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STM317
STM317 Dork
1/26/18 8:28 a.m.

Thanks for the info guys!

It seems like somebody at the NYT read my post about Indianapolis and decided to copy it. 

Im sure there are similar articles being written about other finalist cities. If you come across any good ones, please feel free to post some links. I'd find them to be interesting reading.

John Welsh
John Welsh Mod Squad
1/26/18 9:41 a.m.

Here is a side step.  Not an article about the winner (or potential winner) but an article about a looser.  

https://www.clevescene.com/scene-and-heard/archives/2018/01/22/the-secret-amazon-bid-dramatizes-a-huge-cultural-problem-in-cleveland-the-media-can-do-something-about-it

I caught the TV new from Cleveland the other night.  There was much chatter about, "okay Cleveland Leaders, we lost the bid and did not make the cut, now show us what you offered...lets see the bid."   This is being met with a huge amount of resistance from leadership.  

Indy-Barely Functional-Guy
Indy-Barely Functional-Guy SuperDork
2/10/18 5:20 p.m.

Are they any closer to a decision yet?

STM317
STM317 Dork
2/11/18 9:57 a.m.

In reply to Indy-Barely Functional-Guy :

There's no doubt that they're getting closer, but I don't think we'll hear anything else until the final location is announced. 

This is from Amazon's announcement of the 20 finalists: "In the coming months, Amazon will work with each of the candidate locations to dive deeper into their proposals, request additional information as necessary, and evaluate the feasibility of a future partnership that can accommodate our hiring plans as well as benefit our employees and the local community. We expect to make a decision in 2018."

dean1484
dean1484 GRM+ Memberand MegaDork
2/12/18 7:27 a.m.

I am really hoping that BOSTON does not end up with this. The city is just not ready for something like this. I also think that there is a good balance with in the city that has taken years to achieve. Having Amazon will push many smaller buisness to the curb. I heard a quick sound bite from the mayor and it basically said that it would be a special deal with Amazon. To me that is code for lining many many peoples pockets with sweetheart deals. As a small buisness owner I moved my company out of Boston because everything about being in the city was more expensive and way less convenient.  It would be nice if instead of offering this deal to Amazon the city should offer help to existing buisnesses. Making what you have better instead of just piling more crap on is usually better for the long term.  

STM317
STM317 Dork
2/12/18 8:42 a.m.

In reply to dean1484 :

I understand the trepidation that a lot of people have. HQ2 would mean Amazon dominates whatever city that it lands in. Like almost anything, there are positives and negatives to HQ2 landing in your city. 50,000 more people is a ton of added strain on infrastructure, but it's also a ton more people with high wages paying taxes and spending money at local businesses.

It wouldn't surprise me at all to see HQ2 land in a major east coast city (Boston, NYC, Philly, DC) because of the many benefits that those cities offer. But those places also have drawbacks like high cost of living, lots of competition for qualified workers, etc so I don't think it's the slam dunk that many people do. Statistically, DC has the best shot since 3 of the finalists are in the area, Bezos owns a home there, as well as the WaPo. It would also let Amazon be very close to the government movers and shakers that oversee things like mergers, corporate taxes, etc. Toronto seems like a strong contender to me. Flyover country has compelling options too though, and they typically excel in the areas that the big cities struggle with. Amazon's final selection will show where their priorities truly lie.

Ian F
Ian F MegaDork
2/12/18 10:03 a.m.

Thinking about it... New Jersey has some good potential.  For one, there is the old Merck HQ building in Whitehouse Station that I understand is still essentially vacant and ready to move in.  Not the newest building in the world, but it was state of the art when built in 1990 and Merck constantly upgraded it.  Original construction costs were staggering.  

It's an interesting site and building.

Part of what Amazon is looking for is a place where their employees will want to live and where there is already a pool of employees to draw from.  This tends to lean towards existing major tech hubs.  While 50K jobs sounds great, the number also doesn't represent a huge percentage in an region of millions.  I would not expect some windfall economic impact should they chose your city.

The0retical
The0retical UltraDork
2/12/18 10:28 a.m.

In reply to Ian F :

That's where I ended up. Time for napkin math!

50k jobs @ $100,000 a year (what Amazon claims will be average) = $5 billion in salary a year.

Multiply that by .037 (PA tax rate) gives you 185 million dollars a year.

