Deja vu? In preparing Amazon bid, Colorado officials learn from failed effort to lure Boeing
Denver has been here before, with a Seattle-based corporate behemoth considering a move that could bring many high-paying jobs to the region. Remember Boeing Corp.? Denver came in third behind Chicago and Dallas to lure the aerospace company’s headquarters despite offering a $15 million incentive package.
This time it’s Amazon, which announced last week it is looking for a city for a second headquarters campus. Though the online retailer is looking nationwide, a potential bid from Colorado gained buzz as The New York Times picked Denver as the leader among 52 cities in its own analysis.
“It’s like being chosen the Super Bowl winner before the season starts. You kind of put a target on your back,” joked veteran Denver developer Bill Mosher.
Still, Mosher, who has worked in commercial real estate for more than 30 years, said he believes Denver has a good shot.
“I think Denver and all the growth that’s been taking place here — and the metrics The New York Times utilized — are important. We stack up pretty well,” he said. The analysis looked at a range of factors including workforce, quality of life, transportation and government incentives.
Stung by infighting in the past, state and local economic development officials say this time they are working on a single proposal to try to land one of the largest corporate recruitment prizes the country has ever seen.
“It is really important when these types of projects come up that we speak with one voice for Colorado,” said Rich Werner, president and CEO of Upstate Colorado in Greeley, one of several groups working to land the huge project.
The Colorado Office of Economic Development and International Trade, working in coordination with the Metro Denver Economic Development Commission, will vet the various offers from interested Colorado communities and present Amazon with a unified proposal, with Gov. John Hickenlooper invovled.
The state has larger financial incentives it can put on the table now than it did when Boeing passed over the region for Chicago in 2001. Chief among those is a state tax credit for half of the payroll taxes that employers pay for each new employee hired. The state used those credits in two of its largest economic-development wins: DaVita Inc. in 2009 and Arrow Electronics in 2011.
Those job-growth incentive credits could climb into the hundreds of millions of dollars over time, depending on how many people are hired and their pay levels. The state also has $10 million in cash set aside that can be used to match incentives offered by local governments.
Up to 50,000 people
Amazon, which is outgrowing its Seattle headquarters, is accepting bids for a second campus that could employ up to 50,000 people making an average annual wage of $100,000 or more a year. The company plans to invest more than $5 billion in its new headquarters, which will host executives, managers, software and development engineers, legal staff, accountants and administrative workers.
Amazon is specific in its requirements. Any location must be within a 45-minute drive of an international airport, no more than two miles from a major highway, have access to mass transit and be located within a 30-minute drive of a population center of 1 million or more people.
That would favor a location within metro Denver.
Amazon lists as its first choice finding an existing space with 500,000 square feet and the ability to accommodate a total of 8 million square feet. If that isn’t available, it is will to consider a greenfield parcel of 100 development-ready acres.
Sean Campbell, CEO of Formativ, which is developing the new World Trade Center Denver complex in the city’s River North neighborhood, said Denver has a few sites that fit the bill.
“There’s land around the Pepsi Center, land on South Broadway where the (shuttered) Kmart is. There’s stuff I and others control in this part of town (RiNo). That’s 10 acres each,” Campbell said. “In the city of Seattle, they moved into the RiNo of Seattle. They’ve got four-story, 10-story buildings on it now and 40,000 people.”
Campbell, who helped the region attract Panasonic to open near the airport, said the state and city of Denver have a record of working with other cities to provide short lists of spaces. Denver has a shot but needs to offer Amazon the right financial incentives, he said.
Aurora, home to two Amazon warehouses and with lots of vacant land near the airport, is also making a pitch, said Wendy Mitchell, president and CEO of Aurora Economic Development Council.
“They know that we have a track record to get things done in the time frame they want, in a business friendly environment. It’s all about trust and results,” Mitchell said in a statement last week.
There were important lessons in the Boeing failure, said Tom Clark, former head of the Metro Denver EDC.
In a region that long prided itself on avoiding the in-fighting that hampers so many other areas, the City of Denver submitted a bid, and the rest of the metro region submitted one. Chicago won the day.
“That wasn’t helpful,” said Clark, of presenting competing offers.
A single, coordinated bid
The Amazon campus, while not technically a Fortune 500 headquarters, represents 100 times as many high-paying jobs and a much larger capital investment than what was at stake with Boeing. And this time, Denver is on board with providing a single offer.
“We are working very closely with our partners at the state and metro regional level to jointly submit a single coordinated, strategic, and intentional response representing the Denver MSA,” said Derek Woodbury, a spokesman for the Denver Office of Economic Development.
Although Amazon is allowing one proposal per metro area, any communities that go it on their own would lose the backing of the state, limiting what incentives they could provide.
If Amazon’s decision comes down to who can offer it the biggest package of incentives, then Colorado won’t win, Werner and Clark said.
The state office of economic development last year was able to set aside $10 million set aside in its Strategic Fund for corporate recruitment. Money awarded out of that fund, however, requires a local match, which most communities would struggle to meet.
The strongest incentive the state has in its arsenal is the Job Growth Incentive Tax Credit, which provides employers a credit against future state tax obligations equal to one half of its share of FICA taxes for each new employee added and retained for a year.
Assuming 50,000 employees at $100,000 a year, that would work out to a maximum of $191 million a year. But it could take several years to reach those kind of employment numbers and any initial award would probably be much smaller.
Colorado’s legislature also has shown an aversion to funding large incentives, unlike Texas, or more recently Wisconsin. The state legislature there met in a special session to approve up to $3 billion to lure up to 13,000 jobs from FoxConn, the Taiwanese manufacturer.
If geographic diversity is the goal, then Amazon could be better off locating in places such as Atlanta, Pittsburgh, Charlotte, N.C., or Washington, D.C., among the candidates that CNN listed as the most likely to win.
But the hurricanes that hit Houston and southern Florida could swing the decision-making in favor of communities further inland. And if Amazon’s eventual and unstated goal is to move its headquarters out of Seattle, then Clark said going with a city in the center of the country, like Denver, would make the most sense.