Pittsburgh and Amazon HQ2

What Pittsburgh and Allegheny County promised Amazon in their failed HQ2 bid

The region’s unredacted pitch was released today.

A proposed rendering of Amazon at the former Civic Arena site

A proposed rendering of Amazon at the former Civic Arena site

Amazon Hq2 Pittsburgh Proposal

Ultimately, bigger was better for Amazon, Pittsburgh Mayor Bill Peduto said today.

The e-commerce giant was of “two minds,” he added, either don’t disrupt a larger region or make a positive impact in a smaller area.

“That’s what our proposal was about: How to create the anti-Seattle model,” Peduto said. “How do you create more affordable housing? Better public transit? Better infrastructure? Better workforce development by having a company this size move in.”

“…. At the end of the day, their decision was they were going big,” the mayor said at a press conference two days after Amazon announced it will land its new North American headquarters in northern Virginia and New York City, bringing 25,000 new jobs and billions in investment to each.

Pittsburgh and Allegheny County officials today revealed the promises they made in an attempt to lure HQ2 here in an unredacted proposal released at a morning press conference at the Allegheny County Courthouse.

Peduto, Allegheny County Executive Rich Fitzgerald, and Allegheny Conference CEO Stefani Pashman said they were looking for a partnership with Amazon and wanted to use tax funds derived from the HQ2 project for affordable housing, pre-K education, removing lead lines in the water system and increased public transit, including light rail.

Those things would all be funded with $37 billion in new spending, Fitzgerald said. Officials said no existing taxes would have gone to support HQ2 here.

But there was plenty being offered to Amazon in exchange. The local bid identified four components:

Land

Five featured sites with exclusivity for Amazon well into 2018 and available to the tech giant at no cost. They included:

  1. Hazelwood Green
  2. The former Civic Arena site comprised of 28 acres in the Lower Hill under the ownership of public entities and controlled by the Pittsburgh Penguins
  3. 44 acres in the Strip District owned by a consortium of public and private property owners
  4. Carrie Furnace, a 65-acre redevelopment site along the Monongahela riverfront owned by the Redevelopment Authority of Allegheny County
  5. and a 152-acre site adjacent to the Pittsburgh International Airport owned by Allegheny County Airport Authority.

Cost controls

According to the bid, compared to Seattle, labor costs in Pittsburgh are 19 percent lower, healthcare costs are 8 percent lower, and energy costs are 45 percent lower. “Simply by relocating to Pittsburgh,” the bid reads, “these long-term cost controls could save Amazon $17.7 billion over 25 years, or approximately $350,000 per employee.”

Incentives

Between Pennsylvania, Allegheny County, the City of Pittsburgh and Pittsburgh Public Schools, the Pittsburgh region’s bid offered Amazon a package valued at $4 billion over 25 years. That included $637 million in upfront capital support to reduce Amazon’s Day 1 occupancy costs — land value, site-related infrastructure, and transit investments — $1.3 billion in Performance-Based Grants equal to no more than 100 percent of Personal Income Tax collected by the Commonwealth from direct, full-time Amazon HQ2 employees (incentives shown in present value terms over 25 years); $2.1 billion in a series of investments to “improve the quality of Amazon’s future workforce through pre-K, K-12, and workforce development programs.”

Delivery

The PGHQ2 partnership between the region’s HQ2 backers would be used to coordinate all local jurisdictions, corporations, universities, and foundations that have volunteered their support for HQ2. “PGHQ2 will synchronize regulatory approvals and entitlements, land development, infrastructure, cost control, Day 1 operations, talent acquisition, and more,” per the bid.

Read the full bid here:

Peduto and Fitzgerald said these things would have gone through a normal legislative process, but said the process never got to specific details, and that they didn’t know an operations center was an option, and instead it went to Nashville.

Peduto also defended giving data to Amazon and said it has “the shelf life of bread” and is useless after six months.

In an undated letter released Tuesday, Gov. Tom Wolf’s administration said the state offered Amazon leadership up to $4.6 billion in a new performance-based financial assistance program — a long-term tax break contingent on economic gains to the tune of 50,000 jobs in either Philadelphia or Pittsburgh, two HQ2 finalists.

Wolf’s administration was also prepared to sweeten the pot with $100 million “to support state transportation improvements” near the site of the headquarters.

Pittsburgh officials said Amazon ultimately was complimentary of Pittsburgh, and Peduto compared it to a break-up, with the company saying “It’s not you, it’s me.”

Watch the full press conference here:

Want some more? Explore other Pittsburgh and Amazon HQ2 stories.

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