Figure 6k in property and school taxes if you're in the outlying areas of Philadelphia (figuring optimistically that all 50k of them will buy a home) nets you another $300 million.

Figure another 1% for your EIT (if your county does that) and you gain another 50 Million.

 

So from salary you're looking at: $535 million per year in tax revenue very very optimistically spread over the state and municipalities.

Sounds like a big number no? Well PA's current budget shortfall is $3 Billion by June 30th 2018. So you're looking at roughly 6 years for Amazon to even out the current shortfall assuming a few things:

  1. These jobs are created out of vacuum employing previously unemployed or relocating out of state workers.
  2. Every single one of them buys a home, again out of a vacuum.
  3. No one uses deductions to shelter money.
  4. They use zero infrastructure.

Sure there's sales tax, gas tax, service taxes, and money in general being spent plus there's some work done by contractors who will retrofit or build the facility but the payoff is still dubious at best. I don't know the exact details of all the offers submitted from PA.

OTOH New Jersey was offering seven billion dollars in tax breaks over 10 years. I'd bet it is unlikely the break can be covered by the new salaries and worker spending even with their higher tax rates. Also why should the workers salaries be the mechanism to recoup the tax break? Amazon has the cash to do business wherever it would like simply using the deductions it can already take and I'm fairly sure they'll just up and move when the benefit expires. That's some banana republic E36 M3.

On topic: I don't think DC is a good bet. There's already a ton of competition in that area for the type of skilled labor they'd like. Plus the cost of living is pretty high. Pittsburgh is also unlikely as the city is a huge mess and I don't think the infrastructure will support it.

I'd bet on Atlanta or Raleigh as they both have a good sized tech sector.

mtn
mtn MegaDork
2/12/18 10:53 a.m.
STM317 said:

In reply to dean1484 :

I understand the trepidation that a lot of people have. HQ2 would mean Amazon dominates whatever city that it lands in. Like almost anything, there are positives and negatives to HQ2 landing in your city. 50,000 more people is a ton of added strain on infrastructure, but it's also a ton more people with high wages paying taxes and spending money at local businesses.

 

I don't think so--not for many cities. Sure, your smaller/more rural areas, but for a Chicago or a Boston? Probably not. First of all, they're not moving 50k employees. They're creating 50k (give or take) jobs. Sure, there will be a lot of people that move to the area for the jobs, but for most of the locations there will also be a lot of people already there that take some of the jobs. 

Secondly, for a city like Chicago, 50k more people (even though it won't be 50k) will be a drop in the bucket. Even Indianapolis has been increasing at about 8k people per year. While it may be a significant factor and mover in whatever city it ends up in, unless it is a John Deere in Moline IL, or State Farm in Bloomington IL, or similar, there is always another game. Even in Detroit (city proper), the top 5 employers are 2 healthcare systems, the city, Quicken Loans, and the public school system. Chrysler is 8.

STM317
STM317 Dork
2/12/18 11:01 a.m.
The0retical said:

So from salary you're looking at: $535 million per year in tax revenue very very optimistically spread over the state and municipalities.

Sounds like a big number no? Well PA's current budget shortfall is $3 Billion by June 30th 2018. So you're looking at roughly 6 years for Amazon to even out the current shortfall assuming a few things:

  1. These jobs are created out of vacuum employing previously unemployed or relocating out of state workers.
  2. Every single one of them buys a home, again out of a vacuum.
  3. No one uses deductions to shelter money.
  4. They use zero infrastructure.

Sure there's sales tax, gas tax, service taxes, and money in general being spent plus there's some work done by contractors who will retrofit or build the facility but the payoff is still dubious at best. I don't know the exact details of all the offers submitted from PA.

I hadn't really considered the fiscal health of the state/region/area/province as a factor, but it's an interesting thing to consider. I believe Indiana has been operating with a budget surplus for several years and has something like 2billion in reserves. No idea how other finalists might differ from that but I do wonder how that might affect things, if at all. I suppose it could be an indicator of a stable and pro-business environment that Amazon says they're after. And it probably represents less risk to a business vs locating someplace like Chicago with Illinois' tax issues that might hinder the state moving forward.

aircooled
aircooled MegaDork
2/12/18 11:02 a.m.
STM317 said:

.....Amazon's final selection will show where their priorities truly lie.

