Three Things the Twin Cities Would Do if it Really Wanted an Amazon HQ

Biodome remake?

By now you’ve all seen the news about the amazing Amazon HQ. 50,000 high-paying jobs landing in some North American city is basically the mega-fantasy of every economic-development-person slash tax-base-loving-politician in the country.

And the Twin Cities is among them. Cue the Amazon takes: Governor Dayton, cautiously optimistic; Chris Coleman, running for governor, releasing a press release the next day; Pioneer Press grouch Joe Soucheray crawling out of his garage to weigh in on how Amazon will save Saint Paul; even the anti-Ford Site people tweeted about how a potential Amazon HQ was somehow a vast improvement over the current plans. (That one is a head-scratcher.)

Here’s my take. First, the proverbial tech HQ is an amazing PR coup for Amazon itself. Whoever thought of it is an evil genius and deserves a promotion. This is exactly the kind of media frenzy that crafty tech bros should be dreaming up.

Second, this kind of thing is the classic example of a deus ex machina economic development strategy, where some sort of massive player emerges from outside one’s urban world to swoop in and save the day. This is what every old-school economic development strategy calls for, and has been calling for ever since factories began closing in the Midwest. In the past, these kinds of big company relocations would have been industrial factories, like the hugely subsidized Foxconn thing that Paul Ryan got so excited about in Wisconsin a while back, or the Nissan plant in Mississippi that I saw on my way down to New Orleans. (Update: there’s a huge unionization effort underway.)

You can’t even take a picture of the Shakopee Amazon distribution center, it’s so large.

But these days, factories are no longer the holy grail, tech jobs are. And there’s one important thing that a lot of these old-school diehards like Soucheray seem to forget about the Amazon “contest”.

As a company, Amazon splits very neatly into two schools of urban design. On one hand, they located almost all of their menial warehouse jobs at the very far edge of urban areas, like their massive new building out in Shakopee. This is a pattern all across the country: for logistical work, Amazon builds on the distant edges of metro areas.

I think this is getting it backwards.

On the other hand, and this is hugely important, for high-paying high-skill work, Amazon really values walkable and transit-oriented urbanism.

I did a podcast interview a while back with Spencer Cox, a PhD candidate who has spent years researching (and working at!) Amazon. He has been studying precisely this pattern of employment and bifurcated urban environments.

Here’s a key quote from our conversation:

There are two big trends that Amazon is right at the heart of, the first one is suburbanization of poverty in the US, as well as the suburbanization of low wage work. If you think about Amazon’s expansion into exurban locations, it’s also in a whole set of clusters of really low wage warehousing assembly jobs that are low-wage, low-skill jobs that still very central to our economy. These are increasingly being located, not in our urban cores, but in exurban locations.

There’s also been a trend in the suburbanization of low-income individuals instead of in the urban cores. And since the financial crisis, what’s happening in urban cores, if we look at Seattle and think about where Amazon is located, it’s really interesting. There’s been a weird inversion in the last 10 years, where all of a sudden, [we have] the idea that propinquity and face-to-face communication somehow is innovative and develops new ideas. When Jeff Bezos decided to locate his corporate campus, he didn’t locate in the suburbs, he put it in downtown Seattle. And he said he built it in downtown Seattle because he wanted to build it close to where millennials want to live but also wanted to put it somewhere that would produce innovative new ideas. Seattle all of a sudden has a huge movement of not just Amazon, but you have Salesforce, Facebook, Google, Twitter, urban forestry… a huge relocation of corporate campuses into downtown hubs. They’re reproducing the city in an interesting way, and Minneapolis is starting to see this trend.

The point is that, if Twin Cities political leaders, economic development folks, and talk radio curmudgeons are serious about attracting companies like Amazon, as a society and as a metro we need to actually support better urbanism. So far, we aren’t doing well enough on that front.

Here are three examples of ways our region would have to improve if it wanted the attention and tax-base of a company like Amazon.

1. Consensus on Transit Funding

Twin Cities were eliminated right away.

