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Why are small cities like Pensacola going after Amazon’s new headquarters?

Last month, Pensacola’s mayor penned a letter to Amazon’s Jeff Bezos, giving a sales pitch to the CEO of the world’s largest retailer on why he should build his company’s second headquarters in Pensacola.

The mayors of Birmingham, Ala., Frisco, Texas and Hartford, Conn. have made similar pitches, with some cities even producing videos that have gone viral asking Amazon’s Alexa robotic personal assistant the question: “Alexa, where should Amazon HQ2 go?”

Pensacola, Frisco, and even Birmingham differ from the larger cities of Denver, Los Angeles, and Austin — all who are expected to submit pitches of their own. For the nation’s smaller metros, they understand their long odds in the race to win Amazon.

Amazon’s campus in downtown Seattle. (Amazon/Special to The Pulse)

In September, when Amazon launched its search for a new city outside Seattle to host its $5 billion second headquarters, dubbed HQ2, the company also released a Request for Proposals. The RFP detailed a host of criteria such as minimum population, quality of life, development incentives, and labor force.

The list of small cities with interest in the RFP includes cities with populations far below the one million Amazon prefers; others whose closest airport is hours away; some with poor public transit options; and still others that struggle with issues such as crime, quality of life, and education.

Realizing the obvious falts with their cities and understanding the pitfalls of dedicating resources towards an apparent impossibility, why are cities like Pensacola even trying at all? What’s in it for them?

Amazon’s projected economic impact provided by its anticipated new headquarters. (Amazon/Special to The Pulse)

Some mayors, like Pensacola’s Ashton Hayward, seem to assume not doing anything would mean losing sight of the bigger picture when it comes to creating an ideal evironment for economic development.

In his letter to Bezos, Hayward described the history and economic power of Pensacola and Northwest Florida.

“Having spent time in Pensacola, you know us,” Hayward began his letter, referring to the time Bezos spent living in Pensacola as a teenager attending Workman Middle School.

“We are America’s 1st Settlement, rich in maritime history,” Hayward continued, citing the city’s recent capitalization on cultural tourism and economic growth, including the 10,000 jobs being delivered to Pensacola by Navy Federal Credit Union.

“As you continue to grow your revenue and market share, Please consider Pensacola as a partner in your continued growth.”

 

Pensacola Mayor Ashton Hayward’s letter to Amazon CEO Jeff Bezos. (City of Pensacola/Special to The Pulse)

Hayward and other mayors understand the benefits of stepping outside their traditional roles of managing day-to-day operations to sell Amazon on their successes.

If nothing else, making a bid brings free publicity and media coverage for mayors and their cities. Even if Amazon doesn’t choose their city, mayors across the country are hoping for secondary investments, such as from Amazon’s partner companies or other potential developers.

Additionally, making a bid for a giant like Amazon better prepares small cities for the process of developing economic development proposals and identifying their respective city’s strengths and weaknesses.

Navy Federal Credit Union’s $1 billion campus under construction in Pensacola. (Special to The Pulse)

For Pensacola, the geographically-constrained city of 50,000 lacks several preferred qualifications to entice a company like Amazon. The company said it prefers metro areas with at least one million population; Pensacola’s metro is officially about 500,000 residents, although that number is close to one million if Okaloosa and Baldwin counties are included. Like other cities, Pensacola could increase its population capacity by teaming up with neighboring counties.

Additionally, the company will be looking for incentives — likely, lots of them. Major recent economic wins by Pensacola have included granting substantial tax incentives to companies promising new jobs. To bring Navy Federal Credit Union — the world’s largest credit union — to Pensacola, the state and Escambia County forked over about $30 million with the promise that the company would make good on delivering 10,000 jobs and a $1 billion campus. Economists expect the economic impact from the company’s presence to eventually top $3 billion.

While local incentives are still available to potential developers, the state’s war chest of development incentives has drained. In the 2017 state budget, no money was approved for economic incentives, such as those subsidies utilized by Navy Federal.

What Pensacola does have, as Hayward outlined in his letter to Bezos, is a multitude of successes in improving the city’s quality of life, along with creating a pipeline of diverse career programs.

Last year, the University of West Florida was designated one of the nation’s only federally recognized Centers of Academic Excellence for cybersecurity, paving the way for future generations of the labor force to join one of the fastest-growing job industries; UWF has become a powerhouse in the region, launching new degree programs in supply chain management; and the Institute for Human and Machine Cognition, one of the world’s leading robotics and artificial intelligence research labs, is rapidly expanding in the heart of downtown Pensacola.

Our advice to Mayor Hayward and other small city leaders is to continue pushing the boundaries and step outside the status quo, but do so with vigilance: use opportunities like the Amazon RFP to further hone economic development strategies while recognizing where the line is between fostering innovation and simply just being a drain on taxpayer resources.

For smaller cities like Pensacola, it’s vital for their continued growth that they remain relevant and continue to anticipate future growth. For Pensacola, we have to “play it to win it.”

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