Within hours of Amazon announcing a competition to create a second headquarters, HQ2, mayors and governors all over the country were saying “Me, me, choose me.” Including Sacramento Mayor Darrell Steinberg. This is a mistake!
I don’t have anything against Amazon, they are a company with a business model that has been remarkably sucessful. I shop there, at least when I can’t easily find an item locally. Their prices are often remarkable. Yes, and I also feel hesitant or guilty each time. But this isn’t about Amazon.
I’m also not against jobs. And I’m also not against development, though I certainly prefer small-scale development to large-scale development. A headquarters with 50,000 employees is something that would overwhelm all but the very largest cities. Sacramento is not among those cities.
What this is about is about a city (and regional and state) economic model that says we can’t get anything good unless we soak the taxpayers for a subsidy. In this case, Amazon is asking for a huge subsidy from whatever locale “wins” the competition.
On the positive, Amazon includes the requirement: “Direct access to rail, train, subway/metro, bus routes”. But they also seem quite willing to be in the suburbs, on a greenfield site, only asking within 30 miles of the city center. In the case of Sacramento, that includes Davis, El Dorado Hills, Roseville. Ack!
The RFP then gets to the heart of the matter, money!
Capital and Operating Costs – A stable and business-friendly environment and tax structure will be high-priority considerations for the Project. 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.
Incentives – Identify incentive programs available for the Project at the state/province and local levels. Outline the type of incentive (i.e. land, site preparation, tax credits/exemptions, relocation grants, workforce grants, utility incentives/grants, permitting, and fee reductions) and the amount. The initial cost and ongoing cost of doing business are critical decision drivers.
In other words, we will consider you if you come up with a bigger bribe than anyone else. I doubt that Sacramento can compete in this arena, but more to the point, no one should be in this competition. Amazon is a very successful company. They don’t need our subsidy to be successful.
So, back to the title #JustSayNoToAmazon. I’m not suggesting that Sacramento decline on its own. I’m suggesting that big city mayors show some true leadership, meet with each other, and, as a unified whole, decline the Amazon offer. This is a chance for Mayor Steinberg to show some real leadership and not just be a booster for failed economic models.
Articles and posts on the Amazon plan are proliferating, but let me suggest two:
- Amazon Plans Second Headquarters, Opening a Bidding War Among Cities, New York Times, 2017-09-07.
- What can I do to make you love me?, Strong Towns, 2017-09-11.