Horgan to Bezos: Stay Away

Every word of John Horgan's latest column in the Merc should be read, reread and politicians should commit it to memory.  Click through here for the whole thing.  I'll just give you a taste.

Jeff Bezos, please stay away.

The latest word from the boss of the Amazon octopus is that he wants to build a second headquarters in a North American metropolitan area — and the Bay Area is on his list. Bezos is proposing a massive, new complex that would employ up to 50,000 people — roughly the combined population of Millbrae and Burlingame.

Housing? There is very little available room left for it. The only way to add any significant number of dwelling units is to go up. The result is unattractive urbanization that is transforming portions of San Mateo County into San Francisco. It’s not pretty. Visit sections of the El Camino Real/Caltrain corridor and certain downtown areas for confirmation.

The construction adjacent to the Caltrain tracks in San Carlos is particularly grim and unappealing in its size and scope. Ugh.

As we pointed out earlier in the year, San Mateo County’s assessor, Mark Church, announced that a staggering 58 million square feet of future development is in the county pipeline right now, the rough equivalent of about 1,300 average-sized Safeway stores. Mull those figures for a moment.

One of the great ironies of the present situation here is that many of the same authorities who green-light big development efforts are the same fine folks who fret and fume about traffic gridlock and a lack of housing in the county.

In other words, they give the OK to commercial and other enterprises which generate traffic and then they complain about the traffic _ and a lack of available dwellings to house employees of those new outfits locally. The policy-makers have created their own emergency.

 

John goes on to wax nostalgic and a bit angry about what all of this is doing to the Peninsula of old "it was relatively quiet, safe, uncluttered, attractive and intimate."  And after a wet winter, the memories of the five dry ones just vaporize from people's heads.  In speaking with a B'game city council member this week, when asked what I would like to see happen here I said, "stop all major new development, digest what we have already approved, and fix the infrastructure and school capacity before resuming.  If we did that in B'game we would have a chance to be different than the mess that is being created around us."  I'm not holding my breath though.

Comments

[J. Mir]

ahh yes, the dreaded "San Carlos Transit Village"... While I'm not generally anti-development like everyone else on this board, i however must drive by that monstrosity several times a week and it frightened even the likes of me. Will it be as ugly as the one at Fruitvale? Who knows. People are so desperate for housing there - large numbers of renters in SC, they might just be the next city to get agitated about rent control. Get ready Sequoia HS 200 more kids coming your way next year.

[resident]

It might be time to get on the program, J. Mir. When your skin crawls it is time to rethink not being anti-development. How about pro-being able to drive somewhere?

[Joe]

San Jose mayor Sam Liccardo has a piece in the WSJ this week titled "Why I'm not bidding for Amazon's HQ" where he writes:

Several reporters have asked me what subsidies my city of San Jose may offer to attract Amazon’s new headquarters. My response? None.

Recently, states and cities have been luring companies with subsidies. Wisconsin wooed electronics manufacturer Foxconn with a $3 billion taxpayer-funded dowry. Iowa gave Apple $213 million in state and local tax incentives to bring a 50-job data center to the state. The commonwealth of Massachusetts and city of Boston brought General Electric headquarters to Beantown with a $145 million incentive deal.

Don’t get me wrong, Amazon is a wonderful company. Any mayor would embrace the economic vitality of a company branch with 50,000 employees and an anticipated investment of $5 billion. San Jose has benefited from the recent arrival of Amazon’s Lab 126 research outpost.

But my city won’t be offering incentives to Amazon. Why? Because they are a bad deal for taxpayers. With many subsidies, the jobs a company brings to an area don’t generate revenues commensurate with public expenditures. The GE deal will cost taxpayers more than $181,000 for every job created in Boston. Most experts insist that other factors—particularly the presence of a skilled workforce—play a far larger role in determining boardrooms’ corporate location decisions. Moreover, some 95% of Silicon Valley’s job growth comes from new small-business formation and when those homegrown companies develop into larger firms.
......
So why do public officials throw away taxpayer dollars in subsidies while trying to promote economic development? Perhaps because they can. The subsidy represents something tangible that officials can point to as the factor that “sealed the deal” to create more jobs.

The harder work of investing public dollars in schools, infrastructure and amenities takes years of concerted effort but has far greater payoff. A healthy economic ecosystem that supports innovation and growth is what makes a community attractive to a company like Amazon.
_____________________________

There's a bit of commonsense emanating from the South.

