Along I-35, the roads diverged on how to charm Amazon
Strategies in Austin, Dallas underscore cities’ cultures, goals
AUSTIN — It was a tough day for Dallas.
For more than a year, the North Texas metro area had been aggressively chasing after Amazon and its $5 billion second headquarters project. It had promised the retail giant huge sums of money, offered lavish perks and asked it numerous times to make its city home to the project known as HQ2.
So when Amazon said Tuesday that it had chosen to split HQ2 and its 50,000 jobs between Long Island City in New York and Arlington, Va., Dallas moved into a state of mourning.
At a somber news conference, Dallas Mayor Mike Rawlings talked about the changes Dallas and the state needed to better compete with New York and others, while saying that his heart was “broken today” by losing out on the project.
“We competed hard, we competed well, but we did not succeed,” the mayor said. “It calls upon us, as leaders in this city, to look hard at ourselves and say, ‘Why can we not beat New York City and Washington, D.C.?’”
Three hours south in Austin, the mood was completely different.
Austin — the only other Texas city to make the list of 20 finalists for the Amazon project — took the opposite path from Dallas.
City leaders, who had offered no upfront financial incentives to Amazon — barely blinked.
There was no news conference, no comment from Mayor Steve Adler's office, and no public display of concern from area economic development leaders. The Greater Austin Chamber of Commerce issued only a brief written statement that congratulated New York and Virginia while saying it looked forward “to having more relocation and expansion announcements” soon.
Austin's reaction matched the dispassionate tone city leaders have taken since Amazon announced its competition in September 2017.
The reasons for the vast disparity in the ways the two Texas cities chased after Amazon — and in their reactions to not landing the project — are fairly obvious, said Dallas economist Michael Cox. Already a tech center
Landing Amazon's HQ2 could have turned Dallas into an established power in the technology industry.
Austin already has that status, with or without the new Amazon hub.
Austin “can already say you're a tech center. You already have that identity,” said Cox, former chief economist at the Federal Reserve Bank of Dallas who now works as an economist at SMU's Cox School of Business in Dallas.
“But people do question Dallas' identity because it's a diversified economy. This town would have really liked to have a bigger tech presence rivaling our financial and business management presence.”
Economic experts say Austin's tech scene has long benefited from a perfect storm of circumstances.
Austin has a much denser population than Dallas and other cities, along with a tech concentration downtown, a powerful tech startup scene, hipster culture, the University of Texas and Dell Technologies' headquarters just down the road in Round Rock.
Technology giants such as Google, Amazon, Facebook, Apple, Oracle and others have bought into Austin's touted quality of life and established significant outposts here.
But in Dallas, the economy is fueled differently. The metro area is home to multiple Fortune 500 companies such as Exxon Mobil and AT&T, which have grown the area's business but also tilted it more toward a big corporate image.
Its more sprawling population and competing industries have made the city grow up in a much different way than Austin.
HQ2 was not only a way to bolster the economy, Cox said, but to also align Dallas with a high-tech image that he said city and business leaders there understand is the “future … with companies like Amazon. It's tomorrow's economy.” ‘You go after it’
Dallas leaders exemplified that thinking throughout the past year.
The city revealed Tuesday that it had offered Amazon up to $12,000 per job, or $600 million in financial incentives. In pitch documents, the city also told the retailer it would give its employees 2,000 nights of free downtown hotel service, free one-year memberships to the Dallas Zoo, and other parks and free microchip services for pets if it built HQ2 there.
The incentives were an example of how Dallas had approached the project all along, which included shooting promotional videos to attract Amazon, telling the retailer it would have built an Amazon University to train its workers and having one of its main real estate developers in town create and send a children's book to Amazon that promoted the area's young and diverse population.
There was confidence in Dallas that the city would land HQ2, according to University of Texas economics professor Julia Coronado.
Along with being a much bigger metro area than Austin, Dallas has a huge international airport, a deep talent pool, business resources and other factors were seen as strong points in the area's bid. Dallas was reported to have been in late-stage talks with Amazon before the company made its final decision.
“Dallas has shown a commitment to being a center to headquarters, and they have the infrastructure to do that,” Coronado said. “With Amazon, you have to remember that we're not just talking about tech. It's one of the largest consumer corporations.”
Said Cox, the SMU economist: “A lot of people here thought we were going to get it. When you feel like you have a chance, you go after it.” ‘Dodged a huge bullet’ When it came to HQ2 in Austin, city leaders like Adler throughout the past year have spoken more about protecting Austin's culture against the massive corporate wave HQ2 was expected to bring than in chasing after the project, as well as trying to safeguard the city against some of HQ2's expected downsides, such as higher housing costs and added traffic congestion.
Even though Austin had been seen by experts as a favorite to land the project because of the area's tech talent, livability, culture and other reasons, little effort was put forth by city leaders for the project. There was no promotional videos or talk about financial incentives promised.
In fact, after the Greater Austin Chamber of Commerce submitted the metro area's bid for HQ2, Adler's office released a letter saying that the city had not included any local financial incentives in the package because the city follows a strict policy that calls for financial incentives to be first approved by the Austin City Council.
To this day, Austin's bid remains a secret. The chamber, which handled the proposal, told the American-Statesman it does not intend to release any details, citing proprietary information.
Some city leaders maintain that Austin's approach proved to be one fitting of a city that already has a tech identity and didn't need a huge boost from Amazon.
After the retailer said Tuesday that it would be receiving more than $2 billion in financial incentives combined from the two sites it selected — depending on how many jobs it creates — some breathed a sigh of relief.
Austin City Council member Leslie Pool, who had been critical of Austin's pursuit of HQ2, said with the type of incentive money the winning cities and Dallas were willing to put up, it's likely Austin could never have matched those offers — even had it wanted to do so.
“I'm really glad Austin wasn't chosen, and I expect we weren't really in it,” Pool said. “I think we dodged a huge bullet; $600 million is a heck of a lot of money.”