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The race for HQ2: Dallas-Fort Worth join together for initial bid

🕐 15 min read

“Alexa, where should Amazon locate HQ2?”

The answer is obvious, say North Texas economic development types – right here is perfect, we’ve got land, lots of land and starry skies above. Along with a discount coupon in the form of economic incentives.

But the answer isn’t as simple as say, ordering from Amazon. North Texas is battling for this $5 billion economic prize with cities and towns from New York to Toronto and all sizes and shapes of contenders in-between. And that’s even before the infighting among sites in North Texas has begun.

Retail powerhouse Amazon, bursting out of its Seattle headquarters, announced in September its search for a second home.

Must haves: A prime location, available transit, with plenty of space to grow, as in land, lots of land.

The company said it will spend more than $5 billion to build another headquarters in North America to house as many as 50,000 employees with average pay of more than $100,000 annually.

It plans to also stay in its sprawling Seattle headquarters, with the new space “a full equal” to that, said founder and CEO Jeff Bezos.

Amazon’s announcement set off a frenzy of economic development activity among communities and highlights how fast the e-commerce giant is expanding as it sends the retail world ass-over-teakettle.

Dallas, Fort Worth, Arlington, Frisco, Grapevine and Richardson are among the North Texas cities that are pitching sites, some very publically (see Frisco goes viral for HQ2 below) and others shrouded in secrecy.

Private developers such as Fort Worth-based Hillwood Properties have holdings attached to several proposed sites.

The Dallas Regional Chamber of Commerce is coordinating the North Texas submission for the Seattle-based online retailer’s development known as Amazon HQ2. Only a single bid is allowed for the region.

As a result, the Dallas Chamber is not releasing the list of prospective sites that have been submitted nor providing any details about the cities or sites in the mix.

“For a project of this size and scope, the best first impression we can make with Amazon is to demonstrate our unity as a region,” said Mike Rosa, senior vice president for economic development at the Dallas Regional Chamber. “And the way we do that is to come together and work closely with the Fort Worth Chamber, and our partners around the region, to leverage the scale of our full 7.2 million population and what we have to offer as a whole region, rather than as individual communities.”

Fort Worth has taken a collaborative approach to drawing Amazon’s HQ2 to the area.

“We are working with Dallas to have a Dallas-Fort Worth pitch for the region,” said Fort Worth Chamber of Commerce Executive Vice President of Economic Development Brandom Gengelbach. “With the size and scope of a project like this, there is no one community that can support this by themselves.

“It’s going to take the entire region and the entire 7.2 million population to be able to support this in a way that is going to attract Amazon. So, our first priority is working with our partners in Dallas to put our best foot forward as a region to make it to the next round,” he said.

Fort Worth Mayor Betsy Price said the city would welcome the headquarters.

“As a logistics, distribution and corporate hub, Fort Worth is open for business,” she said in a statement. “Boasting an abundant and talented workforce with 70,000 acres of developable land and an international airport in our backyard, Fort Worth would be thrilled to welcome an Amazon expansion to our thriving, compassionate community.”

Short list

If the Dallas-Fort Worth area makes the short list of U.S. cities and Canada in the running for the new headquarters, Dallas Chamber and other economic development and municipal leaders say the whole area wins.

“We believe that the Dallas-Fort Worth region checks every box in the criteria that Amazon outline in the RFP,” Rosa said. “We provide the size and scale they’re looking for, along with a strong labor force, great transportation options, a favorable business climate and demonstrated economic growth to meet their needs and to help them grow their business for the future.”

Amazon already has a strong presence in the DFW area with its two fulfillment centers in Coppell as well as centers in Haslet, Fort Worth and Dallas. It also has a sorting center in Irving.

Amazon is building a third fulfillment center in Coppell, a project being jointly developed by Hillwood Properties and Perot Development Co.

Hillwood officials declined to comment specifically about their involvement with Amazon headquarter sites.

“North Texas has numerous sites that would be excellent options for Amazon’s second headquarters, and Hillwood is very supportive of the region’s collective bid to pursue this unprecedented opportunity,” said Mike Berry, president of Hillwood Properties.

Beyond the economic ties to the area, Amazon’s Bezos has some personal ties to the area dating back to when his sister lived in the area in the ’90s.

Bezos in Texas

While much is made of founder Jeff Bezos and his Texas connections, market realities are likely to trump any such considerations, said Ray Perryman, president and CEO of The Perryman Group.

“I see the Metroplex area as very competitive in the quest to land Amazon, particularly if key stakeholders such as the cities, counties, the state, universities and others can work together to offer the right mix of incentives,” he said.

Amazon has other connections to Texas. In June, the retailer announced a $13.7 billion deal to acquire Austin-based Whole Foods, which has 450 stores across the U.S.

