D.C. Lawmakers Mull Amazon HQ2

April 9, 2018
By The 2030 Group

By: Andrew Giambrone & Morgan Baskin

Several D.C. councilmembers are raising concerns that Mayor Muriel Bowser‘s administration could be offering too much to Amazon in the District’s bid to lure the company’s second headquarters, which the tech giant has dubbed HQ2.

But many of the councilmembers say they can’t offer a decisive judgment because much of Bowser’s record-setting incentives package has not been publicly disclosed. Despite inquiries and open-records requests, the administration hasn’t fully unveiled the benefits it’s dangling toward richest-man-in-the-world-and-maybe-in-history Jeff Bezos‘ company.

Whether the District should be offering Amazon special carrots for HQ2 is shaping up to be a major debate in the midst of an election year. The mayor, the Council chairman, and most of the Council are up for re-election as the city continues to undergo significant changes.

The Council would need to green-light any incentives like free or discounted public land, new infrastructure built on the government’s dime, and reduced or waived tax rates that go beyond what is now offered through an existing incentives program for tech firms. It is unclear what extra community benefits Amazon might provide in exchange for such subsidies.

Fiscal experts say D.C.’s offer is worth at least hundreds of millions of dollars based on the published parts of the bid. Amazon promises to deliver 50,000 jobs and $5 billion in corporate investment to the winning jursidiction, not to mention likely hundreds of millions of dollars in new tax revenue.

Bowser’s economic development team has said the District can’t show its hand because it is competing with other jurisdictions for HQ2. Officials have also said the still-hidden incentives would come to light for Council approval were Amazon to pick D.C., and that it would be imprudent to get too far ahead of possible negotiations with the company.

A few councilmembers, particularly those who have been in office the longest, share those sentiments. They say D.C. would be kneecapping itself by wearing its bidding strategy on its sleeve, and that a hearing on the package would be “premature” at this point.

But others on the 13-member Council say the proposal deserves a robust public vetting sooner rather than later. They say they worry that if Amazon does choose the District before all the incentives are made known, they would be pressured to pass them under Amazon’s thumb—effectively rubber-stamping the biggest corporate subsidies D.C. will have approved in a single deal.

The company has said it will decide where to locate HQ2 sometime this year. In January, Amazon named 20 finalists, including Northern Virginia and Montgomery County. Virginia officials have been mum about what incentives they have offered as part of their bid. But last week, Maryland lawmakers approved a whopping incentives package worth $5.6 billion at a minimum.

Many observers see the region as a top contender for the headquarters, given the selection criteria Amazon has revealed and the presence of the federal government here. HQ2 in or near D.C. would be an East Coast counterpart to the company’s West Coast headquarters in Seattle.

Bowser’s administration has pitched four sites around the city, including the Anacostia riverfront, Hill East, NoMa-Union Station, and Shaw-Howard University. Only the Hill East site is totally self-contained; the others are spread out across multiple parcels. In late February, Amazon leaders toured the sites and Bowser took them to dinner at Union Market’s Michelin-starred Masseria.

Deputy Mayor for Planning and Economic Development Brian Kenner says the administration is “excited” D.C. and the region have made it this far in the competition. “We will continue to keep the Council and the public updated as we work to grow our local employers and attract new ones,” Kenner says in a statement. “We always approach these efforts with our residents’ best interest as the driving force.”

But residents seem to be at odds over how much D.C. should subsidize Amazon, if at all. A recent poll commissioned by the campaign of Ed Lazere, a candidate for D.C. Council chairman, asked 640 likely Democratic voters if they “support or oppose providing billions of dollars in subsidies to Amazon so they open their second headquarters in D.C.” Forty-five percent of the respondents said they opposed this; 30 percent said they were unsure; and 25 percent said they supported.

“Amazon HQ2 is really about the future of our city,” Lazere said in a statement last Wednesday. “Will we focus on fair development that puts the needs of residents first, or will we give anything to major corporations, without asking for anything in return?” A variety of groups, including the Fair Budget Coalition, Metro DC Democratic Socialists of America, and Generation Opportunity (a conservative organization linked with the Koch brothers) say they are against subsidizing Amazon.

So do some District lawmakers. Last Thursday, At-Large Councilmember David Grosso issued a lengthy statement opposing special incentives for the company. “The current state of the chase makes me wonder: at what cost?” Grosso said.

City Paper asked the whole Council about their thoughts on Bowser’s Amazon bid, and whether they support a public hearing on the package. Below are their responses (edited for concision).

Brianne Nadeau, Ward 1

“Any deal to bring Amazon to the District of Columbia must include incentives for our residents. Every day I talk to residents in the Ward and outside of it who are asking for job opportunities. I don’t want to hear about past jobs created; I want to hear about jobs developed for the people who live here and desperately need work.

“I would welcome a hearing on this topic. They should be talking with us about how to address food deserts, career paths beginning in high school, and training for those who have been left behind in the current economy. To the extent that we talk about offering any incentives to Amazon, the discussion should include addressing all of the issues I’ve outlined here.” (statement)

Jack Evans, Ward 2

“Amazon would be an enormous economic-development engine if it came to the District. What happens beyond [the existing incentives for tech companies] is subject to negotiation. That’s why I find it puzzling that anyone would say we wouldn’t do anything else. I think the danger is that Amazon would be put-off by that. You’re checkmating yourself. I think the way the mayor has handled it is great.

