This week, children all over the country go knocking on doors in the annual ritual of Halloween, trick or treat. In many places, this day is one of the few when you get to meet your neighbors as we go door to door, shuffling along and bumping into friends not seen in some time.
Amazon HQ2 is that kid who ignores the rules, that senior in high school who just wants the candy. Amazon HQ2 did not wear a costume and knocked early when, on September 7th, 2017, it announced its intentions to locate a $5B second headquarters and a 50,000 person workforce somewhere in North America. In a reversal, Amazon pulled a neat trick by getting potential suitors to send elaborate proposals on what treats they had to offer, thus sparing the company the drudgery of actually visiting the communities.
Amazon has always been an industry disruptor, and this latest campaign is either pure genius or a Trojan horse: a trick or treat experience that by my estimate cost North American communities well over $119 million in staff time, and professional fees for video production, print media, research and economic analysis and more to create their responses. In its mailbox, Amazon received 238 proposals in response to its detailed request for proposals.
There are so many lessons to learn and points to consider in what ensued over a six week period that I plan to make this an Amazon HQ2 series over the next year. As I dwell on the HQ2 lessons learned, I’d love to hear your thoughts and feedback. To get that started, please take the companion survey here:
In this posting I cover: Trick or Treat? 5 Experiences of HQ2
Treat: Quality of Place
The criteria that Amazon published in their RFP is straight from our (link to Fourth Economy Quality of Place pdf) Consulting Playbook. While we hope that all of the bidders can cover the basics of labor force, location, and incentives, it is the areas that cover cultural community fit and community/quality of life attributes that make the RFP a treat. These are the areas that, we believe, can make any community a success. Amazon notes variables such as a diverse population, strong higher education systems and local government that will work with them. Under quality of life they mention daily living and recreational opportunities.The real treat will be if all 238 cities actually spent time considering these factors and while putting their best forward also identified opportunities to invest in making their quality of place better.
Trick: A proposal is not a plan
My professional guess is that very few of the cities that submitted a proposal actually had an economic development strategy in place that guides how they will attract and retain new jobs, let alone how they will handle 50,000 over a short period of time. On the other hand, the communities that do not have such a strategy but did submit a bid now have a lot of great information collected in one spot that they can use to advance a plan that goes beyond this one opportunity or if Amazon delivers less than promised.
Treat: Dare to Dream
In many communities, the thought of 50,000 new jobs in a relatively short period of time is exhilarating. This is especially true in Rust Belt cities that lost a lot more jobs that that over the past two or three decades and have struggled with starting the growth engines again. The exhilaration is of course tempered a little when one starts to look at what Amazon’s growth has done for Seattle’s housing prices and other cost of living factors. The resulting conversations are good though as these are the scenarios that communities should be considering with any plan for growth. I am hopeful that the 238 dreamer cities all use the time between now and Amazon’s next step in the process to have honest conversations and plan for what’s next in their communities.
Trick: All That Information
Amazon now has a lot of information on 238 communities and as a company built on data mining they are going to have a field day slicing and dicing. They ask in the RFP for a great deal of information that is readily available via the web. Locations with 1 million people, proximity to an international airport, crime statistics, stable business climate. All of this information could have been found through a simple request to Alexa. Or just start with the New York Times, CNBC, Brookings and more who all crunched the numbers and provided their ‘Top’ lists of communities that meet the criteria. The style points of how the proposers are pitching their communities must have been the reason to ask for Amazon to have them to do their homework for them. So the trick is that as many as 237 communities did a lot of work and may still get a failing grade.
Treat or Trick: Place Your Bets
The idea that there are betting sites now offering odds on which city will be chosen is probably both a treat and trick. A treat in that we can all continue to play along in the speculation and if we guess right make a few bucks in the process. A trick because the notion that people are literally betting on communities opens up a strange channel of conversation about their future.
The previous installment explored the role of placemaking in business retention and expansion as it improves the quality of life of a community and the marketability of a place. This installment considers how placemaking influences entrepreneurship and small business development.
