When I first heard that Amazon was reneging on their commitment to land in New York, I thought it was fake news. After all, how could this be? After a yearlong search and countless meetings with city and state officials, this was supposed to be a done deal. Amazon HQ2 was no joke. It was perhaps the biggest fish in the ocean for all of 2018. Most people rightly assumed the greater DC area would likely land HQ2. (They did, supposedly, in Crystal City, Virginia). But, the added Amazon site in Queens was a bonus. Clearly the masterful work of good leadership, or so we thought. Amazon’s search brought out 238 of our nation’s best places to compete for the prize. The victor, or as I’ll explain later, the moral victor, would have to make way for the tidal wave that is Amazon.
But what happened in New York should make us take a hard look at business as usual. Let me explain. Economic development is a vital component of any community. As citizens, we hardly understand the full benefits of a competitive bid for employers. The closest thing to compare it to is draft day, where the best teams vie for the coveted top players. Choose wisely, and it changes your organization for ever. There is no question that landing an Amazon HQ, or a Mercedes plant for that matter, is huge. Economic developers all over the country will tell you that landing a high wage employer will bring significant growth and benefit to an area. This is proven, and I believe in the importance of healthy competition between states and municipalities. On the other hand, critics point out these negotiations to land employers are held largely behind closed doors, and as some may say; made with “back room deals”. I couldn’t disagree more. Secrecy is of the upmost importance in these negotiations, precisely in light of what happened in New York. We may never know the full story, but somebody in the Big Apple got wind of the massive incentives package being waved at Amazon- then all hell broke loose. Guess what New York, yes you both win and you lose.
In my book “Radical Housing Solutions” I explain in more detail why economic developers should focus more on housing- make that employees- rather than employers. The vocal discontent in New York are right to argue that a massive company like Amazon should get less in the way in incentives. Problem is, like any other pretty face, there are only so many dance partners to go around. New York is now scarred. But, they also saved themselves from a massive increase of unaffordability in housing. Look no further for outrageous rents and high housing prices than the big tech centers of Seattle and Silicon Valley to prove that out. As if New York already didn’t already have a housing problem, they do.
Yes, employers pay wages that can circulate eight to twelve times over in a city. Which means, new jobs help create more new jobs. But, it’s time to flip this dated model of courting big employers on its ear. We’ve had it backwards. I’m proposing we turn several of these original 238 unique incentive packages to lure Amazon around to lure the employees Amazon covets instead. Working 9-5 and commuting an hour each way is history. Collaborative thought travels online around the world in seconds. I say we build housing communities with a mix of extreme affordability, all the way up to million dollar mansions, all in the same walkable, livable acreage once reserved for large buildings. Community leaders: Stop paying off big business to come to you, and instead take care of our people who already live here, or those you want to entice to live here. Turn your economic incentives inside out, and allow us to build you a community we can be proud of. Then, the employers will come to you! Trust me, try it. What have we got to lose? If we learned anything from Amazon’s HQ2 search, and subsequent catch and release, we learned that it’s time to rethink the way we grow our communities. Affordable housing is the crisis we should be concerned about, not the ability to land the latest great company in our town. It’s time we learn from our past, not repeat the same old tired mistakes. For more information go to www.radicalhousing.com.
Tony Bonitati
Author “Radical Housing Solutions” and 30 year veteran of business and real estate.