As the early March deadline approaches for Colorado and 19 other finalists hoping to land Amazon’s second headquarters, the debate over whether they should incentivize the Seattle retail behemoth has intensified.
Some of them are offering billions of dollars worth of economic incentives. Colorado’s pitch to make Denver the next HQ2 is estimated to be in the $100 million range. But few finalists, including Colorado, have revealed exactly how much they offered Amazon. And that has fueled campaigns to smack local governments for offering taxpayer-funded incentives to a company that sold $177.9 billion worth of products and services last year.
Any amount is too much, said Geoff Holtzman, who is with the Koch family funded Generation Opportunity. The conservative political group, representing millennials, this week launched a social-media campaign to oppose such corporate deals.
“Americans, especially young people, believe in the concept of fairness, and there is really nothing fair when you have cities and states conducting shady deals in darkness and giving money to a corporation that doesn’t need the help,” Holtzman said.
Victor Mitchell, a Republican who is running for Colorado governor, unleashed ads last month that welcomed Amazon to the state — as long as incentives are withheld.
“This whole process is so shrouded in secrecy that we really don’t know. I urge much greater transparency,” Mitchell said in an email. “We also don’t know what sort of additional incentives are being proffered for infrastructure, municipal incentives, tax abatements, regulatory relief, worker training, educational links, etc. It is almost assuredly more than just some cash incentives for jobs.”
Other politicians have chimed in on Amazon’s effort. Gov. John Hickenlooper says it would be a “sense of relief” if Amazon didn’t pick Colorado, but he added that the state is pursuing HQ2 100 percent. That spurred Colorado Republican Chairman Jeff Hays to say Hickenlooper was “actively undermining Colorado’s chances.”
Officials preparing Colorado’s bid say they still have no plans to ask state lawmakers for money. Sam Bailey, overseeing the bid at the private Metro Denver Economic Development Corp. because all eight sites proposed by the state are in the metro area, has said Amazon incentives could be “in excess of $100 million.”
“This is a company with a payroll of $5 billion. We’re making a modest investment,” Bailey said this week. “We are not offering Amazon anything we wouldn’t offer to any (qualified) company.”
The state’s largest incentive would be a tax credit that Amazon or other qualifying companies can receive after adding higher-paying jobs to the state. In the past month, Colorado has celebrated others receiving the same credit, including Strava, a San Francisco fitness-tech firm awarded up to $2.3 million for its intent to hire 90 people in Denver.
“First and foremost, incentives are not the decision-maker for any company, nor do we want it to be,” said Bailey. “Whether it’s Amazon’s 50,000 jobs or Strava, which added 90 jobs, it’s based on actual performance and shows a partnership between the state, the communities and the companies that want to invest here.”
Generous incentives from Amazon finalist cities include $7 billion from Newark, N.J., and $5 billion from Maryland. But other finalists, like New York City, don’t plan to offer the company more than what they offer to others.
Some failed bids reveal lavish incentives that apparently didn’t interest Amazon. Orlando, Fla., offered $400 million. St. Louis put forward up to $3.8 billion, depending on the site. And Catawba County, N.C., ponied up more than $582 million. The $400 million from Chula Vista, Calif., which included 85 acres of property and postponing property taxes for 30 years, didn’t even get a response from Amazon.
“I don’t know why we didn’t get picked,” said Chula Vista Mayor Mary Salas. “We were winners anyway. We got national and international attention for the site. It’s created a lot of buzz, and we continue to get calls.”
Public incentives have been used for centuries. In 1791, New Jersey provided a 10-year tax abatement to a company led by founding father Alexander Hamilton, according to a report by New Jersey Policy Perspective, a think tank that is not a fan of its state subsidizing Amazon. In exchange, Hamilton’s company built an industrial park near the Passaic River.
Joseph Parilla, a fellow at Brookings’ Metropolitan Policy Program, said Southern states pioneered incentives in the early 20th century “to steal businesses from the north to build out their manufacturing base. It’s been going on for a long, long time.”
But Amazon’s HQ2 quest has brought such funds back into the public spotlight. Parilla, who estimates local and state governments are spending $45 billion to $90 billion a year on incentives, has been studying the topic and feels it’s best to be skeptical about the effectiveness of incentives.
While many programs target companies with higher-paying jobs, there isn’t always an educational component to help the local community train for the new jobs. Higher-paying tech jobs have tended to be less diverse. And Amazon, already the benefactor of nearly $1.3 billion in state and local incentives for its distribution centers, would have probably built them anyway, he said.
“There’s something that just rubs people the wrong way when a company as large and successful as Amazon is receiving a public subsidy,” Parilla said. “Companies care about talent and other factors. Of course, if you give them a tax break, they’ll take it. But it’s icing on the cake.”
He recommends cities create a scorecard to check whether an incentive improves a community through education, neighborhood development or commitment to being a good partner.
“My one sense is that the best bids we’ve seen have essentially led with public investments that support Amazon but also support other companies and the community. Investments that impact universities, infrastructure, those make sense and are also contributing to the public commons in a way that benefits others,” he said. “Boston and Toronto, they do a pretty good job of saying, ‘Look, this is who we are. This is how we got to be really successful innovative cities and we’re going to continue to double down, which is what attracted Amazon to us in the first place.'”
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Boston’s proposal details the city’s investment in transportation, infrastructure and community, as well as up to $75 million toward affordable housing and $13.1 million to tech job training.
Bailey, with Metro Denver, said the secrecy is typical of how the department handles similar economic development inquiries since companies are comparing locations — and incentives — from other states and cities. But he said talks with Amazon still give him hope.
“Based on our interactions with the company, we believe they will further narrow (finalists) down … and there may be a future round,” said Bailey, who plans to submit updates to Amazon “in early March.” “There is no indication they’re leaning to or prioritizing a geographic region. They want to be in a community that is welcoming and wants to be a partner with them and have a solutions-oriented approach to solve issues related to homelessness and to help contribute to education and ultimately be a place they can create jobs in the next 10 to 15 years.”
