Philly came closer to being selected for Amazon’s ‘HQ2’ than previously known, new book reveals
Philadelphia’s fortunes suffered from Amazon’s shifting outlook at home ... and possibly an executive’s fandom for the Eagles’ football rivals in New York.
Did the Eagles’ rivalry with the New York Giants help sink Philadelphia’s chance of being chosen as home to Amazon.com’s massive “HQ2″ office expansion?
Along with Amazon’s shifting outlook back home in Seattle, it may have played a role, according to a new book by journalist Brad Stone, who reveals that Philadelphia had been one of three top-tier picks for the retail and technology giant’s $5 billion project after a yearlong search.
When Philadelphia was given to senior Amazon officials as one of the search team’s top recommendations, one executive quipped that he and his employees would never want to live in Philadelphia, enemy of his favorite team, the Giants, Stone writes in his book, Amazon Unbound.
That executive was Andy Jassy, leader of Amazon Web Services, who is slated to become the company’s chief executive after founder Jeff Bezos steps aside later this year. Philadelphia is paying the division, one of Amazon’s biggest moneymakers, more than $500,000 this fiscal year to host property data and provide other online services, a city spokesperson said.
At the June 2018 meeting where Philadelphia was recommended for the office complex — alongside Chicago and Raleigh, N.C. — Jassy “opined that he disliked the city, which was the bitter rival of his favorite football team, the New York Giants,” Stone writes in his book about Amazon and Bezos, citing the recollections of an unidentified participant.
Although Jassy seemed to be joking, the remarks marked a turning point, where an earnestly conducted, data-driven vetting process gave way to what search team members saw as “the arbitrary personal preferences of senior executives.”
“We genuinely thought we were working on the most important economic development project in a generation and were going to change the lives of hundreds of thousands of people,” one of them said in the book, which was published last week.
An Amazon spokesperson had no immediate comment about the material in Stone’s book related to Philadelphia’s bid.
When Amazon first invited cities to pitch themselves for the project in September 2017, it said it could eventually put eight million square feet of offices at the site — an amount of space equal to almost 4½ times that within Comcast’s new technology tower — employing up to 50,000 people.
Philadelphia’s civic and business leaders aggressively courted the company. Over the course of its bid, Philadelphia spent $460,000 — $60,000 of which came from nongovernmental sources — on events, consulting contracts, and other efforts aimed at seizing the project.
But the city’s hopes were dashed in November 2018, when the project was instead handed to Arlington County, Va., near Washington, and New York’s Long Island City neighborhood in Queens. The company later abandoned plans at the New York location after encountering political opposition led by an emerging political power, Rep. Alexandria Ocasio-Cortez (D., N.Y.).
Kevin Lessard, a Philadelphia government spokesperson, said officials were not aware of the revelations in Stone’s book about Philadelphia, “but we are incredibly proud of our bid.”
Since the city’s efforts to attract the headquarters concluded, Amazon has increased its number of warehouses in the city, including four new recently announced delivery stations that “will bring additional jobs, revenue, and growth to our communities, which is welcome news,” he said.
Anne Bovaird Nevins, president of Philadelphia Industrial Development Corp., which oversaw the city’s bid for the project, said she was encouraged to learn the city had come so close to being selected.
“I think it’s a real positive for Philadelphia in terms of the way we were able to present the strengths of our city and our market while not shying away from the challenges that we have,” she said.
Philadelphia’s HQ2 proposal centered on sites in University City and the South Philadelphia Navy Yard. It touted the availability of open, developable space in those locations embedded in an otherwise dense urban center.
The bid was one of 238 responses that Amazon fielded in the weeks after it issued its first invitation for cities to submit proposals.
Faced with a mountain of data from those applications, Amazon’s search team developed objective criteria to judge potential sites, logging factors such as population figures, numbers of science-and-technology graduates, and employment rates on spreadsheets, Stone writes.
Bezos was also keen to maximize the amount of tax breaks and other incentives he could extract, after seeing companies such as Boeing, Tesla, and Foxconn win big subsidies for new facilities from state and local governments, Stone writes. Philadelphia’s proposal would have involved more than $5.5 billion in city and state tax breaks and other incentives, officials disclosed after learning that the city had not been selected.
After Amazon’s search team culled its collection of 238 responses down to 20 finalists, including Philadelphia and Pittsburgh, in January 2018, members began visiting each of those locations, meeting with officials and business leaders and touring potential sites.
In June of that year, according to Stone, the search team prepared a six-page paper ranking the finalists into three groups: “not viable,” “hotly debated,” and “top tier.”
Pittsburgh was in the “not viable” group, as it was “still recovering from economic hardships,” the team noted, Stone writes.
The “top-tier” list included Northern Virginia, New York, and Dallas, as well as Philadelphia, Chicago, and Raleigh. But search team leaders recommended that the company focus its efforts on the latter three cities so it could begin talking to elected officials and locking down real estate, Stone writes.
The three cities “do not have the largest concentration of existing tech talent but we believe they have the foundation for talent growth across our many businesses,” the team wrote in its report, according to Stone.
But when the paper was presented to Bezos, Jassy, and other senior company leaders, the recommendation to focus on the three cities was discarded.
Instead, the senior executives compiled their own list of final targets. It consisted of Dallas, Los Angeles, New York City, Northern Virginia, and Nashville.
Stone partly attributes that change in focus to increasing political hostility toward Amazon back home in Seattle, which had led the company to slow its growth there.
“The priorities in the HQ2 search had changed,” he writes. “The hunt for the most robust incentives package had been replaced by an interest in the largest cities, the best opportunities for recruitment, and the friendliest political environment.”
And executives believed that Philadelphia was “not a hotbed of engineering talent.”