There’s are probably a few reasons why “Denver” and not “Minneapolis” was the New York Times answer to the question of “where should Amazon locate?” But one big one is that Denver has actually supported transit as a regional transportation solution. They passed a massive city-wide investment in a light rail system.

Meanwhile, in Minnesota the supposedly pro-business GOP is actively trying to undermine new transit projects. See the recent MPR story about how a Republican governor could derail the SWLRT, Scott Walker style… To make matters worse, the GOP and the Center for the American Experiment (its pretty-much-in-house “think tank) are peddling Randall O’Toole falsehoods about traffic congestion, using driver frustration as a cudgel to try and take down the Met Council, one of the Twin Cities only unique advantages when it comes to competing with other US metro areas.

If the Twin Cities really wanted to attract a company like Amazon, you’d have more consensus on basic governance and sustainable transportation investment. The supposedly pro-business GOP would stop misleading people about where economic growth is coming from in Minnesota in order to score some cheap, and ultimately self-destructive, political points.

2. Actually Building Walkable and Bikeable Streets

Contrary to what Joel Kotkin and Wendell Cox would have you believe, high-wage 21st century employers like Amazon put great value on walkable urban spaces. That’s why Amazon’s current headquarters is in Seattle’s South Lake Union neighborhood, one of the most walkable, transit-connected parts of a city similar in many ways to Minneapolis/Saint Paul. This is the kind of urban space that dot.com companies value, pretty much the opposite of the 50s-era suburban office park.

To be sure, Minneapolis and Saint Paul have made great strides over the years in creating walkable, bikeable, connected urban neighborhoods. But there are still far too many of our streets that are potentially walkable, yet undermined by dangerous high-speed urban roads. Often these are county or state roads, where city concerns like safety or local businesses are undermined in the name of regional traffic flow.

Meanwhile, key efforts to create walkable bikeable downtowns are left by the wayside. See Hennepin County’s recent nixing of the proposed extension of the Washington Avenue curb-protected bike lane, for example. Or the lack of funding for the completion of the downtown Saint Paul curb-separated bikeway. These are the kinds of projects that the Twin Cities should be building if they want to attract a major dot.com employer.

Meanwhile, we have a former business columnist in the Star Tribune giving ink to angry people stuck in traffic, saying ridiculous things about bike lanes and street safety. It’s embarrassing, and not the kind of thing we need if we’re serious about an Amazon-type deal.

3. Lots More Housing

Recent Ford site meeting.

“50,000 workers” seems like a massive overestimate to me, but it suffices to say that any big new company moving to the Twin Cities would create the need for lots of new housing. One of our region’s greatest assets is that, for a long time, housing here has been relatively affordable. The Twin Cities has long been recognized as a place where many young people could afford to buy a home.

But we have a housing crisis now and that old truism is changing. If the Twin Cities is actually serious about attracting an major 21st century employer like Amazon, we need to be building a lot more housing than we are today. The fact that efforts like the Ford site, upzoning in Minneapolis, or affordable housing in the suburbs, are receiving such negative pushback is a sign that the Twin Cities is not serious about solving its housing shortage. If we actually did get a big fancy new company headquarters, we’d need a lot more leadership from cities around the metro when it comes to building new housing.

In Conclusion, I am Skeptical

Maybe it’s the fact that Amazon.com began as a business that undermined local bookstores, but personally, I think trying to seduce an “angel investor” company is the wrong approach for the Twin Cities. We should be trying to grow and improve our local economies and local businesses first. We should be doing all the things I listed above because they improve our quality of life, public health, access to equitable housing, and our local economies.

Given the lack of political consensus in these three core areas, I doubt there is any way Amazon will come to Minneapolis/Saint Paul. And after all, two of their main competitors, Target and Best Buy, are based here. Plus Seattle is a relatively similar city already.

On top of that, the specifics of the Amazon contest leave me with a bad feeling in my stomach. Regions pitting subsidies against each other in a race to the bottom is what Minnesota has tried, somewhat successfully, to avoid for decades! See also Chuck Marohn’s take-down of this kind of economic approach, and his list of cities that might make “bids” for Bezos… I’m skeptical!

But the point remains the same. Right now, the toxic politics around urbanism suggest that Minneapolis and Saint Paul are not serious contenders for growing and competitive 21st century companies like Amazon.

