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For Finalists in the Amazon Headquarters Sweepstakes, the Fun Has Turned Serious

For Finalists in the Amazon Headquarters Sweepstakes, the Fun Has Turned Serious

By Jonathan O'Connell, The Washington Post | Updated: 29 January 2018 16:26 IST

For America's mayors, Amazon.com's search for a second massive headquarters with as many as 50,000 jobs started as a free publicity ride, a chance to make clever promotional videos and woo the retail giant with attention-getting gag gifts.

But for those representing the 20 cities recently picked as finalists, the fun has turned serious. They suddenly find themselves working through a stern set of instructions on how the narrowing will proceed, coming from a company famous for its breakneck speed and incisive data analytics.

Amazon Narrows Field for Second Headquarters Location to 20

It's a process that Amazon is insisting play out largely in private, offering a challenge for elected leaders facing questions from constituents about what taxpayer subsidies might be offered to the $675 billion (roughly Rs. 42.9 lakh crores) company and its founder, Jeffrey Bezos.

"It was exciting to submit the proposal, and it was exciting to be named to the shortlist, but now we've got to get down to the details," said Boston Mayor Marty Walsh, D. He stressed how few details Amazon has provided to this point, making this stage feel closer to the starting gate than the finish line.

"We don't have any information right now about what the company really needs."

For now, Walsh and other mayors from finalist cities are happy to revel in their fortune for making it this far in the Amazon sweepstakes. Many were among the nearly 250 city leaders who gathered in Washington this week at a meeting of the US Conference of Mayors, basking in the media spotlight and receiving congratulations from their peers. It even prompted some to consider the political implications.

Four officials from different jurisdictions described how they received calls from Amazon laying out next steps. Company executives told them they plan to tour all 20 finalist locations, some of which have as many as a half-dozen properties under consideration.

Secrecy will be paramount going forward, the officials said they were instructed, prompting them to speak about the details only on the condition of anonymity.

An Amazon spokesman declined to comment on the conversations. The company plans to make a decision this year and would like to occupy its 500,000 square feet of office space in the new location as soon as possible.

Already mayors from finalist cities are working to further distinguish themselves, testing their pitches as they prepare to press their cases. Those from big-name destinations such as Boston and Washington touted the depth and talent of their workforces, while others - including mayors from Atlanta; Columbus, Ohio; and Philadelphia - reminded how expensive housing in those rival areas has become.

Chicago Mayor Rahm Emanuel, D, suggested that Amazon wouldn't even have to look for a second headquarters if housing in Seattle hadn't become so costly, forcing workers into smaller apartments farther from the office.

"Nobody wakes up and says: 'You know what we're missing? A second headquarters.' The fact is [tech companies] are paying ever more for talent, and that talent is ever more miserable," he said.

The mayors of smaller cities, including Nashville, Tennessee; Austin, Texas; Columbus and Raleigh, North Carolina, argued that their relative size would be an advantage.

"I think those cities are going to be driving the future of the country," said Columbus Mayor Andrew Ginther, D. "Do I think we're an underdog? No. But I relish the role."

Newly elected Atlanta Mayor Keisha Lance Bottoms, D, said the city has already proved itself a desirable hub for corporations, among them Coca-Cola, Home Depot and Delta Air Lines.

"I could go down the list of corporations that really have invested in this city, and they've seen their return," she said.

DC Mayor Muriel Bowser, D, said her city would benefit if Amazon chose a site in either the District, Montgomery County, Maryland, or northern Virginia - all of which were named finalists despite their proximity. Economists and public policy experts have suggested that the jurisdictions combine their bids and avoid being pushed into a bidding war.

Bowser said the jurisdictions could work together on transportation and infrastructure if Amazon decided on the area. But she was also happy to note the possible advantage her city had after Bezos, who owns The Washington Post, bought a house in Washington recently.

"All of the research and evidence suggests that corporate relocations closely track where the CEO lives," she said.

Some mayors in the final pool are still wondering what type of operations the second headquarters will include. Amazon explained in its initial search that it needed workers with a wide range of expertise, and in naming the finalists it said that "Amazon HQ2 will be a complete headquarters for Amazon, not a satellite office" - suggesting it would not have a niche focus.

Several mayors said they were well aware of concerns that Amazon would put new strains on housing prices and transportation networks, based on its experience in Seattle.

"I don't think you should ever not pursue something as game-changing as this because there might be a couple of problems associated with it," said Philadelphia Mayor Jim Kenney , D. "I think you use it to address the problems."

Amazon's request for discretion, however, left some mayors in the final group feeling stuck in a tug-of-war over how transparent to be about their efforts.

Amazon has a reputation for telling potential partners that it will cancel deals if discussions become public. In negotiating the firm's $13.1 billion (roughly Rs. 83,000 crores) acquisition of Whole Foods, for instance, Amazon executives told the grocer that it "reserved the right to terminate discussions if there was any leak or rumour of its interest," according to financial filings.

But civic groups, public advocates and reporters - leery of a corporate giveaway behind closed doors - are now pressing finalists for details about what, exactly, they are offering to a company run by Bezos, who is personally worth an estimated $113.9 billion (roughly Rs. 7.24 lakh crores).

A bid from Newark includes a reported $7 billion (roughly Rs. 44,500 crores) in subsidies, while Maryland officials have proposed $5 billion (roughly Rs. 31,000 crores), and Illinois and Chicago combined to offer $2 billion (roughly Rs. 12,700 crores) or more.

"We know that billions of dollars are on the table, and taxpayers everywhere need to see these bids to decide if they want to amend them," said Greg LeRoy, executive director of the nonprofit Good Jobs First, which is critical of corporate subsidies.

Some cities and states have responded by providing portions of their proposals but redacting subsidy details. Officials have claimed a variety of legal exemptions in batting away public document requests, according to a tally on the collaborative journalism site Muckrock.com.

"People have concerns because of what they've heard in Seattle or other cities," said Newark Mayor Ras Baraka. "People say well, you should spend it on housing, you should spend it on this, you should spend it on that. What they don't understand is that without Amazon, that money is not there."

As a former chief executive of Pizza Hut who oversaw corporate relocations, Dallas Mayor Mike Rawlings, D, said he planned to disclose as little about the bid as possible to help the city's chances.

"They asked us not to, and we decided we were going to do what they said," he said. "The customer is always right."

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