“It’s very premature to [hold a hearing] right now. It would go to your public strategy. Most of the people testifying would be against Amazon and use it as a platform to further their political interests. I don’t know if that’s the message we want to send. I think our best strategy is to wait until Amazon makes its decision, and if they choose us, then to sit down with them and work it out. And at that point, everyone will have the opportunity to weigh in and we will get their information then.” (interview)

Mary Cheh, Ward 3

“First of all, Maryland went public, so to speak, because they needed legislative approval. And of course we will go public, so to speak, if there’s an occasion to get legislative approval from us. We’re not at that stage. I think it might be a little premature, especially since it might be unwise to reveal whatever our negotiating position is because it is a kind of competition. I think the idea of having Amazon here is positive. The District of Columbia should be at the forefront of business and technology.

“But I’m certainly not prepared to say that we should only go this far and not a step further [in what D.C. is offering]. I just don’t see why we would potentially compromise our own position. We’re not incapable of evaluating something just because it comes more fully developed by the mayor. I really doubt the legitimacy of the complaint that we’re just going to be dragged along with whatever is presented to us.” (interview)

Brandon Todd, Ward 4

Todd declined to comment through a spokesman.

Kenyan McDuffie, Ward 5

“As Chair of the Committee on Business and Economic Development, our priority must be to invest in our residents to make certain they are positioned to compete for the jobs and economic opportunities that flow from HQ2. We should also encourage employers who will provide jobs to our residents to locate in the District of Columbia.

“Council oversight must ensure those interests are balanced against any incentives offered and create an economic ecosystem where residents, and small and large businesses, thrive.” (statement)

Charles Allen, Ward 6

“It’s hard to know what incentives could be requested when we don’t know what’s even been offered. But as I’ve said before, I can’t support the District going into a bidding war with a blank check.

“Should Amazon look to locate its headquarters here, then without question, there would be public hearings before both the Council and District residents before any incentives would be approved.” (statement)

Vince Gray, Ward 7

A spokeswoman for Gray says Gray “believes the Council should hold a hearing about Bowser’s bid on Amazon HQ2. He believes, by doing so, the Council can make a more informed decision as to whether additional incentives are needed.” (statement)

Trayon White, Ward 8

“I’m definitely in favor of a hearing on Amazon addressing what is the grand scheme of things for the residents here as it relates to job opportunities and business opportunities. I don’t have a lot of information on it. That’s why I want to get the information from the executive for this proposal. We need to get some of the facts.” (interview)

Anita Bonds, At-Large

A spokesman for Bonds says Bonds “believes that holding a hearing will give the Council and members of the community the opportunity to point out the benefits as well as the concerns of locating of Amazon HQ2 in the District of Columbia and that we will all be able to clear up all miscommunication. Since we do not know when Amazon will make its final decision, if and when we hold a hearing, it must be timely.” (statement)

Organizer Ari Schwartz says Bonds told him on the night of Bowser’s State of the District Address in March that “Amazon should be subsidizing us” when asked about the incentives package.

David Grosso, At-Large

“Advocates for aggressively pursuing the internet behemoth tout the jobs, tax revenue, and prestige that would accrue to the District should we be picked. I certainly understand those arguments and would welcome Amazon to join our strong business community. But, the current state of the chase makes me wonder: at what cost?

“One of the most troubling aspects of the hunt for Amazon has been the opaqueness with which D.C.’s bid has been developed. It is problematic that details [about additional incentives] have not been proactively shared with me and my colleagues. The District of Columbia is a great city to live and work in, with new people and companies flocking here daily. It is attractive in its own right.” (statement)

Elissa Silverman, At-Large

“I think the [existing] Qualified High Tech Companies package is a very generous tax credit. So I’d have to see: What is Amazon offering to us that might make it worthwhile to offer them anything [beyond that]? If Amazon offered an incubator program and enforceable goals of working with small business vendors, minority vendors, if they partnered with universities and community colleges to offer educational pathways to IT jobs and other Amazon-type jobs, then I’d be intrigued by that.

“Of course there should be a hearing. Almost certainly there would be. I think wherever an expenditure of tax dollars is made, we should have a public hearing [and] I certainly would demand a hearing on whatever package we offer.” (interview)

Robert White, At-Large

“I have serious concerns about bringing such a large company to D.C. because we don’t have a way to absorb as many high-income earners [as Amazon wants] into our housing market. Without understanding very clearly how bringing Amazon to D.C. would benefit the city and our residents, I don’t think we can expend to them any incentives beyond what is already codified into the law. We always want to grow our city, but we can’t grow our markets without providing opportunities for our residents.

“I think we have to hold a public hearing to understand what the administration is offering and the benefits. I don’t want to be in a position of Amazon saying ‘we want to locate to D.C.’ and then we are forced, in a very high-pressure situation, to say ‘yay’ or ‘nay.’ That’s not fair to the Council or residents. This is also a new tactic that larger businesses are starting to leverage to create new rules for themselves around the country. Without more information, I certainly don’t support it at this point.” (interview)

Phil Mendelson, Chairman

“It would be premature to have a hearing before we know if we’ve actually been chosen. As to incentives, the law already prescribes incentives available to all comers. If the Mayor wants more, that will require a public hearing and there will be one.” (statement)

At a Democratic candidates forum in February, Mendelson told the crowd: “I don’t favor additional tax incentives in this case, I just don’t. I think that these tend to be money-losers. It’s kind of exciting to get this big-name company. But the goal with economic development is that we get more revenue to the city, and if we are instead giving out a lot of incentives, then we’re frustrating that goal.”

Read the full story at the Washington City Paper