Amazon, but for Amazon HQ
With its radically open bidding process for its second headquarters, Amazon is doing to economic development what it did to retail.
Amazon, the company that disrupted bookselling and then the selling of most everything else, has thrown economic development agencies for a loop with the bidding to host their second headquarters. From the start, Amazon’s process has been out in the open — so open, in fact, that Massachusetts Housing and Economic Development Secretary Jay Ash learned about the opportunity not from a meeting or administrative channels, but from a newspaper headline.
That’s a far cry from the last big corporate headquarters that Ash helped lure to Massachusetts. The deal to bring General Electric to Boston was conducted quietly behind closed doors. No one outside of a handful of city and state officials knew about GE, or even that GE was looking to move, until the deal was close to complete. “Typically what happens,” Ash told the North Shore Chamber of Commerce, “is that somebody in a suit and tie makes an appointment with me and makes me sign 12 forms before they tell me what they are up to.”
There have been critics of that deal, and Boston voters in a recent WBUR poll were split on the tax breaks the city and state gave to GE. But by working behind closed doors, at least Boston officials were able to hammer out a deal without tipping their hand to other potential hosts.
By announcing their intentions widely and loudly, Amazon turned the tables on economic development officials. The HQ2 process has played out more like the competition to host an Olympic Games than a corporate headquarters, with city’s making big announcements and headline-grabbing gestures. Tucson, Arizona sent Amazon CEO Jeff Bezos a 21-foot cactus. The Empire State Building and other New York skyscrapers lit themselves Amazon orange in support of the bid.
Closer to home, Worcester, which has an annual city budget of $630 million, pledged $500 million in tax breaks. New Hampshire, meanwhile, trashed its southern neighbors in its bid, pitching itself as “having all the benefits of Boston without the headaches.”
Before the cacti and the cash and the trash talking, at least, Boston voters were on board with the city throwing its hat in. Two-thirds in the WBUR poll favored Boston bidding for HQ2; only 20 percent were opposed. A new WGBH poll also finds the prospect very popular. As on GE, they were split on whether the city should offer tax breaks, and by a 2-to-1 margin they wanted the bid made public. On that last point voters got their wish.
And so Boston finds itself in a no-holds-barred financial bidding war, with all its cards on the table. To beat out other cities, which Boston voters want, the city is under pressure to give Amazon more than other cities are willing to, which may amount to more than voters will stomach. And all this will unfold under the withering glare of a media spotlight, and countless tens of people on Twitter.
Public officials are walking a tightrope. They have to put their best foot forward while everyone is watching, knowing full well FOIA requests are coming and the public is waiting for a mistake. But they also need to come out fighting if they want a chance in the continent-wide hunger games Amazon has set off.
All this radical transparency may align with voters’ expressed desires, but the net effect is to tilt the process in favor of Amazon and against the bidders. There is no room for negotiation or nuance when every offer is being scrutinized in real-time.
Throwing things completely open may have already hurt Massachusetts. There are multiple cities and regions pursuingseparate and overlapping bids, and the state’s own bid lists 26 different sites, from A to Z. That could be a smart way to hedge bets and give Amazon options. Or it could cause Amazon to pass over the tangle of Bay State bids entirely – but not until after cherry picking the best incentives to demand from its eventual host.
Amazon will likely have dozens of competing bids to sift through and compare. All that information gives it tremendous power to find the best deal. What Amazon has delivered to its customers shopping online it’s now figured out how to get for itself shopping for a new home.
– Hannah Chanatry and Rich Parr
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