Austin’s bid is officially in for Amazon’s giant HQ2 project

Posted October 18th, 2017

For the past month, hundreds of cities have scrambled to prepare proposals to win Amazon’s second company headquarters after the online retailer announced plans for the $5 billion project. 

Austin, considered a contender by industry analysts, has been among those preparing bids.

Now, Austin enters the waiting period. 

The Greater Austin Chamber of Commerce formally submitted the city’s proposal for Amazon’s HQ2 project on Wednesday, one day ahead of Amazon’s deadline, chamber spokesman Mike Berman confirmed to the American-Statesman. 

Austin is set to compete with many other locations -- some of which have publicly offered extravagant incentives to Amazon -- as it awaits to see whether its selling points were enough to land the deal.

“We’ve put together what we think is a compelling case for Austin,"  Berman said.

“Austin, for several years, has been getting global recognition as a great place to work with. When you look at South by Southwest (festival) ... the (Formula) 1 race, (Austin City Limits) festival ... that certainly puts Austin on the map for not only Amazon, but other companies that may decide this is the right place for them.”

While the chamber declined to provide details of Austin’s proposal, Berman said city economic development leaders have been working with officials from throughout Travis, Williamson and Hays counties to submit “one response for all of the Austin region.”

Amazon’s HQ2 is being billed as one of the largest economic development projects in history because of its scope. Amazon said the facility will create 50,000 well-paying jobs and said the facility will be equivalent to its Seattle headquarters, which the company says has pumped $38 billion into that city’s economy. 

"We have seen some pretty high-profile examples of companies moving their headquarters, but those examples were companies largely moving their primary headquarters," said Ravi Madhavan, a University of Pittsburgh business professor who specializes in corporate strategy. "This is the creation of a new headquarters. The public process they are doing is fascinating. It forces leadership and business leaders in these cities to do self-reflection and come up with a proposal of, 'what is really great about us.'" 

Austin has been ranked among top contenders by various economists and publications because of the city’s tech talent, culture, flagship University of Texas campus, and even factors such as Amazon’s recent buyout of Austin-based Whole Foods Market. 

But analysts have also been quick to point out the region's shortfalls, such as transportation issues and concern about where HQ2 could fit here, with Amazon saying the facility could eventually comprise up to 8 million square feet. 

Amazon’s announcement created a public bidding war among North American cities, with some cities having already offered Amazon billions of dollars in incentives while others have visited Seattle to study Amazon’s culture, created committees of hundreds to work on a proposal and sent personal messages to Amazon CEO Jeff Bezos.

Texas competitors such as Dallas have expressed strong interest and have proposed various options for HQ2’s potential location. 

Meanwhile, Austin has been much quieter in its bid. While Mayor Steve Adler has said Amazon’s HQ2 could provide Austin an opportunity to address issues such as transportation, and the chamber has said it would aggressively compete for the facility, the Austin region has stopped short of mirroring the public pursuit of other cities.

American-Statesman StaffAustin Mayor Steve Adler says that if Austin “is given the opportunity” to compete for Amazon’s HQ2 project, that “we should find out if the scale of Amazon could help us achieve answers to affordability or mobility that are not otherwise available or available as quickly.”

There have been “PR stunts by some of the cities who may or may not have the criteria” Amazon wants, Berman said. “Ultimately, it will be up to Amazon to determine what's important to them.”

One other challenge facing Austin’s bid could be the question of economic incentives. Amazon said incentive packages, which are usually combined between cities and state governments, will be an important part of its decision. Austin has become less inclined to offer incentives packages in recent years, and the city is currently reviewing its incentives program. 

Austin has not been the only city debating incentives around Amazon’s HQ2. On Oct. 11, after initially saying they would pursue HQ2, San Antonio city leaders wrote a letter to Bezos, the Amazon CEO, telling him that San Antonio was no longer interested in the project. One of their main reasons dealt with incentives. 

“On one side, there is this whole excitement of potentially putting together a winning proposal,” Madhavan said. “On the other side, there is concern by people of what it will do to our tax dollars? How much money should we allow our mayor to commit? What will this do to house prices because Seattle’s home prices have risen? Those are the kinds of concerns that are being weighed.”

Texas Gov. Greg Abbott’s office said the state will provide the same incentives deal for any Texas city that submits a proposal. Abbott's office declined to provide further detail on what the state is willing to offer.

It’s unclear exactly when Amazon will announce the winner of HQ2. The company only said it would be sometime in 2018. 

While the selection process is expected to enter a more private setting now, the uncertainty surrounding the project likely will keep stakeholders engaged. 

This includes the city of Austin, which Adler has said is measuring the costs and benefits HQ2 could bring if Amazon picks the city. 

“Every city faces its own unique challenges in ways best for that city,” Adler said in a written statement to the American-Statesman. “If Austin is given the opportunity, however, we should find out if the scale of Amazon could help us achieve answers to affordability or mobility that are not otherwise available or available as quickly. 

“That would be great, but as yet we don’t have enough information to know the answer.”