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Do the Twin Cities Have a Realistic Shot at Amazon’s Headquarters?

John Phelan wrote here about Amazon’s plan to develop a second corporate headquarters that will employ 50,000 people with average incomes of more than $100,000. Governor Dayton has vowed to compete aggressively for the project, and the Star Tribune headlines: “Twin Cities prepares to fight for Amazon’s planned second headquarters.”

Of course, cities across America are preparing major efforts to compete for Amazon’s once in a lifetime project. Do the Twin Cities have a realistic chance?

You can read Amazon’s Request for Proposal here. It sets out some basic criteria, most of which the Twin Cities can satisfy, e.g.: a metropolitan area of more than 1 million people, proximity to an international airport, proximity to major highways, and a site sufficiently large to house Amazon’s headquarters. (The company’s existing Seattle headquarters consists of 33 buildings with a total of 8.1 million square feet.)

But lots of cities can satisfy the basic checklist. Unbiased national observers don’t seem to consider the Twin Cities a strong contender. Aaron Renn of the Manhattan Institute writes that “Amazon’s Second Headquarters Is a Golden Opportunity for the Heartland.”

This is going to be the feeding frenzy of the century.
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What, then, are the other cities [in addition to Los Angeles, New York and Washington] that could potentially compete? I see four strong contenders: Chicago, Dallas, Philadelphia, and Atlanta.

Renn does mention Minneapolis along with Denver as possible dark horses.

A basic question is whether a metropolitan area can supply the large number of tech workers who will be needed, either through its existing labor pool or by attracting new workers. The investment firm CBRE ranks the top ten cities for tech jobs, and Minneapolis doesn’t make the list. The top ten are San Francisco, Seattle, New York, Washington, Atlanta, Toronto, Raleigh-Durham, Austin, Boston and Dallas.

Amazon’s RFP includes lots of references to sustainability, strong educational resources, mass transit, cultural amenities, and so on. These soft factors could give the Twin Cities hope. However, the RFP also emphasizes, repeatedly, the importance of a bidder’s business climate. The RFP refers to “a stable business climate for growth and innovation,” “A stable and business-friendly environment,” and “A stable and consistent business climate.” In addition, the RFP says, “A stable and business-friendly environment and tax structure will be high-priority considerations for the Project,” and “The initial cost and ongoing cost of doing business are critical decision drivers.”

No one has ever accused Minnesota or the cities of Minneapolis and St. Paul of being “business-friendly environments,” and certainly Minnesota does not have a “business-friendly tax structure.” And we have one of the higher costs of doing business in the U.S.

The Dayton administration plans to offer Amazon lots of incentives to locate in Minnesota. Maybe the state can put together a package of benefits–tax abatements, regulatory waivers, infrastructure support–sufficient to overcome its institutional disadvantages and convince Amazon to locate here. Whether that happens or not, Minnesota’s policy makers should learn a lesson from the effort. When they want to attract a uniquely desirable project, what do they do? They offer relief from Minnesota’s high taxes, onerous regulations, and indifference to the needs of businesses.

But if that is what it takes to spur economic growth, why don’t we fundamentally reform our business climate, rather than offering one-time giveaways to selected companies? Plywood Minnesota, Rudy Boschwitz’s once-iconic Minnesota company, used to advertise the fact that it never had sales. Rather, the company offered customers “our best shot all the time.” Maybe the State of Minnesota, along with Minneapolis and St. Paul, should adopt that philosophy.

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