WHAT THE HQ2 BATTLE REVEALED ABOUT PITTSBURGH
It showed off our region as an exciting place to do business, but it also put our weaknesses on display, writes former Allegheny County chief executive JIM RODDEY
The long wait for Amazon’s selection of a site for a second headquarters is over, and we now know that it won’t be coming to Pittsburgh. We did make the first cut of 20 cities selected from among more than 200, however, and likely made the short list of a half dozen or so.
We also now know that, at some point during the process, Amazon decided to build two HQ2s expected to employ 25,000 people each, as opposed to building one with 50,000 employees as originally conceived. The change from one to two locations was certainly a good business decision. Putting 50,000 people in one location, particularly a city the size of Pittsburgh, raised so many legitimate concerns — such as its effects on housing prices and transportation — that the cost/ benefit ratio was significantly reduced.
Even though Pittsburgh was not chosen, the competition did improve our reputation as a good place for companies to locate, relocate or, as in the case of Amazon, expand. Another valuable benefit of the HQ2 process was what we learned about our strengths and weaknesses and how to better market our region. Kudos to the many people who contributed to the preparation of Pittsburgh’s proposal, including government officials at the state and local levels and those who work for local organizations.
Now, let’s consider what the Amazon competition revealed about Pittsburgh — characteristics that might usefully be categorized as the good, the bad and the ugly:
The good
1. Location: ready access to East Coast and Midwest markets;
2. High-tech universities and companies;
3. Available sites;
4. Good health care;
5. Cultural amenities;
6. Low cost of living;
7. Low crime rate;
8. Affordable housing; 9. Recreational opportunities;
10. Excellent secondary education.
The bad
1. Workforce availability;
2. Public transit — no rail service to the airport;
3. Low in-migration;
4. Little population diversity;
5. Too few direct flights from the airport;
6. Unfavorable state business-tax structure;
7. Mediocre Pittsburgh public schools;
8. Local government cooperation. Ask local developers or Whole Foods, a division of Amazon, about the difficulty of dealing with the city buildingpermit system.
The ugly
1. Government incentives. It is no wonder that local and state government officials did not want to reveal
how much they were offering Amazon in tax reductions and other subsidies. We now know that the total amount over time could have been $9.6 billion, according to one estimate.
First, consider that Amazon has almost unlimited financial resources. Its balance sheet is certainly superior to that of our state and local governments.
Second, consider that getting Amazon’s HQ2 is not worth $9.6 billion regardless of the “spin” voiced by those trying to justify such an obscene amount.
One other thing we now know is that incentives were not high on Amazon’s list of priorities. The company got far less in subsidies from the sweepstakes winners, New York and Virginia.
In conclusion
Let’s work to preserve our positives, improve our negatives and rethink our policies regarding incentives and subsidies.
Let’s take pride in being a finalist for a large and important economic-development prize and commit to being better prepared for future opportunities.