But if we somehow improve our priorities and begin creating a city with great transit, lots of affordable housing, and safe welcoming streets, I believe cutting-edge companies will flock to the Twin Cites. They won’t come for tax breaks, but simply because these are excellent places to live, full of people care about and value our urban spaces.

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24 Responses to Three Things the Twin Cities Would Do if it Really Wanted an Amazon HQ

  1. Eric Anondson
    Eric Anondson September 15, 2017 at 11:40 am #

    “even the anti-Ford Site people tweeted about how a potential Amazon HQ was somehow a vast improvement over the current plans. (That one is a head-scratcher.)”

    This is easy, it’s much the same thinking that creates the Bay Area crisis, that jobs aren’t people but housing is. Zoning for 40,000 more jobs in a city like Sunnyvale doesn’t create traffic the kind of gridlock that 10,000 homes does. It’s pervasive here.

    • Bill Lindeke
      Bill Lindeke September 15, 2017 at 11:46 am #

      Still not getting it…

      • Eric Anondson
        Eric Anondson September 15, 2017 at 12:05 pm #

        Well, I’m not saying I agree with it.

    • robert saigh September 30, 2017 at 1:05 pm #

      The fact that Demographically, Minneapolis/St. Paul are similar to Seattle….I lived their many years ago. Outside of climate there are many similarities that would create an automatic “Business Dynamic” that cities in the South (for instance) wouldn’t have IMO! Gov. Dayton and the TC’s should put up a serious bid because in the future Best Buy and Target are not going to have the same clot and impact in the area due to changes in retail and demographic changes…..something civic and business leaders must be aware of. The local turf wars over transit and infrastructure must resolve itself because these disagreements not only consume time but costs start to exceed themselves which creates even more dissent!

  2. Tom Quinn September 15, 2017 at 12:06 pm #

    I can see no way MSP will ever be able to entice Amazon for lots of reasons, but there’s one issue that I’ve been thinking about and not hearing anyone mention.

    Both the Minneapolis and Saint Paul city councils have the power to create local labor rules that would affect Amazon. Whether one agrees with the the work rules or not isn’t the issue. My question is why would Amazon expose itself to the risk of such local meddling?

    With regard to the “anti_Ford Site people tweets”, a few sentences from a few people is hardly representative of any group and not worth consideration.

    • Adam Miller
      Adam Miller September 15, 2017 at 12:58 pm #

      I’m not sure any work rule changes matter that much to an HQ housing mostly exempt employees. The support staff it might apply to probably already gets better treatment than required anyway.

    • Bill Lindeke
      Bill Lindeke September 15, 2017 at 1:05 pm #

      It was on the official “livable” Facebook page.

  3. Anton Schieffer
    Anton Schieffer September 15, 2017 at 12:08 pm #

    Not fair – I was just wrapping up my own Amazon post! Lots of good points here. The scariest aspect to Amazon moving anywhere is that many cities across the country are facing the same housing shortage that we are. New jobs will lead to displacement in any city Amazon chooses to locate to.

    I think Denver is the most likely candidate for some of the reasons you stated. They’ve made extensive investment in their transit infrastructure. They have a massive international airport (which, having opened in 1995, is the most modern airport in the US that I’m aware of). But most importantly, they’ve been building housing, to the tune of 10,000 new units in 2016. I don’t know offhand how many new homes were built in the Twin Cities metro area in 2016, but I know it’s well short of 10,000. The more housing we build, the less economic growth (such as adding lots of high-paying jobs) will displace current residents.

    • Eric Anondson
      Eric Anondson September 15, 2017 at 12:14 pm #

      I agree, I’ve been saying that any city with this much heads up and forewarning that fails to zone for that much high-earner housing deliberately creates their next housing crisis. Bureaucratic pace would need to be accelerated to get the housing construction markets ready to go and have housing being built as jobs arrive, not years after.

    • Tom Quinn September 15, 2017 at 12:15 pm #

      So why is Denver building housing at a faster rate that MSP? The paper this morning said that MSP is one of the top three major cities in the US with housing shortages. Why?

