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Minnesota, like others, was played by Amazon in the HQ2 sweepstakes

November 11, 2018

Amid the flood of media coverage of the competition for the second headquarters project of Amazon.com were a couple of columns that saw real potential in the project for Minnesota, and they were written by me.

What a sap.

There is no Amazon second headquarters project with 50,000 new jobs. There may not have ever been.

Amazon.com managed to orchestrate a sophisticated PR and marketing campaign that engaged pretty much all of North America, all to get offers of tax breaks and free stuff from cities and regions. We not only let Amazon get away with it, we eagerly assisted, talking and writing and tweeting about Amazon’s vision and stunning growth.

Now it looks like winners are about to be announced in the sweepstakes Amazon dubbed “HQ2,” and the prize has been split in two. Amazon is reportedly close to development agreements for a couple of new facilities on the East Coast, one across the Potomac River from Washington, D.C., in Virginia, and the other in the Queens borough of New York City.

Nearly 240 cities and regions here in the United States and in Canada provided Amazon a ton of information all about their communities and their growth plans, and all of that under confidentiality agreements. What use Amazon makes of all that confidential information is entirely up to Amazon.

The businesses who compete with Amazon sure don’t have access to that kind of information.

There are other frustrations for business here, too. Imagine owning a business in New Jersey, a perennial contender for title of worst state tax climate for business, according to the Tax Foundation. As of the last ranking it was 32nd among the states in unemployment insurance tax, 47th in corporate business taxes, 45th in sales taxes and 48th in property taxes.

Not a problem for Amazon, which was promised a package totaling up to about $7 billion, including tax credits and property tax abatements.

A New Jersey business owner’s tax burden must feel like carrying a 94-pound bag of Portland cement to work every day. So how eager would you be to expand in New Jersey now without being offered an Amazonian-sized incentive package to lighten the load?

It’s also discouraging to see Amazon pick sites in relatively high-cost areas on the East Coast that are both big already and growing faster than other parts of the country. It remains to be seen what kind of incentives Amazon squeezed out of its two new hometowns, but what the company seemed after are big labor markets where it can find the kind of people it wants to hire.

It’s expensive to live in the Washington metro area and often hard to get around, but it has the amenities and opportunities that have already been drawing the kind of workers Amazon wants. And by putting a big facility there, Amazon’s going to be a draw for others to set up shop nearby.

Nashville? Indianapolis? They made the list of finalists, but it’s difficult to see how Amazon could ever have been serious about them.

Of course the Twin Cities missed that cut altogether. We were “the clear loser,” the Washington Post declared when that list of finalists came, in part because we had scored so well on the list of things Amazon claimed to want.

Now that we are getting closer to seeing how the game ends, maybe it was at least a partial win for Minnesota that we got knocked out so early? Sorry, but no.

Putting it that way seems to give too much credit to Gov. Mark Dayton for somehow sniffing out that this Amazon project was a waste of time. You maybe remember that the governor, when responding to news of the Amazon request for proposal in September 2017, said Minnesota would be making a “restrained” proposal to Amazon.

That’s not what many in the business community wanted to hear, particularly in the technology community, where there was grumbling that a once-in-a-lifetime opportunity wasn’t getting much of an effort.

The state’s letter to Amazon outlined eligibility for up to $5 million of incentives under Minnesota law. That’s certainly restrained, when New Jersey was already out with an incentive package in the neighborhood of $7 billion.

At the time that Minnesota’s response came to light it wasn’t well understood that this wasn’t a “bid.” It seemed more like an invitation to talk — which isn’t the way to win an auction, by the way.

The letter from Minnesota’s Department of Employment and Economic Development was only trying to point out incentives available without getting the help of the Legislature, which had a history of being perfectly willing to offer more.

The letter was addressed to Amazon, c/o Site Manager Golden. Even that, the apparent project name “Golden,” adds a rich detail to the fiasco. After more than a little media coverage and speculation in other states about Amazon’s secret code name of “Project Golden,” it seems Golden was simply the name of a mail clerk in Amazon’s Seattle headquarters.

Given all the hype for Amazon HQ2, it would have taken a truckload of political courage for any state’s governor to simply “no-bid” the Amazon project. Obviously, Amazon knew that.

If running a transcontinental sweepstakes worked this well for Amazon you know someone else will at least try it, so this might be the way to handle this the next time.

Send a bag of wild rice collected from a northern Minnesota lake, a gift box of assorted Spam and a “Keep the North Cold” knit hat along with a simple letter.

“We welcome you to come to the great state of Minnesota!” the letter should say, “There won’t be any special tax giveaways coming, but here you will find a great quality of life and some of the best workers in the world. And we invite you to compete for those workers along with the rest of Minnesota’s vibrant business community.”

lee.schafer@startribune.com 612-673-4302

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