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Courting Amazon HQ2, Cities Promise Prime Perks

New Jersey Sen. Cory Booker, right, speaks while New Jersey Gov. Chris Christie stands behind him during an Amazon bid announcement in Newark, N.J., on Oct. 16, 2017. (AP Photo/Seth Wenig, File)

Nothing brings a congressional delegation or a city together like the dream of winning Amazon’s new headquarters, HQ2.

Political divisions in congressional delegations – and in at least one case, state borders –  disappeared.

Cities across America also rallied to the cause. One municipality was even ready to change its name to “Amazon.”

But then there was Little Rock, Ark., where the head of the local chamber of commerce told PJM that officials decided to fly a banner over Amazon’s Seattle campus saying, “Thanks, but no thanks. It’s not you. It’s us.”

And Michael LaFaive, senior policy director at the Mackinac Center in Michigan, told PJM that cities and states willing to give up tax incentives to win the Amazon race were not only admitting their taxes were too high, but they were also ignoring a fundamental tenet of economics.

However, LaFaive and Little Rock were definitely in the minority as economic development officials, municipal leaders and politicians of all stripes rushed to meet Amazon’s Oct. 19 deadline to answer the tech behemoth’s Request for Proposal.

Amazon offered the construction of a second corporate headquarters (HQ2) “at which Amazon will hire as many as 50,000 new full-time employees with an average annual total compensation exceeding $100,000 over the next ten to fifteen years, following commencement of operations. The Project is expected to have over $5 billion in capital expenditures as described in more detail in this RFP.”

What would a city or state need to do to win such a prize?

First, there’s the building, or campus, HQ2 would require.

“Finding suitable buildings/sites is of paramount importance. Amazon HQ2 is a transformational Project, and we must ensure we have the best real estate options available whether this be a redevelopment opportunity, a partnership with the state, province, local government, or new buildings,” the Amazon RFP read.

Then, of course, Amazon would like to receive what it sees as its fair share of tax incentives.

“Incentives offered by the state/province and local communities to offset initial capital outlay and ongoing operational costs will be significant factors in the decision-making process,” the RFP added.

And the list goes on and on to include requirements for the 50,000-member labor force, logistics, the culture of the community, quality of life, etc.

Even though the requirements were many, and the cost high, there was hardly a political soul in Congress that wasn’t salivating over the idea of being able to say he or she had helped bring home the bacon of 50,000 new jobs.

After all, what’s good for Amazon is good for the voters, right?

Democrats and Republicans in the congressional delegations of Kansas and Missouri put aside whatever differences were brought about by their states’ border.

They sent Amazon a letter that read, “The diversity of exemplary educational institutions in the area will naturally serve as an abundant source of skilled labor to Amazon as it has for existing employers in the region, and access to the top-quality public and private educational opportunities in the country continue to draw families to the Kansas City area.”

The Colorado congressional delegation promised in a letter to Amazon that they would do whatever it took to make the company happy.

“This commitment transcends partisanship. As a congressional delegation we have routinely come together on a bipartisan basis to support the efforts of the state at the federal level,” the Colorado delegation’s letter read.

Douglass Mayer, a spokesman for Maryland Gov. Larry Hogan, declined to release specifics of the package his state’s economic developers had offered Amazon. But Mayer promised “it will be the biggest incentive offer in the state’s history.”

The Baltimore Business Journal reported the Maryland tax break package would “no doubt blast past the $317 million offered to the Federal Bureau of Investigation to move its headquarters to Prince George’s County last year.”

Even politicians who have been critical of Amazon’s business model or tasked with regulating Amazon from Congress want Amazon HQ2 in their backyard.

Sen. Cory Booker (D-N.J.) expressed concerns in July about Amazon’s move to buy Whole Foods.

But in October, Booker joined Republican New Jersey Gov. Chris Christie to make a pitch for Amazon HQ2 in New Jersey, a proposal that reportedly included $7 billion in tax incentives.

“It is by no means mutually exclusive to both advocate for economic development and jobs and to call out anticompetitive behavior by any company that crowds out small business, lowers wages, and stifles innovation,” a spokeswoman for Sen. Booker told Recode.

New Jersey, Maryland, Missouri, Kansas and Colorado — just five of the states that responded to Amazon’s RFP.

Municipalities within those states also made their pitches. At least one showed money isn’t everything.

On top of whatever incentives or concessions Amazon might demand, the Stonecrest, Ga., City Council said it was ready to go even one step further and change its municipal name to the city of Amazon.

“There are several major U.S. cities that want Amazon, but none has the branding opportunity we are now offering this visionary company,” Stonecrest Mayor Jason Lary told the Atlanta Journal-Constitution. “How could you not want your 21st century headquarters to be located in a city named Amazon?”

That level of municipal fervor is too much for Jay Chesshir, the president and CEO of the Little Rock Regional Chamber in Arkansas.

The Little Rock Chamber took out a full-page “love letter” ad in the Washington Post, owned by Amazon CEO Jeff Bezos, to decline to respond to the RFP. Little Rock also rented a plane to fly a banner over Amazon’s HQ1 in Seattle which read, “Hey Amazon, it’s not you, it’s us.”

The “Hey Amazon, We Need to Talk” ad in the Post explained Little Rock didn’t want to be rude, but at the same time didn’t want its culture erased just to lure the world’s top tech company to town.

“You want 50,000 employees for your new campus. We have a sizable, resourceful workforce, but if we were to concentrate them here, it would be a bummer,” the Little Rock ad read. “Our lack of traffic and ease of getting around would be totally wrecked, and we can’t sacrifice that for you.”

“You want on-site mass transit at HQ2. Here, there are many transit options that fit our city perfectly, and thanks to our compact urban footprint, many of our residents can easily get to the office on foot, on a bike or just by a quick drive,” the ad continued. “It would be cool if we could offer that, but we simply can’t do that just to make you happy.”

“Given the fact that we don’t meet the minimum requirements of Amazon for HQ2 we were trying to show them that we appreciate them, and we have a lot of things they were asking for, unfortunately not in the numbers they required,” Chesshir told PJM. “But in the same way also show the rest of the world as well that we have those things.”

Michael LaFaive at the Mackinac Center told PJM that those who were ready to give away the soul of their towns to win the HQ2 race were ignoring a basic economic theory.

“Our entire economic science is based on the notion of tradeoffs. If you want X amount of guns, you can’t have X amount of butter,” LaFaive said. “There are no free lunches. If you offer a billion dollars to Amazon, someone has to pay for it and it’s not going to be Amazon.”

But he admitted it was easy to see why so many politicians fell all over themselves to respond to the Amazon RFP.

“The political class and their lieutenants care more about ribbon-cutting ceremonies and job announcements,” LaFaive said, “than actual jobs.”