This is not exactly hard to figure out.  Amazon in a public company, and as a public company has an obligation to create value for it's stockholders.  Thus, what they figure will make them the most money (in this case, it's more what allows them to spend the least since this is unlikely to be a profit center) is what they will do. 

Robbie
Robbie GRM+ Memberand PowerDork
2/12/18 11:08 a.m.

In reply to The0retical :

Nice! You're a little more optimistic than my post on pg 2, but we both are in the same ballpark.

STM317
STM317 Dork
2/12/18 12:15 p.m.
mtn said:
STM317 said:

In reply to dean1484 :

I understand the trepidation that a lot of people have. HQ2 would mean Amazon dominates whatever city that it lands in. Like almost anything, there are positives and negatives to HQ2 landing in your city. 50,000 more people is a ton of added strain on infrastructure, but it's also a ton more people with high wages paying taxes and spending money at local businesses.

 

I don't think so--not for many cities. Sure, your smaller/more rural areas, but for a Chicago or a Boston? Probably not. First of all, they're not moving 50k employees. They're creating 50k (give or take) jobs. Sure, there will be a lot of people that move to the area for the jobs, but for most of the locations there will also be a lot of people already there that take some of the jobs. 

Secondly, for a city like Chicago, 50k more people (even though it won't be 50k) will be a drop in the bucket. Even Indianapolis has been increasing at about 8k people per year. While it may be a significant factor and mover in whatever city it ends up in, unless it is a John Deere in Moline IL, or State Farm in Bloomington IL, or similar, there is always another game. Even in Detroit (city proper), the top 5 employers are 2 healthcare systems, the city, Quicken Loans, and the public school system. Chrysler is 8.

Valid points. Like I said, bigger cities have several advantages, but one of the biggest disadvantages is competition for talented workers. Being a big fish in a small pond vs just another big fish I guess. If they want to be able to shape a growing area, rather than joining a more mature/established area then one of the smaller finalists might be the way to go. For what it's worth, 50k employees would make them the largest employer in Illinois, by about 30,000 people. It would also make them the largest employer in MA, by about 33,000 people. Pennsylvania has similar numbers, although there are several employers with over 20k, so it might be the most difficult in Pitt or Philly. Either way, they'll have a ton of impact on policy wherever they land.

50k employees would make it the largest employer in Indiana too. By about 35,000. And to have all of those jobs averaging very good money (for our podunk little city) is potentially a really big boost. I understand that many of those 50,000 jobs may come via poaching talent form other companies. But if that occurs, that leaves the poached job available for somebody else right? It still seems like a potential net gain to me.

The0retical
The0retical UltraDork
2/12/18 12:20 p.m.
Robbie said:

In reply to The0retical :

Nice! You're a little more optimistic than my post on pg 2, but we both are in the same ballpark.

I think I was having a bad day when I wrote that...

I'm not a huge fan of incentives for mega corps since I work in a small business and my livelihood is supplying small businesses with a toolset to run their business more efficiently in order to compete with much larger businesses (something I like to think we do well.) Regulatory environments I'm more ok with as long as the rules are applied evenly across the board which is why I mentioned deductions and generalized incentives.

Special deals poison the well. I'd be happy for Amazon to locate here in the Lehigh Valley, and they have with numerous logistics hubs, but I don't want it done at the expense of the community as a whole, at least not without a "beyond a reasonable doubt" amortization schedule.

mtn
mtn MegaDork
2/12/18 12:31 p.m.
STM317 said:
mtn said:
STM317 said:

In reply to dean1484 :

I understand the trepidation that a lot of people have. HQ2 would mean Amazon dominates whatever city that it lands in. Like almost anything, there are positives and negatives to HQ2 landing in your city. 50,000 more people is a ton of added strain on infrastructure, but it's also a ton more people with high wages paying taxes and spending money at local businesses.

 

I don't think so--not for many cities. Sure, your smaller/more rural areas, but for a Chicago or a Boston? Probably not. First of all, they're not moving 50k employees. They're creating 50k (give or take) jobs. Sure, there will be a lot of people that move to the area for the jobs, but for most of the locations there will also be a lot of people already there that take some of the jobs. 