      On the face of it, it makes no economic sense. If you have a shortage, people will meet the need so there must be artificial factors involved. What are they? Why are builders building?

      • Monte Castleman
        Monte Castleman September 15, 2017 at 12:43 pm #

        1) We’ve created an artificial land shortage with anti-growth policies like the MUSA line and minimum lot sized zoning. The only houses that can be built given these policies are expensive McMansions that few can afford.

        2) As has been well chronicled here, there’s been a lot of resistance to anything that would increase density in developed areas. Maybe you don’t want a hulking apartment tower next next to your property blocking the sun and eviscerating your privacy, but that also means less places for other people to live.

      • Adam Miller
        Adam Miller September 15, 2017 at 1:00 pm #

        Zoning.

        • Andrew September 18, 2017 at 11:13 am #

          Are our zoning policies really that different from other cities, or in the case from Denver’s? I thought zoning was pretty universal, until maybe recently.

          Serious question – I just don’t know that much about zoning, and thought that while it causes problems here, it would also cause problems elsewhere.

          • Adam Miller
            Adam Miller September 18, 2017 at 1:25 pm #

            I don’t really know. I mean, I think we’re very different from say, Houston. And I assume something must have changed recently in Denver to allow them to add all the housing they’ve added.

            What I do know is that we used zoning to effectively stop the process of gradually increasing density somewhere around the 1970s. You can see it in the housing stock, where see lots of du-, tri-, and quad-plexes and small apartment building from before that time and few to none from later.

      • Jake September 23, 2017 at 5:46 am #

        A few additional reasons not mentioned by others is that in 2012, Minnesota chose to upgrade to higher energy code standards and have added safety standards as well(2nd floor double-hung windows can’t be opened farther than a few inches by a child and an adult must open the rest of the way. The changes on average compared to surrounding states add $30,000 to the cost of the same size home on average. All surrounding states have very similar costs. The metropolitan council also has a development line to keep costs of sewer and utilities more affordable and recently an article states by doing so, saves 40% on sewer costs. The savings are lost however when land owners inside the line seriously overcharge for land. Land inside the line can swell in value to around 100,000 per acre, vs land outside the line worth 20,000 per acre.

        It’s also important to note that annexation works much differently in Minnesota than surrounding states because in Minnesota, annexing land needs to be approved by the state capital by a judge. In Wisconsin, a city buys land from a farmer or a land owner signs to allow the city to annex. The state reaches out to neighbors who would be affected by annexation in their area and gets the consensus of their views on it and almost always, the neighbors don’t want to pay the additional costs, so it doesn’t happen. Once cities/suburbs incorporate, a nearby city can’t take them over, but in Illinois, the city of Chicago has been talking about annexing neighboring suburbs, so each state has different rules. It’s also important to realize Chicago has around 230 square miles already and Detroit is around 150 square miles. Minneapolis has around 55 square miles, and St. Paul has around 50 square miles(used to be larger until neighborhoods like Lauderdale incorporated and St. Paul back then approved it). So land wise, instead of Minneapolis being 230 square miles as one city, in the same space, our takes prefers hundreds of independent cities. One of the biggest issues our area faces is many large companies and the general public doesn’t understand what the twin cities really is or how big it is. People nationally think Minneapolis or St. Paul are small, but don’t understand they are because of a lack of space, but not by square mile. Many people think “Minne” means small but anyone driving around the region or state is quickly overwhelmed by all the different city names all in one area and how big the area feels compared to what they expected to find.

        The good thing about this area however, is that it gives companies and residents so many more choices and keeps crime more under control because every city has different law enforcement setups and if there are big problems, you have far more resources to pull together than having one force which can get overwhelmed easily. Each city has it’s own priorities and can uniquely focus on independent ideas and projects…most areas can’t do that. Also, the twin cities supports a physical mega region(a recent research article called it the Laurentide US mega region which made a few errors in my view in the size but is basically the size of the 1848-1858 Minnesota territory+the western half of Wisconsin, areas of the UP of Michigan and should also include the northern 1/3rd of Iowa as Des Moines, Sioux falls, