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amazon hq

Amazon HQ image via flickr user Robert Scoble.

published on October 19, 2017 - 1:02 PM
Written by David Castellon

Mayors and other government officials across the U.S. are trying to convince Amazon to build its second headquarters in their cities.

And many are trying to sweeten the deal with incentives that include Stonecrest, Georgia, offering to rename itself “Amazon,” while costlier proposals include building a station for Dallas’ proposed bullet train within the Amazon HQ2 campus and New Jersey Gov. Chris Christie’s backing Newark’s bid by offering the online giant $7 billion in state tax breaks to build there.

But Fresno Mayor Lee Brand told reporters Thursday that his city couldn’t afford to be part of a bidding war for $5 billion in construction to build or renovate about 33 office buildings to create a business campus similar to its vast headquarters in Seattle.

And with that new development is the promise of up to 50,000 new jobs — many of them in high-paying technical fields — made by Amazon CEO Jeff Bezos in September when he announced the company’s expansion plans.

Brand said Fresno’s proposal for Amazon’s HQ2 “is a vast departure from the norm. It’s unique, it’s counterintuitive, and it doesn’t promise a dollar in incentives. Let me reiterate, Fresno is not offering any [financial] incentives to Amazon to build HQ2 here.”

Instead, he said, “We are offering an innovative and creative opportunity to enhance and build a sustainable community around the HQ2.

“We call it ‘Amazon Community Fund,’” in which the city would enter into a 100-year agreement with Amazon to take 85 percent of the property taxes generated by Amazon’s buildings — and possibly taxes generated from the sales of items at those properties — and place it in a fund to help the community and Amazon, Brand explained.

Fresno’s Director of Economic Development Larry Westerlund roughly estimated that Amazon could pay out $50 million a year in property taxes.

“This fund will be jointly controlled by city officials and Amazon executives to build the infrastructure and sustain the Amazon HQ2 project for the community for the next century,” said Brand, who called the idea a win-win for both Fresno and Amazon.

He said the money would be divided five ways:

– 25 percent for housing projects for Amazon workers.

– 25 percent for transportation and infrastructure projects.

– 10 percent for parks, trails and cultural amenities for the company workforce.

– 10 percent to support science, technology, engineering and mathematics (STEM) education projects.

– 15 percent in undesignated funds for public safety and other city services.

When asked whether the housing funds would go specifically to pay for construction of homes or apartments for Amazon employees or to increase the overall availability of housing in Fresno, Brand said that hadn’t yet been determined.

Also unclear was whether the money would be directed solely to projects around the Amazon campus or if the oversight committee could choose to pay for infrastructure and community enhancements in other parts of the city.

As for where Amazon might locate, Brand and Westerlund — whom the mayor credited with coming up with the idea of the Amazon Community Fund — said downtown Fresno could easily fit the bill, through a combination of new construction and renovating existing buildings, similar to the way Amazon set up shop in downtown Seattle and spread out as the business grew.

“We think you could do 8 million square feet easily for the property that’s available in Fresno … some of it old, whether it’s the Guarantee Bank Building or the Helm Building, some of it new, whether it’s the old Armenian Town Project or otherwise,” said Westerlund, who added that if Amazon chooses Fresno, the company might build some of its offices throughout the “downtown triangle area” rather than in a single, contiguous area, or in outlying areas of the city, outside of downtown campus area.

The mayor told reporters that compared to many other cities looking to become home to HQ2, the odds of executives picking Fresno could be slim.

Westerlund concurred, telling reporters, “It’s probably not going to happen, but we’re going to give it our best shot anyway.”

Even in his letter being sent today to Amazon, Brand tells Bezos “Fresno may seem like an unlikely choice for the HQ2 project, but we are much like Seattle was back in 1994, the year Amazon was founded. In the mid-1990s, Seattle’s population was around 525,000, it was struggling economically and was in no way the technology hub it is today.

“In many ways, this is the Fresno of 2017. Like Seattle, Fresno’s proposal shows that we are a diamond in the rough that is already changing and making positive changes that would pay handsome dividends on your HQ2 investment far into the future.”

The letter being sent digitally includes a short video highlighting the low costs of land and housing here, along with the mixed cultures that comprise the population and the number of educated people here.

Westerlund added during the press conference that “the reason we think we even have a reasonable, sporting chance” is the California High-Speed Rail line under construction in the Valley and its planned stop in Fresno.

Through that, he said, “We will be connected to downtown San Jose,” so engineering, software and other technology experts living in the Bay Area could commute between San Jose and Fresno in about 45 minutes.

He added that Fresno also has the benefit of having negotiated successfully with Amazon to build its new 855,000 square-foot fulfillment center here, where online orders are sent out.

Incentives Fresno is offering on that project include a 90-percent rebate on the city’s share of the property taxes paid by the owner of the property — which Amazon will lease — along with reimbursing Amazon for the sales taxes it pays to buy goods and services in Fresno.

Construction on the $200 million fulfillment center began over the summer.

“We have to be realistic on the deal,” said Brand, noting that Fresno doesn’t have the appeals of some larger cities, like New York, nor is it “giving away the farm” in up-front incentives, as some cities are doing to attract Amazon.

And if Fresno were to make the top 25 cities in Amazon’s consideration process, “It would speak volumes. It would speak volumes of how we’ve progressed as a city — our reputation and our ability to transform of our economy,” the mayor said.

And that could draw the interests of other businesses to consider locating here, while the offer Fresno is making to Amazon could be the “generic blueprint, per se, for future growth for Fresno” that could result in similar types of offers made to other large employers, Brand said.

 

Fresno’s Amazon video

To watch the city of Fresno’s video to Amazon, go online to https://youtu.be/23cqrCa-t7s.


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