March 3, 2019
Bungled Amazon HQ2 deal shows that cities need transparency — even when big companies ask for the opposite
Blame whichever side you like — the Queens deal imploded because of secrecy
By Carmen Gentile and Matt Stroud
Visuals By HHM Creative
It would be funny if it weren’t so infuriating.
Amazon leaves New York City at the altar, and, in the process, jilts the dozens of other cities that were begging for a ring.
It was a humiliation seen round the world — proof that not even the mighty Big Apple could ultimately wed the king of e-commerce.
However, any humor quickly dissipates once the ugly truth sinks in: Amazon reneging on its plans to establish a second headquarters in Queens — and apparently giving up on other locations — is a slap in the face to all those cities that desperately pursued the internet giant, hoping that it would choose them for its much-hyped HQ2.
More than 200 cities and states spent millions of dollars in a contest to woo Amazon, offering millions more in tax incentives and other perks. The winner of that contest would effectively wed the online seller of everything under the sun, hosting its second home and as many as 50,000 lucrative Amazon jobs.
And now, the offensive part: Amazon asked these cities to keep their offers hidden — to shield from the public what their local governments planned to sign away in the prenup.
This played out memorably in Pittsburgh, where government officials not only kept their Amazon bid away from public viewing, but spent untold tax dollars defending their decision to do so in court. They ignored orders from Pennsylvania’s Office of Open Records, which informed them that the details, by law, should be public. Pittsburgh’s leaders were unmoved. “When you’re dealing with public-private [partnerships],” Pittsburgh Mayor Bill Peduto reasoned during a press conference in January 2018 to explain the secrecy, “it’s not simply public, it’s also private and you respect the interests” of companies such as Amazon.
Other cities played along, too.
Out of the hundreds that applied, Amazon pared down the list to 20 finalists last year. Each potential suitor proffered secret tax breaks and other incentives, hoping Amazon would choose them.
As part of the affection-vying, Amazon asked these cities to keep their offers hidden — to shield from the public what their local governments planned to offer in the prenup.
Alas, none of their secret bids could compete with New York City and the lure of close proximity to the nation’s capital offered by the soulless, officer-tower suburb known as Crystal City.
With Amazon’s selection of NYC and the DC area for its dual HQ2s, the contest seemed fixed. Cities like Pittsburgh — despite their willingness to play along and hide details of essential giveaways — were merely pipe dreaming. Pittsburgh, in particular, had offered a reported $9.7 billion in incentives for Amazon, the largest enticement package among those that made the final round, including Postindustrial American cities like St. Louis, Columbus, Nashville, and the Baltimore area.
None of that really mattered. That is, until the grumbling started in New York.
New York lawmakers, including the newly elected democratic socialist firebrand Representative Alexandria Ocasio-Cortez, balked at all the secret incentives and tax breaks that city and state leaders offered Amazon behind closed doors, a move that fired up unions and citizen critics alike.
Frightened by vehement local opposition to the now-public incentives, Amazon walked away from the NYC deal — on Valentine’s Day, appropriately enough.
In the end, Amazon executives wanted basic perks: A city near a big airport — with direct flights to its Seattle headquarters — and access to plenty of amenities. They also wanted a city with a compliant, pliable citizenry that wouldn’t balk at massive, secret corporate giveaways. Astoundingly, Amazon executives thought they would find that in New York City. They were mistaken.
In the wake of the bungled NYC deal, government officials in many of the 20 locations not chosen for HQ2 have kept quiet — presumably hoping that Amazon might change its mind and try again with Columbus or Baltimore or St. Louis. A senior City of Pittsburgh official — speaking anonymously, of course, fearing all sorts of ramifications from higher-ups — told Postindustrial: “I don’t think we would walk away from the right opportunity” from Amazon.
But should they?
Tens of thousands of jobs would help any city’s economy — including Pittsburgh’s. But the impulse to cater to a massive corporation on something as fundamental as making tax incentives public seems a step too far.
After all, do cities such as Pittsburgh and St. Louis really want to think of their citizens as being compliant and pliable? And do they want companies to think that any government decision is best kept out of public light — just for the asking? Government officials need to do some real soul-searching to answer those questions.
Otherwise, cities like Pittsburgh and St. Louis risk spending a lot of money on a wedding that won’t result in a marriage.
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