winning a bid of this magnitude. There is a downside, though; a massive construction project could equal years of inconveniences, negatively impacting local businesses and commuters. The influx of highly-paid Amazon workers could drive housing prices past affordable levels, pushing many longtime residents out of their homes and into less desirable areas of the city – or out of it entirely.

Amazon could also poach thousands of employees from other sectors like tech, marketing, finance, and human resources. It would be hard for many smaller companies to compete for talent against the monolithic tech giant and its hefty compensation packages. And enticing tax exemptions will play a large role in the winning city’s bid, meaning local taxpayers will be footing a chunk of Amazon’s tax bill.

And the Winner Is…

It’s believed that Amazon will choose the winner some time in early 2018, but there’s no deadline for them to make an announcement. Many believe that any city with a population of less than 4 million will be eliminated, and an emphasis on the availability of an educated workforce and the presence of a strong public-school system will be weighed heavily.

Cities should consider the option of pulling their bids from consideration. Once the headlines fade, the development of an Amazon campus could hold a city hostage, first in its construction, and then with indefinite tax exemptions. Politicians should have to prove that Amazon is the best for its taxpayers, not that its tax structure is best for Amazon.


 

 

Rob Shapiro | Contributing Writer

Photo credits: Jay Sterling AustinSeattle City Council

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