Secondly, for a city like Chicago, 50k more people (even though it won't be 50k) will be a drop in the bucket. Even Indianapolis has been increasing at about 8k people per year. While it may be a significant factor and mover in whatever city it ends up in, unless it is a John Deere in Moline IL, or State Farm in Bloomington IL, or similar, there is always another game. Even in Detroit (city proper), the top 5 employers are 2 healthcare systems, the city, Quicken Loans, and the public school system. Chrysler is 8.

Valid points. Like I said, bigger cities have several advantages, but one of the biggest disadvantages is competition for talented workers. Being a big fish in a small pond vs just another big fish I guess. If they want to be able to shape a growing area, rather than joining a more mature/established area then one of the smaller finalists might be the way to go. For what it's worth, 50k employees would make them the largest employer in Illinois, by about 30,000 people. It would also make them the largest employer in MA, by about 33,000 people. So it would be a game changer for Chicago or Boston.

50k employees would make it the largest employer in Indiana too. By about 35,000. And to have all of those jobs averaging very good money (for our podunk little city) is potentially a really big boost. I understand that many of those 50,000 jobs may come via poaching talent form other companies. But if that occurs, that leaves the poached job available for somebody else right? It still seems like a potential net gain to me.

It will almost certainly be a net gain, but not as big as everyone is thinking. 


I'm also skeptical of those numbers linked. For instance, State Farm I know has about 15k employees in Bloomington normal, and that doesn't even include the temps/support jobs with other companies. 

STM317
STM317 Dork
2/12/18 1:16 p.m.

In reply to mtn :

It shows 3 different State Farm entities in Bloomington. One with 13,000 employees, and 2 with 10,000 each. I'm not sure if there's overlap there, or if there are really 33,000 State Farm employees.

They did a similar breakdown with Allstate. Allstate Insurance Co has 13,000 and Allstate Corp has 12,000.

So,if they're all separate employees, I screwed up when I posted and Amazon would only be the largest employer in the state by 17,000.

PS- that's a lot of insurance

mtn
mtn MegaDork
2/12/18 1:32 p.m.
STM317 said:

In reply to mtn :

It shows 3 different State Farm entities in Bloomington. One with 13,000 employees, and 2 with 10,000 each. I'm not sure if there's overlap there, or if there are really 33,000 State Farm employees.

They did a similar breakdown with Allstate. Allstate Insurance Co has 13,000 and Allstate Corp has 12,000.

So,if they're all separate employees, I screwed up when I posted and Amazon would only be the largest employer in the state by 17,000.

PS- that's a lot of insurance

Yeah, I think there is something off in the analysis in general. Besides, CPS (Chicago Public Schools) has over 30k employees--don't see them on that list. 

Your point stands--it will be a giant influence, but it won't be able to move things on its own. 

 

EDIT: interesting looking at that list though. My dad has worked for one of the companies on that list, I have two cousins that work at 2 more, I used to work at State Farm, my wife works at one, MIL at another...

Robbie
Robbie GRM+ Memberand PowerDork
2/12/18 1:40 p.m.

As well as being subdivided by probably each legal filing entity (notice University of Chicago x2 in the top few), the list is also probably only companies that file their home HQ in Il. For example, UPS has 350k employees in US, and some VERY large IL operations, but it doesn't show up on casual glance at that list. UPS is HQ'd in Atlanta it would seem.

IL and MA are probably bad places from a tax perspective to place your company HQ.

dculberson
dculberson UltimaDork
2/12/18 1:51 p.m.

In reply to The0retical :

Well, I wouldn't look at the effect of the tax revenue on the entire state - I would look at it on a locality basis. For the city I'm in, Columbus, it would be a big deal. It's not going to be transformative, but at $5bn in incomes it's $125mm in tax revenue (2.5% income tax in Columbus). The current budget of Columbus is $891mm, so a 14% increase. That's a big jump. If the jobs are in Columbus proper then the taxes are paid to Columbus. There's not a city in the world that wouldn't fight hard for a 14% increase in revenue, that's for sure!

Nationwide is a big player here, and they employ about 30,000 people. They aren't the biggest employer but they have a ton of pull with the town. They recently built a small corporate campus for about 3500 people in a close-in suburb (as in 2 minutes from downtown) and literally doubled the tax revenue for that town. It's amazing to see what they will do for something like that! It makes sense, but it also loses some of the character of the town.

