Richard Florida Calls For Truce in Amazon HQ2 Bidding War

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Are our governments paying too much to have Amazon deliver HQ2 to them?

Richard Florida, the urbanist researcher who first told us about the “creative class” and is now sounding the alarm about “The New Urban Crisis,” is a huge fan of Amazon.

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“I’m one of their prime Prime customers,” he said in a telephone interview. He even served on the panel that put together the bid that made Toronto one of the 20 finalists for Amazon’s second headquarters.

But now he’s had second thoughts about the bids the finalists are now preparing. Calling the tax incentives of the kind being offered “often wasteful and counterproductive,” he has launched a petition on Change.org calling on both Amazon and the 20 finalist cities to call a truce in the bidding war[7].

A contest that “threatens to spiral out of control”

“While we are supportive of Amazon’s quest to build a new headquarters, we fear that the contest among jurisdictions[…]for this facility threatens to spiral out of control,” the petition states in part.

“When I saw [former New Jersey] Gov. Chris Christie offer $7 billion, when I saw some of the country’s most progressive mayors — Bill De Blasio in New York, Eric Garcetti in Los Angeles, Ras Baraka in Newark — line up to offer big incentives, I said, ‘Something is wrong here,'” Florida said.

According to a post on CityLab[8], Pennsylvania will offer Amazon $1 billion in incentives to locate in the state, and legislation is pending in Philadelphia that would add $2 billion to the total. As Amazon has requested of all the bidders, Pittsburgh has not disclosed what it intends to offer, but Pennsylvania’s Office of Open Records has ordered the city to unseal its bid[9]. The organization that put the bid together plans to appeal the decision[10] in state court.

(Published reports have estimated that Amazon HQ2 will provide a $5 billion stimulus to the economy of the metropolitan area it settles in.)

Florida canvassed a spectrum of urbanists from left to right before writing the petition; 95 of them signed it along with him. “I was amazed at how many people signed the petition immediately,” he said. “99 percent of the people signed up.”

Among the more prominent signers: Bruce Katz of the Brookings Institution, Edward Glaeser and Robert Putnam of Harvard, former Secretary of Labor Robert Reich, Congress for the New Urbanism co-founders Andres Duany and Elizabeth Plater-Zyberk, Chuck Marohn of Strong Towns and Joel Kotkin of Chapman University, in many respects Florida’s opposite number.

Local co-signers include Penn Design faculty members Eugenie Birch, Gilles Duranton and Adam Grant, Gerald Carlino of the Federal Reserve Bank of Philadelphia and Jeremy Nowak, founder of the Reinvestment Fund, now a fellow at Drexel University’s Lindy Center for Urban Innovation.

Opening up two Pandora’s boxes

“It’s anti-competitive and rent-seeking,” Florida said of the push to coax larger subsidies from the finalist cities. “What’s also troubling is that it opens up a Pandora’s box. If Amazon does it, Apple will want to do it.”

This gives Amazon and the tech sector a public-relations black eye to boot, he added. “I think these tech companies have done so much for America. But now they’re looking and acting like villains.”

Kevin Gillen, senior research fellow at the Lindy Center, said that the bidding war also opens a Pandora’s box for the cities making the bids.

“Most economists, myself included, think these place-based incentives are fine to use on the margins, but they shouldn’t be the base of an economic development strategy,” he said. Instead, places should compete on the fundamentals: quality of the workforce, available facilities, transportation and infrastructure.

Moreover, “once you start down that path, you not only have to offer incentives to every company that wants to move to your area, you have to offer them to your existing businesses.”

The lack of transparency also bothers Florida. “I believe this is public taxpayer money that’s being spent, and that information should be publicly available.”

He said that both Amazon and the cities competing for HQ2 would be better off pursuing a cooperative approach to attracting the headquarters. “The good that Amazon could do by embracing mutually beneficial development, and the good that cities could do by partnering with these companies — it’s a win-win situation,” he said. “I don’t understand this race to the bottom.”

As of this writing, 651 individuals and counting have signed the petition, which went live on Change.org Tuesday evening.

Endnotes:
  1. Philadelphia Dodged a Major Bullet by Not Getting Amazon HQ2: https://www.phillymag.com/news/2018/11/15/amazon-hq2-philadelphia-aftermath/
  2. Here’s What Philadelphia Offered Amazon in HQ2 Competition: https://www.phillymag.com/news/2018/11/14/philadelphia-amazon-hq2-proposal/
  3. Confirmed: Amazon Was Never Coming to Philadelphia: https://www.phillymag.com/business/2018/11/13/amazon-philadelphia-hq2-decision/
  4. As Philly’s Amazon HQ2 Hopes Dim, Details Emerge of the City’s Secret Pitch Dinner: https://www.phillymag.com/business/2018/10/25/amazon-hq2-philadelphia-dinner/
  5. If Amazon’s Hiring Is Any Indication, Philly Definitely Won’t Land HQ2: https://www.phillymag.com/business/2018/09/12/amazon-hq2-philadelphia-bid/
  6. See all »: https://www.phillymag.com/tag/amazon-hq2/
  7. call a truce in the bidding war: https://www.change.org/p/elected-officials-and-community-leaders-of-amazon-hq2-finalist-cities-support-a-non-aggression-pact-for-amazon-s-hq2
  8. a post on CityLab: https://www.citylab.com/life/2018/01/hq2-hunger-games-meet-your-tributes/551000/
  9. ordered the city to unseal its bid: http://triblive.com/local/allegheny/13220106-74/pittsburghs-amazon-hq2-proposal-should-be-made-public-state-rules
  10. plans to appeal the decision: http://www.post-gazette.com/local/city/2018/01/25/Amazon-HQ2-Pittsburgh-Allegheny-County-bid-transparency-open-records-appeal-court-fight/stories/201801250148

Source URL: https://www.phillymag.com/business/2018/01/31/richard-florida-calls-for-truce-in-amazon-hq2-bidding-war/