Amazon's search for a second headquarters is almost a year old. As the company weighs its options in silence, some bidders and close observers anticipate another cut to the list of 20 places still in contention.
For HQ2 watchers, it’s awfully quiet out there.
There is little to suggest Amazon will reveal the location of its second headquarters any time soon. Except, perhaps, the calendar.
Sept. 7 marks one year since the Seattle company’s surprise announcement that it was planning to build a second headquarters campus in another North American city.
As that anniversary approaches, some economic developers and government officials, from observers in Seattle to bidders in the Northeast, say they are preparing for a final decision as if it were imminent.
They all want to make one thing clear: They didn’t hear it from Amazon.
Long known as a secretive company, Amazon has lived up to that reputation during its search for a spot to put a “full equal” second headquarters and some 50,000 employees, requiring nondisclosure agreements with the remaining bidders and practicing a level of information control around the project that has surprised even some employees at the company’s headquarters.
Observers hungry for details about how the process has proceeded over the last several months haven’t had much to chew on.
The clearest public indication of the company’s thinking remains the eight-page request for proposals posted online a year ago that laid out the company’s wish list for a second home.
Of 238 applicants who met an October deadline for submissions, Amazon plucked 20 finalists in January, and started visiting each of those cities, saying only that it would make a final decision sometime in 2018.
The experience of finalist Philadelphia is typical. The city hosted Amazon officials for a whirlwind tour this winter, an effort to give the company a feel for the town, and responded to the company’s follow-up questions in writing.
Since then? People working on the bid have waited, and worked on other projects in the meantime.
“We don’t have any new information,” said John Grady, who leads PIDC, the public-private economic-development group that led Philadelphia’s bid. “We’re a little bit on the receiving end of this process.”
Grady’s organization is typical of the HQ2 process in another way. The PIDC, formerly Philadelphia Industrial Development Corp., has not said what the city’s bid offers Amazon in terms of tax breaks and other programs to offset the company’s costs, citing the semi-private nature of its charter and concerns that such disclosures could give other cities a competitive edge.
The bid has cost the city more than $500,000, Billy Penn reported, a sum that, if it is a complete accounting, would likely be on the low end among bidders still in the running, corporate site relocation consultants say. Philadelphia is resisting both a state records office order and five lawsuits seeking to compel the city to turn over its entire proposal, the news site said.
Similar battles between transparency advocates and economic-development officials are playing out in other cities.
“What is striking about HQ2 is that you have cities that are generally committed to transparency hiding their HQ2 bids,” said Nathan Jensen, a professor of government at the University of Texas, Austin, who has studied corporate-relocation incentives. “This may be the first time that many people have seen this ugly side of economic development.”
For their part, Grady and his peers say the secrecy is business as usual. It is rare, they say, for a company like Amazon to have disclosed a search for new office space before actually signing a lease.
The few incentive offers that have become public, including Maryland’s offer of tax breaks and infrastructure projects valued at $8.5 billion on behalf of Montgomery County’s bid, and a state-and-local package for Newark valued at $7 billion, have captured headlines while Amazon deliberated quietly. Portions of other bids and existing incentive programs suggest the breaks from other cities — including Atlanta, Chicago, Columbus, Ohio, Philadelphia and Pittsburgh — easily top $1 billion.
“The entire industry of economic development is being defined by these absurd level of subsidies,” said Amy Liu, director of the Metropolitan Policy Program at the Brookings Institution, a Washington, D.C., think tank.
Liu has been critical of the use of megadeals and large-scale tax breaks as tools to spur lasting economic growth, saying investments in education, transit and smaller companies tend to be better uses of cash than one-time breaks to corporate giants that may never be paid back in taxes. She argues there should be a public process before cities commit to using large amounts of taxpayer funds.
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The public’s elected officials may well get a chance to weigh in before Amazon’s decision is final.
Broadly speaking, there are two types of incentives cities use to lure companies: those made available to all comers under existing law, and new programs targeting specific projects. The latter often require approval of a city council or state legislature, as already happened at the state level in Maryland and New Jersey.
Amazon may insist on similarly firm assurances of promised tax breaks and real-estate terms before choosing among its suitors, city and state economic-development officials say.
Such a process might look like the deliberations playing out in Atlanta, where the city council this month held a hearing on a public-funding scheme for an Amazon-sized redevelopment of a downtown area called the Gulch. A spokeswoman for Georgia’s state economic-development office declined to comment.
The Newark City Council passed its own Amazon tax break into law earlier this month.
There is also widespread speculation that Amazon will whittle its relatively large 20-location shortlist to a smaller group of cities from which it will solicit final offers. It’s unclear whether Amazon would publicly announce such a decision, or inform cities of its thinking quietly. The company declined to comment on its plans.
Jensen, of the University of Texas, said he suspects Amazon will pick three finalists to choose from. “But there have been lots of rumors about HQ2 over this past year,” he said.
Amazon’s hiring of a lobbyist in Atlanta and an economic developer in D.C. signaled to some news outlets that each of those cities might be on top. A spike in clicks from Seattle users to a local news site did the same for Northern Virginia. And The Columbus Dispatch, citing a single Atlanta economist, has been reporting that the company’s decision was imminent since early April.
That’s too much for one official involved in a finalist’s bid. “I gave up tea-leaf reading on HQ2 long ago,” he said.