Amazon Gives Raleigh a Rose, Sends Us to the Next Round of the HQ2 Reality Show | News
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Friday, January 19, 2018

Amazon Gives Raleigh a Rose, Sends Us to the Next Round of the HQ2 Reality Show

Posted by on Fri, Jan 19, 2018 at 9:09 AM

This post is excerpted from the INDY’s morning newsletter, Primer. To read this morning’s edition in full, click here. To get all the day’s local and national headlines and insights delivered straight to your inbox, sign up here.

There’s something surreal about watching cities all over the country prostrate themselves before Amazon, acting like this is some sort of reality show—a high-stakes, corporate The Bachelor, perhaps—offering millions of dollars in incentives in hopes of landing HQ2. Of course, there’s a reason they’re doing so: the second Amazon headquarters could be an economic game-changer that brings some fifty thousand well-paying jobs and billions of dollars of investment into the area. More than 230 cities and regions in the U.S., Mexico, and Canada bid on HQ2, including four in North Carolina. Some promised huge perks for the internet titan: Newark offered $7 billion in incentives; a city in Georgia offered to rename itself “Amazon.” There were high-gloss presentations and expertly crafted videos touting regional amenities. But yesterday, Amazon narrowed its options by 90 percent, from 238 to just 20. And the only one left standing in North Carolina is Raleigh. [INDY]
  • “The Triangle region of one of 238 cities in 43 states to submit bids to Amazon last year. And while ours didn’t spell out potential incentives—officials told the INDY that they’d propose an incentive package if they made the first cut, which has apparently happened—many of the others did. According to Wake County Commissioner Matt Calabria, county leaders and economic development officials have discussed what an economic inventive package might look like, but those conversations have happened in closed session, which means he’s not allowed to talk about them. The county does have a standard economic inventive package and a headquarters provision that could unlock more dollars for Amazon, but it’s unclear right now what else local governments might pitch in.”
  • “Raleigh’s biggest draw, [Calabria] says, is its highly skilled, highly educated workforce, which is a key driver in luring companies to the region. In September, after Amazon announced its RFP process, The New York Times’s Upshot blog predicted that the Triangle’s underdeveloped mass transit system would be its undoing in its bid for the $5 billion project. That story labeled Denver the frontrunner.”
  • From the N&O: “Research Triangle Regional Partnership, an association of economic development agencies, submitted seven sites for Amazon to consider. The group wouldn’t say where the sites are in the region. Thursday’s announcement didn’t indicate if the company was looking specifically at a site in Raleigh or if that was part of the larger Triangle proposal. … The Triangle has received consistently high marks from analysts who have been handicapping the contest to land the Amazon project, except for its mass transportation system. On Thursday, Davidson College Economics professor Fred Smith said the lack of a transit system could hurt the area as Amazon narrows the field even further. … [Raleigh Mayor Nancy] McFarlane, however, said that lagging behind in transit could help bring the project here because the region is in the early stages of a countywide plan that could be shaped to accommodate Amazon.”
  • Charlotte did not make the cut, much to its leaders’ dismay [Charlotte Observer]: “‘I am absolutely flabbergasted that Charlotte didn’t make the list,’ said Charlotte City Council member Tariq Bokhari, who helped lead a group called Hivestorm with the Carolina Fintech Hub to support the Amazon bid. ‘If you had said five cities were on the shortlist and Charlotte wasn’t one of them, I’d say, Alright, I guess I understand that. … Something’s wrong here.’”

WHAT WE KNOW: RTRP has given Amazon seven options for placement, but we don’t know where most of them lie. One comes from Raleigh megadeveloper John Kane, who is offering a “Prime” corridor (get it?), which extends from Dix Park through the Warehouse District and out to Midtown, a massive stretch that would revolutionize downtown. [WRAL] Kane doesn’t know if his proposal is the one Amazon is considering.

WHAT WE DON’T: RTRP has been mum on the question of financial incentives, which will probably be a huge factor in Amazon’s decision. When Raleigh first submitted its bid, we were told that the package didn’t talk about incentives, and that would come later on. Yesterday, Calabria told me there have been closed-session meetings with economic developers about incentives, though he couldn’t talk about them. Wake County does have some standard incentive packages that would apply, though there’s talk of going bigger; in addition, Durham and Durham County could chip in as much as $50 million, the N&O reported in November.

SOMETHING TO CONSIDER: At first blush, this seems like a pretty good deal for the region, and most of the region’s elites are stoked about the revolutionary potential of HQ2. After all, these won’t be warehouse gigs, places where Amazon is sometimes accused of exploiting its workforce [Salon]. This will be white-collar all the way, with six-figure salaries aplenty. Which is why you’ll see lots of stories like this one, from the N&O’s David Menconi, basically begging Amazon to move here. But there could also be a downside we’re not talking about.
  • From Business Insider: CEO Jeff Bezos said HQ2 will be equal in size to Amazon's current headquarters in a Seattle neighborhood locals now call Amazonia. Since the late 1990s, the company has grown from a small set-up in Bezos' garage into a global e-commerce giant. … Many city leaders are optimistic about the thousands of jobs Amazon claims HQ2 would create. But some residents worry that it would also spur the same problems that Seattle has seen since Amazon arrived: increased traffic, soaring housing prices, and prolonged construction.”
  • “James Thomson, an ex-head of Amazon Services (the division that recruits sellers to the company's marketplaces), told the Toronto Star that inviting an Amazon HQ comes with risks. ‘The expense is a trade-off against schools, infrastructure, health care, etc.,’ he said. ‘Can Toronto support 50,000 high-net earners who all want nice homes, nice restaurants, easy commutes, etc.? Amazon is NOT a fan of unions or regulation.’ As of bid day, 73 community organizations across 21 states [including the N.C. Justice Center and N.C. League of Conservation Voters] have signed an open letter to Bezos listing several concerns around a possible HQ2 in their cities, including out-of-state hiring, lack of investment in transportation infrastructure, unaffordable housing, and gentrification.”
  • “Their worries about higher rent prices are not unfounded, according to a recent report from the real estate website Apartment List. The site made a few predictions about HQ2's potential impact on housing prices in 15 major cities, based on historical home-building statistics and data from the US Census and Bureau of Labor Statistics. According to the report, the metro areas with the highest rent increases would include Raleigh, North Carolina (1.5% to 2% annually); San Jose, California (1% to 1.6%); Pittsburgh, Pennsylvania (1.2% to 1.6%); and Baltimore, Maryland (1% to 1.3%).”

WHAT IT MEANS: There are two big questions to keep in mind as this deal moves forward. The first is whether the region’s lack of decent mass transit will effectively derail the bid, or whether the Triangle’s promise to design its transit expansion around Amazon’s needs will overcome those concerns. (It’s also a little unsettling that the city’s solution to this deficiency is to design a billion-dollar mass transit project around one corporation’s whims.) The second is whether Raleigh is equipped to handle what HQ2 would mean. There’s no getting around the fact that the project would drive up housing prices, especially in the urban core. It would exacerbate gentrification and the economic divide and likely do little for lower-income communities while luring lots of workers from out of state. Which isn’t to say that I don’t think Raleigh should pursue this bid; the economic benefits could be momentous. But it’s important to keep our eyes open to the realities of what Amazon will mean.

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