Small Business Drives Jobs
Entrepreneurship is essential to a community’s economic dynamism. Small businesses diversify local economies, create local jobs, and increase residential and commercial development. Small businesses employed just over half of the private-sector workforce and created nearly two-thirds of net new jobs in the time period of 1993 – 2011. Furthermore, homegrown businesses are more likely to have strong roots that keep them located in a community compared to businesses that have been attracted from elsewhere.
One typical method of supporting small businesses is creating incubators – shared rental spaces that offer low-cost office amenities and, often, coaching, mentoring, and other types of support. Other ways of supporting entrepreneurs include creating small business centers, which serve as information hubs for entrepreneurs and local small businesses, and holding networking events, and connecting businesses to sources of funding.
Small Businesses Create Vitality
Small businesses also play an important role in creating unique places that enhance quality of life. Commerce in downtowns and neighborhoods is often driven by small businesses, whether retail establishments, bars and restaurants, or small companies occupying office space. These small businesses draw people into business districts and create vibrant, walkable neighborhoods that attract both residents and tourists.
Beautiful places and small businesses go hand in hand. Urbanist author Jane Jacobs wrote, “New ideas must use old buildings.” Older buildings, typically having more affordable rents, are often located in downtowns that are conducive to transit and as a critical mass of customers and office workers. The national Trust for Historic Preservation finds that cities with older, smaller buildings actually have higher density, more diversity, a greater number of small businesses and lots more entrepreneurial activity.
Footholds for Startups Activate Places
Small businesses and entrepreneurs thrive in walkable downtowns, but they can also create vibrancy in areas that could use a shot of revitalization. Creating temporary spaces like markets and kiosks allow for start-up businesses to test new ideas, while also providing an event to encourage potential to attend, therefore enlivening areas of a community that are in need of investment. The graphic below, from Thompson Placemaking, shows an incremental approach to building spaces for new businesses as part of a community revitalization strategy.
The graphic moves from easily implemented, temporary retail options to permanent, multi-use buildings. The tents in the first frame are seen at events such as farmers markets or holiday fairs. Generally, this level of retail is available to anyone for very little investment other than merchandise. Food trucks, trailers, pods and micro retail buildings represent the “missing middle” of retail outlets. These structures require some investment, either from the vendors themselves or from developers, but the risk is still quite low compared to signing a lease or purchasing a store. Small retail stores and mixed-use buildings require the most investment – from retailers, developers or property owners, and from the city that would benefit from their development.
Barriers to Incremental Placemaking
It is feasible that a business could grow from a tent to a trailer to a retail bay, increasing profits and employees at every step. Facilitating space for businesses at each level creates a pipeline of small businesses ready to expand into retail bays when they become vacant. Yet, in many places, regulation prevents small retail environments and harms small businesses.
For example, in New York City, food vendors must obtain a permit, but the number of applications is so high that the City is only issuing permits to licensed vendors already on the waiting list. According to a 2015 article in Eater, in the late 1970s and 80s, the number of food vending permits was reduced from 12,000 to 3,000 due to pressure from business interests and general civil unrest in the late 1970s. The article reports that this has led to existing permits being rented out for exorbitant prices on the black market, with many stories of food vendors being swindled out of permits and having to close their doors.
The Guardian profiled these challenges recently and pointed out that in San Francisco, where tech giants like Uber make billions by skirting taxi regulations, the permitting process for street vendors selling wares like fruit, beverages, and popsicles requires as much as $1,500 in application and licensing fees. Often, these vendors are immigrants who make less than $100 per day at their trade. Many have limited English proficiency, and many more lack capital to cover these startup costs.
How can Policymakers Help?
