Adler Shares Letter He Wrote Amazon Trying To Lure HQ2 Project

AUSTIN, TX — Mayor Steve Adler on Wednesday released a copy of the letter he sent to Amazon officials as part of the city's pursuit of a second headquarters site the giant e-commerce retailer wants to build — the so-called HQ2 project.

Some 50 cities throughout North America are pursuing the economic development plum which would create some 50,000 local good-paying jobs after construction of the $5 billion plant.

Adler also addressed the issue of offering tax incentives, saying any such inducements would have to be approved by city council first.

"I haven’t had any conversation about any specific incentives for Amazon, and no city incentive could be approved without council action," Adler said in a prepared statement. "The council has recently passed a resolution asking staff to look at changing how we do incentives in Austin to more closely align with driving the community benefits that we all want and I would expect that resolution and the associated community work to direct any future deliberation."

Companies seeking to expand have historically required a menu of financial inducements — tax abatements, credits, tax income financing (TIF) districts and the like — prompting competing cities to offer the most attractive mix of inducements even to companies such as Amazon who can well afford to expand and build new sites on their own without securing municipal incentives to do so. (Amazon posted $136 billion in revenue for its 2016 fiscal year, plenty of money for construction costs and any number of U-Haul trucks, if needed, to make the move.)

Citing the tendency for companies to pit communities against each other to extract the most attractive package of financial incentives, some communities have opted not to pursue the project. Officials in San Antonio suggested it's never been they're style to "give away the farm" in terms of providing incentives to get corporate expansion and construction projects (even though they actually historically have always done so) as their own reason for not pursuing the Amazon plant.

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Despite San Antonio officials' historical revisionism as to their own past economic development tactics, it is accurate to say that a growing distaste for offering tax incentives has developed in recent years. This is especially true when the companies seeking the incentives post robust earnings quarter after quarter, year after year — such as global pharmaceutical giant firm Merck that sought to build a 600-worker IT hub locally but not before extracting $856,000 worth of financial incentives from the city even though the company had just posted annual revenue of $40 billion the year before.

See also:

Global Pharmaceutical Firm Merck Considering Austin For 600-Worker IT Hub

Merck To Build $20M IT Hub In Austin, Creating Up To 600 Local Jobs

Adler suggested the city would rely on its other strengths and dynamics in luring Amazon.

"Austin is a magical city with some wonderful opportunities and serious challenges that all fast-growing communities face," Adler said. "My hope and belief is that Amazon would partner with Austin to create a new paradigm of collaboration that focuses on how we can together address our city’s most serious challenges by bringing benefits to our community we would not otherwise get or get as quickly because of Amazon’s scale."

To read Adler's full letter to Amazon, click here.

>>> Photo by Reed Saxon/Associated Press