Amazon Seeks 'Business-Friendly' City For Its Second Headquarters

SEATTLE, WA - Members of Seattle's political and business class experienced a serious gut-check Thursday when Amazon suddenly announced it's searching for a new site somewhere in the U.S. to build a second headquarters. Amazon is offering cities and states a grand prize of 50,000 high-paying tech jobs and up to $5 billion in construction activity to entice competition.

But why is the company searching for a second city to dominate when it's already rooted in Seattle? Amazon's press release on its "HQ2" search offers a key detail. The company is looking for a "a stable and business-friendly environment," which might mean that it's looking for tax incentives or other cost cuts. Amazon is looking for a few other specificsL a metro area with 1 million-plus people, and "communities that think big and creatively" about real estate development. But "business-friendly" definitely stands out.

"As this is a competitive project, Amazon welcomes the opportunity to engage with you in the creation of an incentive package, real estate opportunities, and cost structure to encourage the company’s location ..." the company says in its RFP (request for proposals).

Seattle has recently tried to increase standards of living through legislation: raising the minimum wage to $15 per hour, creating a city income tax on high earners, creating a collective bargaining process for gig economy workers. The Seattle Chamber of Commerce seemed to view the Amazon H2Q announcement as backlash to those moves, saying it "should come as no surprise, as the city has continued to implement policies that create an environment that is at best unfriendly, and at worst, outright hostile" to big businesses.

"Unfriendly" toward business is a stretch, but other cities and states might be more able to grease Amazon's wheels with tax breaks. Take for example Michigan: the state has loads of cheap and available land (Detroit), is close to the East Coast, and has giant land-grant universities (University of Michigan, Michigan State University) that churn out the type of tech talent Amazon craves.

Michigan and its cities can also offer tax breaks. Unlike Washington, individual cities can offer tax credits for redeveloping "brownfield" properties, or for Obsolete Property Rehabilitation Act (OPRA) projects. One of the state's most generous tax breaks is the Michigan Renaissance Zone, a designation that creates a tax-free bubble for businesses that commit to spending at least 15 years in a given area. Cities in Michigan have the power to create their own Renaissance Zones for the right clients.

"We have been ranked one of the Top 10 states for corporate tax competitiveness due to our simple, fair and efficient 6% corporate income tax and $500 million in annual business savings through the elimination of industrial personal property tax," the Michigan Economic Development Corp. boasts on its website.

And don't count out desperation. Wisconsin has offered Foxconn - a company that had to install suicide prevention nets at its Chinese factories - $3 billion in tax breaks to build a factory in the state. Elected officials say Foxconn will create 13,000 jobs, but the company has so far only committed to 3,000.

Amazon, acting like a government agency, is searching for its new (second) home through RFP, which means it can sit back and let the generous offers from states like Wisconsin and Michigan to roll in.

But that also means Seattle - or any other city in Washington state - has a shot at the prize. Washington did give Boeing $8.7 billion in tax breaks in 2013, even though the company turned around and announced it would cut 15 percent of its Washington workforce earlier this year (not to mention, Boeing moved its headquarters to Chicago from Seattle in 2001 and got up to $35 million in tax breaks from Illinois).

That's why Seattle mayoral candidate Cary Moon responded to the Amazon news like this:

"[W]e've seen with Boeing how a bidding war over billions in tax breaks for corporations only helped the wealthy few while doing nothing to keep good paying jobs here. I'm not interested in playing that game if Amazon isn't serious about helping to pay for the impacts of their rapid growth on our city."

For now, Mayor Ed Murray and Gov. Jay Inslee are willing to talk to Amazon.

Immediately.

"My office will immediately begin conversations with Amazon around their needs with today’s announcement and the company’s long-term plans for Seattle. And we will coordinate with Governor Inslee to convene key business and community leaders to plan for our future growth and response to this announcement. I look forward to working with Amazon to secure their long-term, successful future in the heart of Seattle," Murray said in a statement.

Image via Peter Alfred Hess/Flickr.com