Calgarians willing to spend money to nab Amazon’s HQ2
After enduring a punishing recession that led to thousands of layoffs, most Calgarians are willing to see the city spend some money to try to make some more — and create new jobs.
In a new Mainstreet Research poll for Postmedia, 62 per cent of Calgarians favour the city using tax dollars to pursue the second corporate headquarters of online retailing behemoth Amazon, and they have some support from the front-runners pursuing the mayor’s chair.
The e-commerce giant made headlines last month declaring it’s looking to spend $5 billion and create up to 50,000 jobs for its new “HQ2.”
Amazon wants interested cities to send in their bids by Oct. 19.
The announcement has sparked intense activity across the United States and Canada from hopeful cities — including Calgary, Edmonton, Toronto and Vancouver — that are preparing applications.
Aside from meeting a series of technical criteria, Amazon wants prospective communities to detail what kind of incentives and tax breaks they are prepared to provide.
Most Calgarians favour spending money on the bid, while 22 per cent prefer the city focus on companies that employ the existing labour force. The remainder were unsure, according to the automated phone poll of 1,000 Calgarians, conducted Sept. 28.
The poll has a margin of error of plus or minus 3.1 percentage points, 19 times out of 20.
In the past month, the province has set up its own advisory panel to consider the Amazon bid process and the tricky matter of offering sweeteners to help Edmonton or Calgary with their applications.
The issue has also crept into the civic election race, with the top three contenders for mayor — Andre Chabot, Naheed Nenshi and Bill Smith — prepared to consider some kinds of enticements.
Just how much they’re prepared to offer, and in what form, remains up for debate.
Calgary lawyer Bill Smith said if he wins the Oct. 16 election, which comes just three days before the bidding deadline arrives, he’d consider supporting the city offering incentives to nab Amazon.
But Smith wants to see a costbenefit analysis first that shows subsidies make sense.
“I would be interested in it, to the extent that I could understand what our rate of return would be on the investment,” he said in an interview.
“I’ve heard there’s been other cities around North America — mainly in the U.S. — where they find they offer these investments to get these big companies to relocate there and at the end of the day, it doesn’t make sense ....
“I’m not averse to it, but I’d sure have to know what the details are.”
Incentives are commonly provided in the U.S. to attract businesses to set up shop. For example, Wisconsin agreed to provide a lucrative US$3-billion incentive package to Foxconn this year to attract up to 13,000 positions.
Nenshi, the incumbent who is also on Calgary Economic Development’s executive advisory committee that’s helping with the local Amazon bid, said he was initially skeptical the retailing company was holding a “beauty contest” to extract concessions from the city it already wanted to choose.
But after studying the process, Nenshi believes this is an opportunity for Calgary to “fish for the big fish, and this is the biggest whale there is” in the economic development game.
“We’re not going to give everything away. In fact, the ability of the city to provide incentives is very limited, unlike in the U.S. where the cities have a lot of taxing abilities and authorities,” he told the Calgary Herald and Calgary Sun editorial board last week.
“All we basically can do is give them a deal on land, which we do often for different kinds of companies. We can do that.”
Nenshi noted both the federal and provincial governments have more ability to provide enticements.
Last year, Alberta agreed to provide $500 million in royalty tax credits to two new petrochemical facilities, while the federal government has given subsidies to Montreal-based Bombardier.
Ottawa must ensure the Amazon package it provides is equitable to all cities, he added.
Chabot, outgoing councillor for Ward 10, agreed Canadian cities have limited ability to provide subsidies to private companies, usually to help offset the municipal portion of property taxes.
Calgary could ease the approval process for the company to make it less time consuming and perhaps less costly to navigate city hall, he said.
Amazon has indicated it will initially be looking for at least 500,000 square feet of office space for its new headquarters, but that could grow to eight million square feet after 2027.
If Amazon is looking to construct new buildings as part of a corporate campus, council could offer some kind of tax increment financing measure to offset civic taxes, he said.
But if the company simply occupied existing office space, that wouldn’t necessarily boost municipal revenues, and Chabot isn’t prepared to write off property taxes to win HQ2.
“I couldn’t, there’s no way we could go that far. You start thinking about that. That would be a slap in the face of every other Calgarian in the city and every small business that is struggling right now, to forgo any property tax from that organization,” he said.
“If they added tax revenue to the city by building a new building, then that’s a completely different conversation.”