By Brad Segal, published in the Denver Business Journal, Sept 22, 2017
In pursuing Amazon’s HQ2, the holy grail of economic development, Denver finds itself in a most unlikely position – a favorite. The irony is most appreciated by those of us that have been involved in the evolution of this city since the 1980s. Then an economic basket case, metro Denver has since invested billions in civic improvement projects and successfully diversified our economy to become a globally relevant city. Today, the key to attracting Amazon is to continue our pattern of investing in ourselves, and avoid the temptation to shower incentives on a firm that doesn’t need them.
Here are four key points leading to Denver’s winning strategy to lure Amazon’s second headquarters and it’s 50,000 jobs:
1. Acknowledge we’re already in the top tier of logical cities. A recent New York Times analysis provided an initial screen of more than 50 eligible metros throughout the nation, and found Denver to be the Number One choice. Our fundamentals match nicely with Amazon’s needs, including quality of life, tech-savvy educated workforce, mobility options and a welcoming culture. Given our fundamentals, we can compete from a position of strength and focus more on an innovative pitch.
2. Avoid the temptation to lard incentives. Other regions that don’t share our fundamentals and particularly those with a tradition of spending lucrative incentives to attract companies (i.e. Texas, Southeast), will throw the kitchen sink at this “deal of the century”. Expect eye-popping pitches in the billions of dollars as states and regions rob their futures to subsidize Amazon. Colorado doesn’t need to do this, and our state has a track record of providing more measured incentives when compared to peers. However, we’re not beyond the occasional ridiculous subsidy (i.e. remember the $380 million gift Aurora crafted for the notorious Gaylord project now rising out of the plains near DIA?). Not only is a huge subsidy unnecessary (remember we have fundamentals), but this could actually work against us. Why, Amazon may wonder, do these communities mortgage their futures to subsidize our present?
3. Offer a standard array of property development carrots. It would be fair game to utilize Colorado’s property development incentive tool kit, particularly if Amazon chose a site for its campus that is truly blighted or requires substantial infrastructure. Tax increment financing and special districts are effective here, and offer a competitive advantage over other states. We should be mindful to not give away the store and negotiate revenue-sharing agreements so that Amazon doesn’t completely syphon future revenues from schools and other essential public services.
4. Invest in ourselves. Instead throwing needless incentives at Amazon, metro Denver should use this opportunity to invest in the infrastructure that supports our continued economic vitality. Let’s go big on affordable housing, education and transportation – the civic infrastructure that is required to absorb Amazon’s giant scale, and to ensure that everyone in our community will benefit.
The groundwork has already laid to create a “surge” in civic investment. Denver is creating a new housing plan, and affordable housing advocates are urging the city to support a housing bond that could create $150 to $300 million. This scale of investment could help stabilize existing neighborhoods in advance of Amazon’s arrival, and help preserve a diversity of housing types to support our growing jobs base.
On transportation, if the state can’t agree on a boost in funding for roads, transit and other mobility options, then the metro region should pursue it alone.
More resources for education may be more challenging and would require us all to step up on both a local and state level. Our focus should be on the full continuum of education options, from pre-school to graduate education. Let’s use the Amazon challenge to break Colorado’s grip on having one of the lowest per-pupil funding legacies in the nation.
By investing in ourselves and building upon a 30-year pattern of civic investment, we’ll demonstrate to Amazon that we’re not only preparing for the long-term economic vitality of our region, but also protecting the culture and values that are attracting them here in the first place. In addition, the upside of this strategy is we’re better off with or without Amazon. We will have invested in strengthening an opportunity infrastructure that will keep our economy robust for generations to come.