How much should Boston want Amazon’s new HQ?
Could Boston become Amazon’s next home? The online retail giant seemed to be angling to stir up a national bidding war when it announced earlier this month its intentions to construct a second headquarters and invited municipalities to make their case for becoming the firm’s other home. Mayor Martin Walsh responded with enthusiasm, noting on Twitter that Amazon expects to invest $5 billion and create 50,000 jobs, which the firm says it would do over the course of 15 to 17 years.
For Bostonians, memories are still fresh of the controversy over the efforts of Walsh and Gov. Charlie Baker’s administration to entice General Electric to the city. Walsh celebrated the victory, while City Councilor and mayoral challenger Tito Jackson attacked Walsh repeatedly over the generous incentive package, which included $25 million in city property tax breaks, $120 million in state grants and a $100-million bridge renovation, calling it a misuse of public resources. Now, the Amazon possibility offers the city a chance to reassess or replicate its approach.
Bids are due from cities on Oct. 19, 2017 with headquarters construction intended to start in 2019.
What Amazon wants
Amazon’s announcement unleashed a flurry of speculation over the firm’s final decision, with many weighing Boston’s chances.
Amazon is looking for more than 8 million square feet of space, favoring a shovel-ready parcel. Other desires: quick access to the airport, easy car and public transit access, a mix of housing options available near the site and desirable housing prices, as well as a “business friendly environment” and “local government structure and elected officials eager and willing to work with the company.” Amazon also specifies that “a highly educated labor pool is critical and a strong university system is required,” and a preference for a metropolitan area with at least a million people, according to its request for proposals.
Boston certainly is college-rich, graduating many with software development and engineering talent. But other factors such as easily accessible, low-congestion transportation and nearby attainably-priced housing are items the city currently struggles to provide.
Even with the city’s educational strengths, it is unlikely Boston will fill all of Amazon’s hiring needs. An influx or new concentration of workers could put further pressure on city’s transit and housing scene, some say. Alternatively, some hope that the prospect of an Amazon headquarters could encourage new investment into making such improvements.
Given the sheer size of Amazon’s intended headquarters, it could be difficult to site in Boston. While Walsh has stated intentions to submit a bid for Boston, Revere Mayor Brian Arrigo and House Speaker Robert DeLeo support instead locating the so-called HQ2 on Suffolk Downs, which straddles the border of East Boston and Revere, and other Massachusetts municipalities also have been proposed.
Why do we want Amazon?
Amazon states in its RFP that it anticipates employing up to 50,000 people with average salaries of $100,000. That means higher income tax revenue for the state, and, with Amazon planning to invest $5 billion, strong property taxes for the city. Amazon’s presence, coming on top of GE’s, also could solidify for Boston a reputation as the dominant tech center on the east coast, which could help draw other businesses and retain startups, said Peter Enrich, professor at Northeastern University School of Law.
Those who stand to benefit directly include professionals from several fields in which Amazon says it wants to hire: executive/management, engineering — with an emphasis on software development engineers — legal, accounting and administrative. Many say they expect Amazon’s workers to come both from local and national or global job markets.
Why don’t we want Amazon?
Some fear Amazon’s arrival could exacerbate existing issues around housing and transit or that the benefits of a new major company would largely bypass working-class longtime local residents.
Jason Pramas, DigBoston executive editor, predicts in a recent piece about Amazon that permanent jobs likely will not be created for longtime working-class Bostonians, who may instead get subcontracting work, while steady jobs will instead target local college students with high-tech degrees, many of whom arrive from out of town.
Pramas anticipates as well that employees moving into the city to take high-income Amazon jobs will then snap up luxury housing units and drive up demand for them, in turn exacerbating the city’s housing issues. The result, he says, is Amazon’s headquarters would burden housing and transportation infrastructure, while any tax break or direct payment incentives offered to lure the company will deplete needed public money.
“After starving even more social programs to pay for this latest boondoggle, what are working families going to get back from the huge multinational?” Pramas writes.
According to Fox Business, home prices in Seattle, Amazon’s first — and currently only — headquarters, have risen 47 percent in the past decade. Zillow Chief Economist Svenja Gudell told the Boston Globe that rising housing costs have spurred concerns that non-tech-industry workers are being pushed out of Seattle neighborhoods.
Balancing the right package
Sam Tyler of the Boston Municipal Research Bureau told the Banner that although he was not aware of the specific jobs Amazon seeks to fill, there is strong potential for many of the Amazon jobs to be filled in-city or in-state and for local higher education to adjust training to be more relevant to such jobs.
Northeastern’s Enrich, an expert on local government and tax policy, told the Banner that Amazon’s arrival could mean Boston and Massachusetts would retain more of the people who graduate from local colleges and universities and depart for global job markets. However, he noted that currently there is a lack of employees with skills that demand less formal education, such as in operating complicated machinery, and said an Amazon-type company could benefit from a steady at-hand supply of such workers. Here he saw opportunity, recommending that any city efforts to attract Amazon focus on wide-reaching improvements such as boosting training for such non-advanced-degree tech or production careers, as something that could entice Amazon or any future firm.
Noah Berger, executive director of Massachusetts Budget and Policy Center, likewise advised that anytime the state makes a pitch for a company’s location with the intention of unlocking economic development, it should minimize tax break incentives and instead emphasize existing strengths or actions that can make lasting business ecosystem changes such as educational and transportation improvements.
“The state shouldn’t be focused on one big deal at a time,” Berger said. “The state should be focused on, ‘What does it take to make Massachusetts a good place to do business and to live?’ There are clear types of policies that strengthen this — having an educated workforce and having an infrastructure that works.”
Jesse Mermel, president of the Alliance for Business Leadership, told the Banner that Amazon’s desire for transportation and housing accessibility ideally would bring greater investment, public or private, in improvements to meet such needs, which will benefit all businesses. There also should be an eye on how Amazon’s arrival could bring greater equity, for instance, by engaging or locating in areas like Dudley Square or “gateway cities” that often are left out, Mermel said.
Tyler and Enrich also cautioned against generous tax breaks, noting that bidding wars can spur cities into over-offering. Enrich underscored that infrastructure improvements give more public benefit than monetary business incentives.
Walsh told the Boston Herald he will not publicly reveal what he has offered Amazon to entice it here, so as not give that information to competing cities. According to The Boston Globe, there is a limit to what the city is prepared to give financially, with Walsh stating, “We are not going to get into a bidding war with another city over something like this. It would have to be, ‘Is Amazon the right fit for Boston, and is Boston the right fit for Amazon?’”