One of the great publicity stunts of the 21st century came to a close today, as media reports confirm that the tech giant Amazon will split its second headquarters between two corporate campuses in Long Island City, New York, and Crystal City, an affluent neighborhood in Arlington, Virginia just across the Potomac from Washington, D.C.
While the decision to split the headquarters took some by surprise, experts and odds-makers have been predicting that Amazon would choose either the New York or D.C. area for most of 2018.
Still, the reports are bound to be a disappointment for Pittsburgh and the 19 other cities that were shortlisted for HQ2. As the process winds down, we here at NEXTpittsburgh reached out to some local experts, along with urban studies expert Richard Florida, to discuss both the bidding process and where Pittsburgh goes from here.
Back when Amazon first announced their national hunt in late 2017, the company claimed they would choose a single location that would be equal to their Seattle office, bringing $5 billion in investment and up to 50,000 high-paying jobs over the next several decades. Naturally, Pittsburgh and dozens of other cities jumped at the chance to bid, but from the beginning, there was opposition and skepticism.
“The scale of what Amazon pitched in their [request for proposals] meant that there was little chance a region the size of Pittsburgh would be seriously considered,” says Christopher Briem, University of Pittsburgh professor and expert demographer. “We just don’t have a large enough workforce to begin to accommodate that type of net new job growth in the time frame they would have needed to ramp up employment here.”
Audrey Russo, president and CEO of the Pittsburgh Technology Council, had been slightly more optimistic. She had put the city’s chances at around “one in five.” mainly due to the city’s enhanced reputation as a hub for advanced research and technologies. However, she says the region’s aging infrastructure and lack of critical flight routes to and from Pittsburgh International Airport put the city at a distinct disadvantage.
Beyond concerns at how a massive influx of population and capital would have affected the city’s cost of living and general quality of life, many Pittsburgh residents raised alarm over the total secrecy surrounding the process. Citing the need to preserve a competitive advantage, Pittsburgh joined several other cities in refusing to release the details of their bids.
Though two different judges have ordered the bid to be released, county and city officials have appealed the decision, and the bid remains a mystery. With Amazon’s official announcement, that should change soon.
In addition to being wary of providing secretive tax breaks and financial incentives to one of the wealthiest corporate entities in human history, many balked at the idea of local officials freely giving away untold quantities of sensitive municipal information to a company that largely makes its money sucking up consumer information.
Russo observed that the process at a city level resembled the way most individuals engage with large tech platforms on a personal level: heedlessly giving away our private data with little thought toward how it will be monetized.
“They got an inside view of all these cities that are their customers,” says Russo. “My hat’s off to them for getting away with it.”
Richard Florida, former professor at Carnegie Mellon, says keeping the bids confidential was a critical error for the cities vying for HQ2. The first reason is simple accountability: “This is taxpayer money, you’ve got to be open and transparent.”
Beyond that, Florida says local leaders are mistaken to think of themselves as competing for the favor of big tech in the first place.
In spring of this year, Florida posted a petition online calling for all the cities bidding for HQ2 to sign a “non-aggression pact” promising they would not undercut one another with exorbitant tax breaks.
Speaking to NEXTpittsburgh, Florida went even further, and endorsed the idea of America’s city and regional leaders banding together and collectively bargaining in the face of the tech giants. Florida says such partnerships are even more critical now, as the federal government is increasingly choked by dysfunction.
“They owe it to themselves to get together on this,” says Florida, “I think it’s our future.”
This morning the shared statement from Allegheny County Executive Rich Fitzgerald, Mayor Bill Peduto and Stefani Pashman, CEO of the Allegheny Conference on Community Development, said thanked Amazon on behalf of the regional partnership that submitted Pittsburgh’s proposal to host HQ2 and congratulated the winning cities, including Nashville, which was chosen as home to a new Amazon Operations Center for Excellence.’
“In spite of today’s announcement,” they said, “Pittsburgh is proud of the innovative ‘Future. Forged. For All.’ proposal we submitted to Amazon and how far we progressed in the site selection process.”
“The region, more than ever,” the announcement said, “is confident in our tremendous assets that would benefit any business looking to build or grow. In particular, our thriving innovation-supportive ecosystem is advantageous to technology-based companies, many of which already call this region home. For all of our businesses across a diversity of industry sectors, Pittsburgh is growing in a resilient and equitable way.”
And they promised to release the bid: “The county and city’s portions of the PGHQ2 proposal submitted in October 2017 will be publicly released in the coming days.* When that occurs, the community will see that there were only two local investment packages offered and neither included using any existing city or county tax money/revenues. Rather, the proposal included a strategy to make sure if Pittsburgh invested in Amazon, Amazon would have invested in us, to the benefit of all residents.”
That asterisk led below to a statement that a media advisory will be forthcoming with details on a news conference regarding the bid release.
How will Pittsburghers react once they see the bid, and is this where the story ends?
Both Briem and Florida point out that Pittsburgh may still be in line for a smaller Amazon office devoted to machine learning or artificial intelligence, areas that Russo also described as being the city’s main competitive advantage in an increasingly globalized world.
While he did not discuss the specific contents of the bid, County Executive Rich Fitzgerald spoke yesterday with NEXTpittsburgh more generally about the county’s larger policy toward financial incentives and negotiating with large tech companies.
On what turned out to be the eve of the announcement, Fitzgerald acknowledged that many observers find any kind of special treatment for large, wealthy corporations distasteful. But, he said, “if a company is going to bring wealth, it’s overall worth it.”
He went on to say that with tech companies, in particular, most of the assistance they requested usually took the form of workforce development and help with transport, rather than just financial incentives.
Furthermore, Fitzgerald said yesterday that the county does not pursue deals that involve bonds or other public funds being steered toward the companies in question. Rather, they negotiate with certain tax breaks on the wealth that the new business would create.
Like both Briem and Florida, Fitzgerald told NEXT that he believed Amazon’s final decision would ultimately have very little to do with a particular city’s incentive package. Rather, he said yesterday, it would likely turn on the workforce and the state of the local tech industry. “That’s more impactful than anything the Mayor, the state or I can provide,” he says.
When asked about the possibility of city and regional leaders cooperating rather than competing with their counterparts around the nation, Fitzgerald questioned how workable such an approach could actually be.
“It sounds good,” he allowed. “But we are competing.”