Obviously, requirements that protect the health of customers buying food are important, but legal processes that restrict small businesses unnecessarily are unfair. To help small businesses get started in informal retail environments, policy makers can do an audit of the systems that these businesses must go through with the goal of streamlining processes to make them more efficient and time-conscious. Furthermore, policy makers can examine zoning laws to understand if regulations that influence where vendors can operate are fair. If there are significant zoning regulations, it may be helpful to create something like a “Vending Overlay Zone” or other district where vending is accessible to small businesses. A focus on creating small business friendly communities often leads to better places and better quality of life.
To many Americans, Canada is our friendly neighbor to the north, known for an affable attitude, a passion for pucks and a penchant for strong beer. What is perhaps less known is how critical trade with Canada is to the economy of the United States. Consider:
- Nearly 9 million U.S. jobs depend on trade and investment with Canada
- Canada is the top export destination for 35 states
- Canada is the number one supplier of crude oil, refined petroleum products, natural gas,
and electricity to the U.S. as well as a
leading supplier of uranium
- 400,000 people cross the Canada–U.S. border daily
Defense Department budgets are in flux. Factors such as the Budget Control Act, reductions or shifts in spending related to the drawdowns in Iraq and Afghanistan and responses to future threats could all create significant economic disruptions for Pennsylvania’s defense industry sectors and the regions they call home. The state’s defense industry leaders and the communities that support them cannot afford to risk being caught unprepared by waiting for news of budget changes and then reacting to them. Instead, it is imperative that the sector understands potential risks and prepares for them proactively. Continue reading “PA Standing at the Ready: Creating Proactive Strategies for Potential Changes in Defense Spending”
Tis the season for annual conferences – that chance each year for trade groups to tout their accomplishments and relevancy. The Fourth Economy team attended our fair share. What we find scary is that while the workshops and keynotes are conveying the seismic changes occurring in our economy, change on the street, in our communities and programs, appear to keep on keeping on as if it were, oh say, 1999. Many of the metrics for growth we heard remain focused on absolute land development, job creation (regardless of type and cost) and more office space. Continue reading “Inspire Yes, But Act As Well”
Fourth Economy Consulting has turned five and has topped over 200 client engagements in that short period. And by engagements, I mean that we have had the great fortune to partner with community leaders all over the country as they work to strengthen their organizations and communities. This experience has provided me with yes you guessed it, five notable trends that I wanted to share with you. Continue reading “Which Trend is Your Community Experiencing?”
As summer BBQs turn to fall tailgates, how often do you find that neighborly backyard burger flipping leads to discussions on how great your town is or how much better it could be. Sure there is always room for improvement, but ever wonder how those opinions and impressions sync-up with the facts. Sometimes we are too hard on our own community when it may really be doing quite well, while other times it is heading for a cliff that nobody seems to notice or care. In either case, gaining a better understanding of how impressions align with the facts is a good starting point for long-term strategic planning. Continue reading “Ready, Set, Survey…”
We are asking corporate real estate managers, location consultants and economic developers to identify how air quality affects location decisions.
As an incentive, all respondents completing this short survey will have an opportunity to win a $200 prepaid Visa card. All respondents will also have access to the final results.
We appreciate you taking 10-15 minutes to complete the survey by Monday, October 17, 2015. Results will be used in summary form only in order to protect confidentiality. Continue reading “Survey: Environmental Factors and Site Selection”
In September, Dr. Jerry Paytas was featured on Workforce Central, hosted by the National Association of Workforce Boards‘ President/CEO Ron Painter. Workforce Central features public & private sector leaders in workforce development, education, business and economic development discussing key workforce issues and investment strategies to help America compete globally.
By Dave Feehan
President, Civitas Consultants LLC
Since 1990, Business Improvement Districts or BIDs, as they are commonly known, have become the most effective and accepted method for funding downtown and business district organizations.
For many decades, merchant associations and voluntary downtown councils played the role of business district manager and advocate; but the decline in downtown retail, the shift to national chain stores, and the acquisition of local headquarter firms by national and international conglomerates made these downtown management models difficult to sustain. Continue reading “Business Improvement Districts – Not Just for Big City Downtowns”