Fort Worth and the surrounding communities, Perryman noted, have a lot to offer, and have the potential to compare well with “nearly anywhere in the country.”

While areas to the east, such as Plano and Frisco have recently landed two high profile developments – Toyota and the Dallas Cowboys respectively – Perryman says the “lower land costs, the advantages associated with proximity to a major business airport and essentially equal access to the regional workforce can prove to be compelling for the Fort Worth area.”

Lower land costs could be critical.

In Seattle, its rise and the attendant influx of mostly well-heeled tech workers has caused housing prices to skyrocket. The Seattle Times reported recently that the median price for a house in August in Seattle was $730,000, up almost 17 percent in a year.

That itself may be a factor. Amazon may be looking for a spot where it’s not as expensive for its employees to live, said Rita McGrath, a professor at the Columbia Business School in New York.

“It’s hard to attract people if they can’t afford the housing available locally,” she said.

But transit issues could be a problem, local officials say, as other areas are further along with transportation solutions.

As a whole, the Lone Star State will be attractive because of its business-friendly climate, Perryman said.

“Texas is known as a business-friendly place to be, and the very competitive incentives available at the state and local level should keep us in the race, as can be evidenced by our consistent position at the top of various rankings,” Perryman said in a recent column.

Amazon is hoping for something else aside from a tip of the hat and a loud “Howdy!” for its second hometown: tax breaks, grants and other incentives. A section of the proposal that outlines those says that “the initial cost and the ongoing cost of doing business are critical decision drivers.”

To seal the deal, though, significant incentives will have to be offered, Perryman said.

The company received at least $241 million in subsidies from local and state government after opening facilities in 29 different U.S. cities in 2015 and 2016, according to an analysis by Good Jobs First, a group that tracks economic development deals.

In explaining why it was holding a public process, Amazon said on its website that it wanted “to find a city that is excited to work with us and where our customers, employees, and the community can all benefit.”

Brad Badertscher, an accounting professor at the University of Notre Dame, said the public search appeared to be a way to start a bidding war among cities.

“This was like an open letter to city leaders saying, ‘Who wants Amazon and all our jobs?’ ” Badertscher said. “This is Jeff Bezos doing what he does best: adding shareholder value and getting the most bang for the buck.”

Dark cloud

But even as local leaders tout the state’s “yee-ha!” business-friendly atmosphere, there is a potential dark cloud that could dampen the prospects for North Texas: the conservative, sometime contentious political climate of Texas.

“I do think issues like the Bathroom Bill and the Sanctuary Cities Law suggest a contradiction for what Amazon is looking for,” said Cal Jillson, a political science professor at Southern Methodist University.

“Texas is not a model for progressive thought for a company based in Seattle in a blue state that is very progressive,” he said.

Jillson noted that Amazon would be transferring some employees and hiring new employees from the workforce of the location it chooses. Many of its employees would be high-tech workers with diverse backgrounds

“Quality of life is going to be very important to Amazon and these workers, who will likely be young and many will be immigrants,” Jillson said.

Jillson likened the Amazon search to the Boeing’s Co.’s decision to move its headquarters out of Seattle in 2001. The aircraft manufacturer bypassed Dallas and Denver, both on its short list, and chose Chicago.

Boeing’s president said at the time that the decision was based on incentives and tax breaks offered by Illinois. Jillson said generous enticements from Texas have drawn companies such as Toyota to move its U.S. headquarters from California to Plano.

Amazon CEO Jeff Bezos “has a very sharp pencil and he is well aware of how to use it,” Jillson said.

Gloves off

If the Dallas-Fort Worth area is chosen for Amazon’s short list – the decision is expected sometime next year – various locations in the area will begin their own battle for HQ2.

“We’re working with all the regional partners and each of the regions are submitting specific sites that they think meet the criteria for the Amazon deal,” said Gengelbach.

“We as Fort Worth submitted sites that we feel as suitable, that could work with Amazon, and then other communities have done the same. From there our job as a region is to package those up and create a similar look and feel so we can represent the DFW region in a very positive light,” he said.

It’s all peace and harmony to make it through the first round, but in the next round, Brandom says “the gloves are off.”

Fort Worth has picked out some unspecified locations that would potentially be a good fit for HQ2 to send to the Dallas Regional Chamber for presentation. One, mentioned during a Fort Worth City Council meeting, was the Panther Island development. Other cities involved in the collaboration have done the same.

“Now don’t get me wrong. When we’re shortlisted as a community the gloves will come off and we will definitely compete from a city standpoint within the DFW region, but we’re going to have one united front recognizing that everyone’s going to benefit if [Amazon] comes to our area,” Gengelbach said.

Jillson said a prospective North Texas site that would be extremely appealing to Amazon is the proposed by the city of Richardson and the University of Texas at Dallas.

