Emily Royall / Rivard Report
Yes, it hurts to not be on Amazon’s big green map, especially with I-35 neighbors Austin and Dallas representing Texas. San Antonio found out last week that its decision not to submit a bid for HQ2, Amazon’s $5 billion, 50,000-jobs second headquarters, indeed proved to be a surefire way not to make the short list of finalists.
No surprise there, really. San Antonio’s leaders concluded they couldn’t compete, but that doesn’t mean we should be content with the judgment we cannot compete. It ought to hurt that San Antonio can’t make the cut of Top 20 cities. We may love the city where we live, work, and play, but we are better off being honest with ourselves about our shortcomings and then doing something about it.
That’s the real way to give meaning to the city’s Tricentennial year.
It certainly would have been interesting had San Antonio proposed a Texas two-step with neighboring Austin, packaging a bid that offered a fast train between the two cities if Amazon came. That idea never found traction in either city. San Antonio and Austin have no real history of effectively collaborating. If the two cities did have such a history, we might have regional air and rail service and maybe another pro sports franchise or two by now.
Instead, the two cities are on course to grow into one big, reluctant megalopolis over the next decade or two with little coordination, planning, or state funding to facilitate smart growth. And for San Antonio, that means watching Austin win more than we would like. Good for Austin, of course, but how about our city?
It’s hard to tell much from the company’s actual announcement – mostly that green map – about how founder and CEO Jeff Bezos, Amazon’s other senior leaders, and a committee of 12 employees are approaching the internal process of site selection. All we know for sure is that the final 20 came from the bigger pool of 238 suitor cities.
One thing we do know is that a number of the finalists don’t meet all of Amazon’s stated criteria, first released in September. There probably is no single city that meets all the criteria, although I have always thought Denver comes the closest as a metro area with more than 1 million people; a skilled workforce; affordable housing and cost of living; an impressive mass transit system; and a city with lots of curb appeal for young tech workers.
Denver did make the list, but as a Western city it’s an outlier. The majority of the cities are on or near the Atlantic Coast, which suggests the process could be an East Coast beauty pageant. Yet it’s home to four of the list’s least affordable cities: New York, Boston, Philadelphia, and Washington, D.C. That suggests that cost of living and affordable housing are secondary considerations for the selection team. (Los Angeles and Chicago are two other finalists with high costs of living.)
Eight finalists are in the Northeast Corridor, and 14 of the 20 are in the Eastern Time Zone.
Clearly, mass transit isn’t a must-have, either: Atlanta, Austin, Dallas, Columbus, Indianapolis, and Raleigh are all car-centric. Neither is Amazon’s call for 8 million square feet of office space. Clearly, just about everyone is going to have to clear land and build.
Workforce and first-tier universities that produce a steady stream of smart workers seem far more important. The importance of incentives will become more clear when Amazon releases a second-round list that pares the 20 cities down to five or fewer.
That brings me to Newark another finalist, with a high unemployment rate and nobody’s idea of a city on the rise or a magnet for smart young tech workers. Like many, I picked Detroit to be the sentimental favorite among down-and-out cities, even if it stood no chance to advance. Instead, New Jersey’s embarrassing $7 billion proffer of state and local incentives seems to have landed Newark on the list.
Some cities chose not to make incentives the focus of their bids. Toronto, the most diverse city in North America and the only finalist outside the United States to make the list, basically offered only a welcoming hand. The Canadians managed to bid while keeping their dignity intact. Austin also chose not to include a specific incentive package in its bid, according to the Austin American-Statesman, although the offer of a state incentive package is a given if Austin or Dallas make the next round.
My bet is that the single biggest factor in Amazon’s decision is this: Where will the next generation of talented, tech-savvy workers want to live and work? That will be the deciding factor, and that gives Austin a fighting chance, although other analysis gives Austin little chance. If that city does win, won’t San Antonio leaders wish they had proposed that Texas two-step?
Should San Antonio have bid, even if local leaders calculated that our bid would compare unfavorably? It’s not a question local leaders are asking themselves in any public way, yet it’s certainly a conversation worth having.
If the reasoning was “Do not bid on what you cannot win,” then the decision to not bid was the right one. If entering a bid would have helped San Antonio in other ways, by attracting more national attention to the city and its attributes in its Tricentennial year, or by accelerating a community conversation about long-term investment in mass transit, then the city should have bid.
Houston and El Paso both bid without success, and neither is the worse for wear.
By not bidding, San Antonio’s leaders presumably turned their attention to other economic development opportunities outside public view. Yet we now know those same leaders probably knew by late last year that the city also had been eliminated as a contender for the new Toyota-Mazda production plant.
Other cities and states publicly acknowledged their elimination as they received the news. San Antonio’s city leaders did not, which I think is short-sighted. Trust the public, even when the news is not good.
Elected officials at City Hall and Bexar County and some business leaders who objected to the no-bid decision back in October will take note of a statement made last week by Holly Sullivan, Amazon’s head of economic development, who was quoted in the New York Times and elsewhere on the day of the announcement:
“Getting from 238 to 20 was very tough – all the proposals showed tremendous enthusiasm and creativity,” Sullivan said. “Through this process we learned about many new communities across North America that we will consider as locations for future infrastructure investment and job creation.”
By not bidding at all, did San Antonio miss a bet to find its way on to Amazon’s radar? It’s highly unlikely the selection team would have added a third Texas city to its list of finalists, but that doesn’t mean the city can’t vie for a future subsidiary investment, especially if either Austin or Dallas wins the contest.
Bezos, on paper, is the richest person on the planet, according to Forbes. San Antonio could have made its point more effectively by bidding without an irresponsible incentive package. Take us or leave us on the merits, Amazon. That might have brought us some out-of-market admiration if not any Amazon jobs.
I have never been a proponent of kitchen-sink incentive packages that turn cities into beggars, either for big corporations or for pro sports team owners. Better to ask ourselves as a community: How can we better invest those same dollars to create jobs, improve education outcomes, increase social and economic equality, and maintain and improve our infrastructure?
The City of San Antonio recently arranged a reasonable package of incentives for USAA to bring 2,000 workers into its recently acquired pair of downtown office towers. At least 1,500 of those jobs will be new ones. Why doesn’t the City convene the area’s top employers and ask: How can we help you create more jobs here? Most of our biggest employers are creating jobs here, and also creating jobs elsewhere. Could we capture more of those jobs here with the right incentives?
Amazon’s promise of 50,000 new, high-paying jobs glitters with gold, and rightfully so, but according to the Dallas Fed, its annual report (which is not yet released) shows our metro area created nearly 35,000 new jobs in 2017. And while many of them do not pay Amazon salaries, most were created by local businesses without incentives.
One really good thing happened in San Antonio when Amazon first invited cities to bid. The city under newly-elected mayor Ron Nirenberg and the best-educated, most policy-driven City Council in memory took a very candid look in the mirror and began to talk more openly and honestly about the need to improve public schools, our higher education institutions, public transportation, affordable housing, and the many changes needed to make the city a more sustainable and livable place.
That conversation needs to continue with the same sense of urgency Amazon created in San Antonio for one brief moment in time.