Trick or Treat? 5 Experiences of HQ2

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.

Pay for Success Explained (and Illustrated)

By Chris Ellis and Sara Blumenstein

At Fourth Economy, we are interested in—and experts in—a new generation of funding mechanisms that are enabling the expansion of interventions with proven results. (See these posts from last year introducing Social Impact Bonds and Three Questions to ask to demonstrate impact.)

The key stakeholders involved in a Pay for Success transaction

 


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Embedding Equity Into Economic Development

Guest Blog by Sarah Treuhaft, Director of Equitable Growth Initiatives, PolicyLink

Treuhaft-Inequit-BlogIt is another summer in which America’s deep racial fault lines are being painfully exposed. Following the horrific violence in Baton Rouge, Falcon Heights, and Dallas, in a July 8 poll seven in ten Americans said race relations are “generally bad.” A National League of cities analysis of one hundred “state of the city” speeches from 2016 found that mayors increasingly view racism and inequities as major threats to progress in their cities.
Continue reading “Embedding Equity Into Economic Development”

GASB Shines a Light on Tax Abatements

Paytas-Blog2-Web-05-2016The Governmental Accounting Standards Board (GASB) has implemented new guidelines[1] for disclosing tax abatements with the requirements taking effect for financial statements for periods beginning after December 15, 2015. These new regulations will require a significant change in the operating procedures and record-keeping of many economic development organizations and local governments. Chances are many are not ready to meet the requirements of the new GASB standards. Continue reading “GASB Shines a Light on Tax Abatements”

NIST Announces NMII Competition

Paytas-Blog-20160405Recently, The National Institute of Standards and Technology (NIST) announced the competition to award its first National Manufacturing Innovation Institute (NMII).  Proposers may focus on any advanced manufacturing technology area not already addressed by another institute or open competition. Seven institutes have been funded to date with two currently moving through the review and negotiation process. After attending the Proposer Day session on March 8, 2016, it is clear that many proposal teams have already been formed. Continue reading “NIST Announces NMII Competition”

48 Hours in Pittsburgh with the Consulate General of Canada

Bernard-Blog-20160405To 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

Source: http://can-am.gc.ca/can-am/index.aspx?lang=eng

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What Is Not Being Addressed that Will Kill Your Economic Development Strategy

BooksforBlogAt this point I think we are all familiar with the struggles facing Detroit Public Schools, at least on the surface: mushrooms growing in schools, teacher strikes, financial crisis. However, as detailed by this incredibly thorough and thoughtful report by LOVELAND Technologies, 200 years worth of poor decision-making led Detroit to where it is today. This speaks to the need for a new approach to public accountability in our education system. Recognizing the critical role of public education to economic development, in Nashville, it has been the Chamber that has been stepping up to provide that platform for accountability by conducting annual holistic assessments and concrete recommendations for improvement. Continue reading “What Is Not Being Addressed that Will Kill Your Economic Development Strategy”

Regional quality of place and the fight against blight

BlightBy now, the costs of blight and vacancy are well-documented in terms of unpaid local and school taxes, drained municipal resources, further disinvestment, and/or declining adjacent property values.  We have also seen in from our clients the key role that quality of place plays in retaining and attracting talent – a key driver for economic success.  No matter the size, competitive communities create places where people want to live and work, and blight can be a major blow in that endeavor.  Continue reading “Regional quality of place and the fight against blight”

Inspire Yes, But Act As Well

Coffee-Shop-1099Tis 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”

APA Pennsylvania Chapter Recognizes Fourth Economy Team

APA-Upper-LawrencevilleThe Pennsylvania Chapter of the American Planning Association recognized Fourth Economy Consulting with a “Planning Excellence” award for its contributions in developing a Targeted Development Strategy for the Pittsburgh neighborhood of Upper Lawrenceville. The consulting team helped the community craft a neighborhood identity and a series of principles guiding future development to achieve the community’s long-term livability goals. Continue reading “APA Pennsylvania Chapter Recognizes Fourth Economy Team”