[Bruce Dickinson]

Joe, it amazes Bruce Dickinson how much the technology zeitgeist in the Bay Area has gotten to the point of so much self-felicitations, self indulgence and and incessant perpetuation of this aura of invincibility. It is automatically assumed any company would "love the privilege of moving here". That attitude pretty much says the technology bubble is about to pop.

Let's sit back and think about it, for a moment. Why would Amazon want a Seattle 2.0? All the issues with the high cost of real estate, difficulty attracting talent due to real estate affordability, high rents, traffic/congestion, a lack of good public transportation infrastructure, competition for good public schools that are unable to support the growing population, etc are all made worse by moving to the Bay Area, not to mention the additional exposure to natural disasters (Earthquakes). The very fact that Amazon is even having a "contest" of sorts is an admission that it is NOT moving to the Bay Area, since if the benefits are so obvious, then just prepare to move there by talking directly one-on-one with Bay Area city officials.

So no, San Jose, Burlingame, Palo Alto, San Francisco, Redwood City, etc should just get these delusions of grandeur out of their minds and as Joe stated, start addressing the tough, real problems that face us today. Right now, having sufficient funding for schools, restraining unbridled growth, improving our roads and quality of life are important. Sure, you can support a much larger population here, but really do you want to live in the US version of Tokyo, London, or Hong Kong?

While Bruce Dickinson has spent much time in these places as well as dozens of others in my illustrious career, I can tell you exactly where I would want to spend most of my non-traveling time.

Hint: it's in the zip code 94010!

[Bruce Dickinson]

Listen folks, you know how Sting says "I'll always be King of Pain"?

Well, maybe it's time Bruce Dickinson says "I'll always be King of Prescience"!

As yours truly predicted, Amazon did not pick the Bay Area in it's "short list" of cities to locate its second headquarters.

So hopefully San Jose's mayor or John Horgan didn't lose too much sleep (or keystrokes) thinking/writing about something which pretty much had a zero chance of happening.

Moving on......

[Do tax payers pay for economic development/ tax incentives?]

"Wisconsin wooed electronics manufacturer Foxconn with a $3 billion taxpayer-funded dowry..."

Joe, while I'm not an economic development / tax incentive expert, do you really think that tax incentives really are paid for by tax payers?

Doesn't the govt entity see the decision as delivering huge, positive, incremental (new) benefits to the tax base and local economy?

Maybe I'm missing something from the concept that you can enlighten me about...

[Joe]

It's a matter of how much incremental there is in incremental benefits. If the benefits come soon enough (time value of money spent vs received back) and the incented business delivers in jobs and taxes then it sort of works but only because the base tax rates there and elsewhere (the competitive municipalities) are uncompetitive. Easier to fix the overall rates than do selective incentives that are ripe for abuse. See the repatriated offshore funds as exhibit A.

[Bruce Dickinson]

"King of Prescience" strikes again! (see Oct and Jan posts above) Folks, what you are seeing right before your eyes, is the technology and real estate bubble popping in real-time.

Don't say that Bruce Dickinson didn't warn you!

[Joe]

I think Bruce is referring to the Bay Area thankfully NOT being on the finalist list:

The 20 potential cities are:

Atlanta
Austin
Boston
Chicago
Columbus, Ohio
Dallas
Denver
Indianapolis
Los Angeles
Miami
Montgomery County, Maryland
Nashville
Newark
New York City
Northern Virginia
Philadelphia
Pittsburgh
Raleigh
Toronto
Washington, D.C.

GO NEWARK!! You all need it!

That and 2200 points off the Dow in two days make the point.

[Culture eats strategy for breakfast...]

I'd bet on either Dallas or Nashville or Chicago due to their distribution hub advantages. Whichever city it is, Amazon probably already has a presence there.

[Joe]

Long Island City, NY and Crystal City, VA are the "winners". Some news reports say that NY is paying Amazon $78K per job to move there (in tax credits, etc). So glad we were not considered!

[Joe]

Hey, and we thought we had it bad....oh, wait, maybe we have most of the same issues?

"We have a crumbling subway system, record homelessness, public housing that is in crisis, overcrowded schools, sick people without health insurance and an escalating affordable crisis," said New York City Council Speaker Corey Johnson, a Democrat. "Is anyone asking if we should be giving nearly $3 billion in public money to the world's richest company, valued at $1 trillion?"