After Amazon closes HQ2 door, Austin shrugs and moves on

For Austin residents who revel in the hipster vibe the city continues to cultivate, Tuesday brought a collective sigh of relief — thanks to Amazon.

After an international competition that spanned more than a year, the online retail behemoth said Tuesday that it has chosen to split its second headquarters project — known as HQ2 —  between Long Island City in New York and National Landing in Arlington, Virginia.

In doing so, Amazon closed the door on Austin and 17 other finalists — including Dallas — whose bids were still in the hunt for the project, which promised up to 50,000 jobs and a $5 billion investment from Amazon.

Amazon is in line to receive up to $2.5 billion in combined incentives from the two sites it chose. The city of Dallas had offered up to $12,000 per job, or $600 million, in potential incentives to Amazon for the HQ2 project, according to documents the American-Statesman obtained Tuesday from Dallas officials. State officials previously said an incentives deal would also be offered from the Texas Enterprise Fund if Amazon chose a Texas site. The governor's office, which administrates the Enterprise Fund, as of Tuesday had not released the amount of that incentive offer.

While some cities expressed disappointment, in Austin there was little angst being voiced Tuesday. From the start, Austin-area elected officials and economic development leaders showed limited enthusiasm for chasing Amazon.

The already fast-expanding Austin economy wasn’t starving for the economic upside HQ2 would have brought, experts say. And, by several economic measures, Central Texas and the state as a whole shouldn’t miss a beat due to the missed opportunity.

“Austin is a city that is already seeing very strong growth, with significant amount of immigration, and a city that is already trying to keep up with that growth,” said Julia Coronado, an economics professor at the University of Texas. “It didn’t need (HQ2) per se.”

Examining the job market alone, Coronado said, proves that point. The local unemployment rate is tight at just below 3 percent, while the state’s seasonally adjusted unemployment rate for September was 3.8 percent, according to the Texas Workforce Commission.

Austin has also continued to attract economic development over the years, Coronado said. Large corporations such as Apple, Google, Oracle, Facebook, pharmaceutical giant Merck and others have recently expanded or plan to expand in town. Austin’s population, which increased by 23 percent from 2010 to 2017, is expected to continue its upward trajectory.

Limited enthusiasm

Since Amazon announced plans for HQ2 in September of last year, eventually receiving 238 bids from cities in North America, there have been signs of Austin’s ambivalence toward the project. Even after Austin in January landed on the list of 20 potential finalists, that attitude didn’t waver.

Austin Mayor Steve Adler set the tone early, taking a more restrained approach to HQ2 than his counterparts in Dallas and other cities, which used promotional videos to attract Amazon and openly discussed giving the online retailer large financial incentives.

Adler instead wrote a letter to Amazon last year that indicated a potential relationship would only be beneficial if Amazon also helped Austin solve issues such as transportation. In an interview with the Texas Tribune in March, the mayor went as far as to say that he didn’t know “that we want to be” Amazon’s second home.

On Tuesday, the mayor’s office said it had “nothing new from the mayor on this and aren’t anticipating a statement from him.”

National polls of Austin residents throughout the past year and interviews by the American-Statesman have echoed the dispassionate approach.

The issues that experts said hurt Austin’s HQ2 chances — aging infrastructure, cramped roads, limited mass transit options — are what drove worried residents and city leaders to question what HQ2 would have done to Austin’s swelling population, laidback culture and housing costs, which have risen 40 percent in the past five years, according to data from the Austin Board of Realtors. As of September, the metro area’s median home prices stood at $302,250. In Seattle, where Amazon is based, housing prices have risen sharply as the company has grown.

'Misread our appetite'

The shroud of secrecy around Amazon’s project had also been a point of contention for local critics of HQ2. Some city leaders have been critical that the region’s bid was submitted through the Greater Austin Chamber of Commerce, which is not a public entity and therefore has been shielded by state law from information requests made during the past year by the American-Statesman and other news organizations. Details of the bid, such as which sites were pitched, are still not known.

Austin City Council member Leslie Pool has contended that many city leaders have been in the dark about what Austin promised Amazon. The city has said no local financial incentives were included in Austin’s bid.

Pool said that had the chamber been more transparent about the city’s bid, perhaps support for the project would have been greater in Austin.

“The chamber stepped bold out onto the national stage without getting support first from the community or (city) council,” Pool said. “They misread our town’s appetite for (HQ2).

“Not getting it is not a big news story for Austin, Texas, based on the fact that there was not groundswell support of it.”

Amazon said Tuesday that it could receive up to $2.5 billion in combined financial incentives between its selected sites, depending on how many jobs it creates.

Nathan Jensen, a government professor at UT, said with that type of tax dollar giveaway, “we should be happy we didn’t "win.’”

“Every company provides benefits and costs in terms of services,” Jensen said in an emailed response. “Attracting Amazon would be great, but not by cannibalizing our tax revenues.”

At the chamber of commerce, which throughout the past year has showed the strongest support for landing HQ2, the business organization was already focused on the next opportunities.

In a written statement, the chamber congratulated New York and Virginia while saying it looked forward “to having more relocation and expansion announcements” soon.

Danielle Trevino, a chamber spokeswoman, said the organization is proud of what it accomplished with the HQ2 project, and that it will continue to work with Amazon, which employs more than 1,600 people in the Austin metro area, along with more than 2,500 people through Austin-based Whole Foods Market, which Amazon owns.

“We are confident that (Austin’s) talent pool and our way of life is going to continue to attract new jobs, whether they are from Amazon or other companies,” Trevino said. “The attention we received from Amazon’s search has inspired interest from other companies.”