UTD, known for its high-tech research facilities, was originally established through a partnership with Texas Instruments to train engineers and research scientists. It sits in the heart of North Texas’ Telecom Corridor.

In another high-profile bid, Grapevine is pitching a site of nearly 800 undeveloped acres on Dallas-Fort Worth International Airport property within the city of Grapevine. This site would have widespread benefits for the DFW area because of its central location, proximity to the airport terminals and access to a new Tarrant County commuter rail line that is due to begin service in 2018.

And, since the airport is owned by the cities of Dallas and Fort Worth, those cities would reap tax revenue rewards as well, officials said.

“There are lots of good sites within the Metroplex and we hope we can get on Amazon’s short list,” said Grapevine Mayor William D. Tate. “That would be a win for everyone.”

As for who will make the final list? Only Amazon – and Alexa – will know for sure.

– Marice Richter, Nealie Sanchez, Linda Kessler and the Associated Press contributed to this report.

Frisco goes viral for HQ2

If you’re a community wanting to impress technologically-savvy Amazon, it helps if you’ve got a handle on technology yourself. Frisco officials did just that shortly after the competition for HQ2 began.

Economic development officials there created a video touting the area’s strengths as a candidate for the site. And it went viral.

The video features various sights of Frisco, a voice over by Jeff Cheney, mayor of Frisco, endorsements by business owners such as Jamba Juice CEO David Pace, and sports team owners such as FC Dallas owner Dan Hunt and, of course, Dallas Cowboys owner Jerry Jones. Jones even says he’s come down with a case of “Frisco Flu.”

The just-under-two-minute video ends when Cheney asks Amazon’s AI Alexa “Hey Alexa, where should Amazon locate HQ2?” To which she responds, “Hmm. In Frisco, Texas.”

Cheney talked about his city’s video pitch and what he thinks makes it stand out in Amazon’s search.

“Amazon’s request for proposals is very different from what we’re used to seeing,” Cheney said, adding that usually these things are done very hush hush behind closed doors. “The public pitch by Amazon needed a public, bold response. So that’s what we did.”

Frisco’s motto “Progress in Motion” was mentioned throughout the piece, as growth, progress and motion have been very important to the city.

“Frisco is the fastest growing city in the country,” Cheney said. He said that, located 25 miles to both Dallas Fort Worth International Airport and Love Field and surrounded by cities also seeing progress, Frisco is “in the epicenter of development.”

“We’re where the next wave of growth is going to happen and what’s funny is we’re the fastest growing and we’re just getting started,” Cheney said.

Cheney believes Texas, and North Texas specifically, are in a great place to pitch to Amazon, considering that Texas as a whole is known for its business climate, the Dallas-Fort Worth and North Texas areas are very attractive because of their infrastructure and again, he said, Frisco is in the epicenter of development, its economic development center having spent more than $40 billion on development over the past 25 years.

In this competitive event, the Dallas-Fort Worth area is taking a regional approach, Cheney said, explaining that each city in the Metroplex had to send their proposal to the Dallas Regional Chamber by Sept. 29 – detailing what makes their city and locations stand out for Amazon.

“All of the mayors recognize a project of this magnitude would have a ripple effect [throughout] the entire region,” Cheney said. “The beauty of North Texas is that the message we are trying to convey is that the communities that are submitting for Amazon are quite a bit different. So we have an exciting menu of options for them to look at.

Cheney said as a region, everyone feels confident North Texas will be in the top contenders at the end of the search because of all the unique options available. However, something that helps Frisco stand out – in addition to its bold video pitch – is the amount of available land the city has, the mayor said.

“One of the things that makes Frisco so attractive is we’ve identified six sites we think would fit Amazon’s needs,” he said.

While it is very well known that a key component of Amazon’s decision will be transit, Cheney isn’t worried about his city’s lack of public transportation options. Currently the city has a small contract with Denton County Transportation Authority for its on-demand shuttle and the BNSF railroad tracks still go through the city and could be activated should that be needed for Amazon’s transportation needs.

But, Cheney said, “I feel the future of public transit is going to look very different than it does today.”

“We can custom fit their transportation needs,” he said, adding that rather than investing money in the legacy transportation options, Frisco will be “looking at that next generation of transport, [which] will be attractive to Amazon.”

Cheney compared being able to offer Amazon custom transportation needs to an analogy of getting custom-made boots as opposed to pulling a pair off the shelf.

Cheney also praised the city’s low crime rate and good schools, saying that Frisco is widely known as a great place to live and raise a family.

“We also have a history of putting together complicated deals and doing it quickly,” Cheney said. “From all those components, we are a perfect match for Amazon.”

As for how they got Alexa to say Frisco was the best place for HQ2, Cheney says it’s a secret.

“It took a lot of effort and it was not easy, I’ll tell you that,” he said with a chuckle, adding that the city may release a blooper reel one day.

– Linda Kessler

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