I think OSU is the largest employer in Columbus, with about 50k university employees and 10k medical employees. Their pull in this town is massive, but the city is big enough to not be a "college town." I imagine Amazon feeling like OSU in scale if they were to locate here. A massive part of the city but still not the "center" of it.

It's an interesting thought experiment at least. I doubt they'll locate here, but if they did I bet it would be bad for the lower income folks due to housing costs and good for the higher income folks due to, well, housing costs, along with job growth. I'm sure it would carry some benefits for lower income people but when small houses and apartments are already getting hard to afford it's very hard when they get more expensive. We have a fair amount of affordable housing in the city but it's not got great schools and it's subject to high demand given the city's continued growth. The area is already growing by something like 23,000 people a year, and a new major employer would only accelerate that.

The0retical
The0retical UltraDork
2/12/18 2:34 p.m.

In reply to dculberson :

I'd say it can be argued both ways. I used a statewide example because I knew what Chris Christie offered for HQ2 to end up in New Jersey so I'm assuming PA municipalities put up something similar. We're also dealing with a Cleveland type situation here where the county won't divulge what was offered. This seems to have irritated pretty much everyone I talk to.

I doubt Northampton, Berks or Monroe county would throw the potential for 50MM (we're 1% income tax to the muni) + property tax revenues out of bed as it would greatly bolster their revenues.

I know it's not "real money" as no one is going to hand Amazon a comically sized check for the tax revenue, but, there is still extra strain on infrastructure and government services which is funded by taxpayer money and will be utilized. Maybe it just rubs me the wrong way because Amazon can afford to locate wherever they want without incentives. This whole playing everyone against each other thing is a race to the bottom and smacks of corporate self interest. I'd say the same about basically any company getting a sweetheart deal not available to anyone else.

dculberson
dculberson UltimaDork
2/12/18 2:36 p.m.

In reply to The0retical :

I agree with you there!!

Don49
Don49 HalfDork
2/12/18 4:06 p.m.

Interesting about the Merck site. I had a shop adjacent to that property in the 80's. The reason for the underground parking was the runoff that would have been created with unsheltered paving. The area is/was primarily residential and farmland. It is also close to RT 78 amd RT 22.

xflowgolf
xflowgolf Dork
2/16/18 2:17 p.m.

Not sure this has any merit, but this "expert" believes it's down to D.C. or New York City, with a dark horse being Miami.  

http://www.foxbusiness.com/markets/2018/02/16/amazons-hq2-location-will-be-in-one-these-two-cities.html

Sound points though.  Bezos has homes in New York and D.C. already.  Regulatory action and impact is going to be a part of their corporate existence.  Young talent wants to live there (don't care about housing costs).  

The0retical
The0retical UltraDork
2/16/18 3:21 p.m.

In reply to xflowgolf :

I guess it depends on what everyone is offering. All things being equal Mr. Bezos can afford a house wherever he wants so I doubt that will play into the decision. The problem is the level of competition in those areas and cost of living. 100k in LA, NYC, and DC doesn't go nearly as far as it does in places like Atlanta, Raleigh, Columbus, or Newark. The latter cities are seriously nice places to live with many of the amenities of their larger counter parts and better infrastructure in addition to the lower cost of living  (maybe not Newark. Sorry NJ people I can't stand driving through there much less living there.)

Yea young people want to live in the big 3 but you're also going to have immense turn over as there is huge competition for skilled workers and they find out that that $100k is like $50k elsewhere. That's not good for business either as many of these positions are likely to be core areas rather than mail clerk or web developer so retention is pretty important.

It's pretty obvious I'm out of my 20's now isn't it? I'm also probably not one to talk as my employer owns 26 acres on top of a hill overlooking the valley. So my version of quality of life is that I have awesome back roads with no traffic to drive to work every day rather than having my soul crushed by an office park while battling 2 million other shiny happy people also commuting to work on a congested highway.

bmw88rider
bmw88rider GRM+ Memberand SuperDork
2/17/18 7:08 a.m.

NYC and DC really don't help them answer the question of affordable housing for their workers. The cost of living in Seattle is the whole reason I'm not working for AWS right now. It would have been a 20-30K realistic pay cut to move there from Austin. 100K in either NYC or DC only gets you a long commute. 

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