It sounds like something more out of the Cold War than a competition for a corporate headquarters.
Richard Florida, a former Carnegie Mellon University professor, is urging Pittsburgh and the other 19 cities still in the running for Amazon’s second headquarters, to sign “a mutual non-aggression pact” to prevent a bidding war involving incentives from erupting to attract the coveted economic development project.
Pittsburgh officials responded coolly to the pitch.
“Unilateral disarmament has never worked ... we want to see incentives that benefit the greater community, not that are pocket change for any development,” Mayor Bill Peduto said.
Mr. Florida, who made a name for himself writing about how the creative class was the key to revitalizing downtrodden cities, has launched a petition drive on Change.org to gather signatures.
He already has collected endorsements from a number of high-profile people described as urbanists, urban economists, policymakers, and experts on cities to lend support to the cause.
Among those who have signed are Robert Reich, former U.S. labor secretary under President Bill Clinton; Jason Furman and Alan B. Krueger, both former chairs of the president’s council of economic advisors under Barack Obama; Bruce Katz of the Brookings Institution; and Stephanie Kelton, former chief economist to U.S. Senator Bernie Sanders.
The petition states some are liberal, others conservative. Some are strongly opposed to the use of incentives. Others believe they can be of value “within some reasonable bounds and limits.”
The petition calls on cities, regions, and states to compete on the “underlying strengths of their communities — not on public handouts to private business.”
“Tax giveaways and business location incentives offered by local governments are often wasteful and counterproductive, according to a broad body of research. Such incentives do not alter business location decisions as much as is often claimed, and are less important than more fundamental location factors. Worse, they divert funds that could be put to better use underwriting public services such as schools, housing programs, job training, and transportation, which are more effective ways to spur economic development,” the petition states.
“While we are supportive of Amazon’s quest to build a new headquarters, we fear that the contest among jurisdictions — cities, metro regions, states, and provinces — for this facility threatens to spiral out of control. Already, at least four jurisdictions have proposed multi-billion-dollar incentive packages. This use of Amazon’s market power to extract incentives from local and state governments is rent-seeking and anticompetitive.”
So far, cities and states haven’t been shy about offering Amazon massive subsidies in their quest to land HQ2, with its promise of up to 50,000 jobs and $5 billion in investment over 17 years.
New Jersey, with Newark still in the running, is offering the e-commerce behemoth $7 billion in incentives. Maryland is dangling more than $3 billion in subsidies as well as another $2 billion minimum for road, transit and other infrastructure improvements to help finalist Montgomery County.
Pennsylvania, with Pittsburgh and Philadelphia still contenders, is believed to be offering at least $1 billion, although that has not been publicly disclosed.
The state has not released any information about the package. Pittsburgh Mayor Bill Peduto and Allegheny County Executive Rich Fitzgerald also have refused to divulge the region’s HQ2 proposal or any information about potential subsidies.
Like Mr. Peduto, Mr. Fitzgerald would not commit to signing the pledge Tuesday, saying, “We’re going to leave our options open as far as that goes.”
But he argued the strength of the region’s bid lies in potential partnerships, not incentives.
Amazon, he noted, has provided $10 million to the University of Washington for a new computer science and engineering building, and the Pittsburgh region would like to partner with the company on similar initiatives here.
Local leaders also are interested in partnering with the online retailer on mentoring and STEM education programs, particularly in underserved communities, he said.
“Our interest in procuring and winning the Amazon competition is exactly what Amazon is about — providing opportunities to a broader section of folks who have been left out,” Mr. Fitzgerald said.
In making his case, Mr. Peduto said an incentive might be the transit that will benefit numerous neighborhoods or an affordable housing fund that ensures a range of housing prices.
He said he talked with Mr. Florida about this last week — he didn’t get into details — and has had some conversations with other mayors, but wasn’t signing on to a pact
Dennis Davin, the state’s community and economic development secretary, could not be reached for comment. But in a statement last week to the Post-Gazette, he said, “One of our biggest priorities is making sure that the incentive package we are putting together is both fiscally responsible and strong enough to help us win over other states.”
While the state’s office of open records has ruled the Pittsburgh Amazon proposal is a public document and should be released, the city and county intend to challenge the ruling in court. Mr. Davin said the state does not intend to make its incentive package public, either.
“Revealing possible incentives at this stage of the process would allow other states to adjust their own incentives accordingly and put us at a competitive disadvantage,” he said.
As of late Tuesday afternoon, Mr. Florida’s petition drive was off to a modest start, with a little more than 250 signatures beyond the university and policy making luminaries who signed it.
Amazon stated in its request for proposals to cities bidding on HQ2 that the initial and ongoing cost of doing business will be “critical decision drivers” in making a selection, which is expected later this year.
Mark Belko: mbelko@post-gazette.com or 412-263-1262. Rich Lord contributed to this story.
First Published: January 30, 2018, 6:54 p.m.
