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Why San Antonio Turned Down Amazon’s New Headquarters

Leaders of the Alamo City took it out of the running for the online retail giant’s HQ2.

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San Antonio Mayor Ron Nirenberg
Illustration by Claire Hogan; Photo by Eric Gay/AP Photo

On Wednesday, Texas Senators Ted Cruz and John Cornyn penned a joint letter to Amazon CEO Jeff Bezos, pitching the state of Texas as the landing site for the online retail giant’s planned second headquarters, HQ2. “Everything is bigger in Texas, and that includes our economy, our skilled workforce, and our quality of life,” they wrote, noting that three of the nation’s top-five fastest growing cities are in Texas: Houston, Austin, and San Antonio. All three of those cities and others across the state, including Dallas, El Paso, and Frisco, put themselves in the running for HQ2 when Amazon called for proposals last month. But on the same day Cruz and Cornyn wrote their letter to Bezos, two San Antonio leaders, Bexar County Judge Nelson Wolff and Mayor Ron Nirenberg, wrote a separate letter to Bezos informing him that the Alamo city no longer wishes to be considered a potential landing spot for HQ2.

“We’ve long been impressed by Amazon and its bold view of the future,” they wrote. “Given this, it’s hard to imagine that a forward-thinking company like Amazon hasn’t already selected its preferred location. And, if that’s the case, then this public process is, intentionally or not, creating a bidding war between amongst states and cities. Sure, we have a competitive toolkit of incentives, but blindly giving away the farm isn’t our style.”

While San Antonio probably didn’t have a realistic shot to land HQ2 anyway—the detailed wish list Amazon released last month included a major airport and lots of available office space downtown, two things San Antonio doesn’t really have—it’s still surprising to see the city take a stand against the nationwide fervor to score HQ2, which is expected to generate 50,000 new jobs.

But there are some valid reasons why San Antonio wouldn’t want the new headquarters. First, as Wolff and Nirenberg mentioned in the letter, Amazon has sizable demands. The company’s request for proposal asks for the potential home of HQ2 to offer major tax incentives. Amazon has received more than $1 billion in public subsidies for its facilities since 2000, including a $7 million subsidy for a Houston warehouse last year, so the company clearly has a big figure in mind for HQ2. “Incentives offered by the state/province and local communities to offset initial capital outlay and ongoing operational costs will be significant factors in the decision-making process,” Amazon wrote in its call for bids. One economic policy expert recently told the New York Times that this sort of tactic is basically “blackmail” and equates to “corporate welfare.” According to their letter, Wolff and Nirenberg believe a winning incentive package for HQ2 will probably exceed the $3 billion the state of Wisconsin recently dolled out to Foxconn, a Taiwanese electronics manufacturer.

City officials looked at other aspects of HQ2 besides the price, too. “It has to be the right fit; not just for the company but for the entire community,” Wolff and Nirenberg wrote in the letter. “Does it create good jobs? Does it offer good benefits for employees? Are there opportunities for small businesses? Is the company a good ‘corporate citizen?'” Those are legitimate questions to ask of Amazon, which has had its fair share of systemic problems. Amazon has long wrestled with a poor reputation for how it treats low- and mid-level workers. A bombshell report by the New York Times two years ago exposed the company’s poor treatment of employees, characterizing the workplace as “bruising.” Amazon’s reputation for the way it treats warehouse workers is particularly poor, and the company has faced accusations of employees who mistreat women and pass them over for upper-level management positions due to their gender. We wrote about some of those problems in greater detail last month. The company’s main headquarters in Seattle has also played a role in the city’s intense gentrification and skyrocketing cost of living, which may have played a role in the decision of San Antonio’s leaders.

While San Antonio appears to have pulled itself out of the running, HQ2 could still land in Texas. Austin and Dallas are considered darkhorse favorites to win the bid, while Houston, El Paso, and Frisco have inserted themselves into the competition, too. It remains to be seen if any of those cities will follow San Antonio’s lead and drop out.

 

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  • Bill N

    Smart San Antonio. “Amazon has received more than $1 billion in public subsidies for its facilities since 2000, including a $7 million subsidy for a Houston warehouse last year, so the company clearly has a big figure in mind for HQ2.”

  • SpiritofPearl

    What’s wrong with the SA airport?

    • PastureMuffins

      It doesn’t have many direct flights to major hubs around the country without going through Dallas or another hub, so it takes forever to get somewhere.

      • wildbill2u

        Well, the warehouse workers probably aren’t flying to a lot of cities without direct service anyway. San Antonio has a fair share of direct flights and I don’t recall many businessmen there wanting taxpayers to build another airport for those who complain.

      • SpiritofPearl

        But Austin would be better?

  • PastureMuffins

    Is not “some job” better than “no job?” I’m glad he has a plan to provide 50,000 awesome jobs for San Antonio and can afford to snub his nose at this. Let’s see his plan… Whaddya mean he has no plan?

    • Kozmo

      You just accept Amazon’s unsubstantiated boast, then? Really?

    • Niel Powers

      1) Very few corporate HQ’s (especially a second one) includes 50,000 jobs, even if you count all the “indirect” employment that Amazon is claiming. It just doesn’t add up.
      2) This is a corporate HQ. Which means most of the top paying jobs will come from outside of San Antonio, leaving basically administrative and such for hiring from people already in the community.
      3) San Antonio does not have an unemployment problem, they have a growth challenge.

  • Kozmo

    Good for San Antone. At least one city has the sense not to fall over itself trying to give away the store to land this corporate piranha.

    Amazon can WELL AFFORD to take care of its own needs and not shove its subsidies onto the backs of local residents and taxpayers.

    Austin has chased every get-rich scheme for decades, and has all this “prosperity” made the city more livable or lessened the tax burden here? No. The opposite always happens.

  • wildbill2u

    San Antonio may have learned a lesson when it built a huge domed stadium WITHOUT a permanent tenant like a NFL team and built-in design flaws, the morst important of which was building the Alamo Dome on property that was a toxic waste site and with virtually no on-site parking. (Yes, you read that right)

    the Spurs tried to fill the void, but found it too big for a reasonable NBA crowd. They left for another tax payer funded venue.

    Having been extorted twice, some San Antonians aren’t ready for a billion dollar plus bill for a warehouse center.

  • lonestar

    This was a smart decision by San Antonio officials. Amazon is looking for corporate welfare and SA said no. Well done.

  • Niel Powers

    Very smart on the part of San Antonio. This corporate blackmail stuff has gotten way out of hand.

  • Walt Longmire

    Goodness, politicians with moral values? Can I move to San Antonio and vote for these guys? Amazon is a tax scofflaw bandit corporation that need to be taken down a notch — or three, or four.

  • BarksintheCountry

    Well played San Antonio. Why should one company get outsized tax benefits at the expense of all others? Are all businesses in the “successful ” city going to receive the same tax benefits as Amazon?

  • Ed Hino

    seems like these co,s bring in the people by the thousands e homes which used to sell for 125-140k are 330k or 500k wtf are we gointo do with our kids earning 17.00 an hours trying to buy unafordable house and theyarebeyond reach all to bring theses billionares init justruins our afforable way of life its unaffordable now utilities keep going up our check dont lap topsmessed up

  • George Panciera

    The leveraging of citizen communities against each other has to stop. This is concentrated unaccountable corporate power rearing its ugly face.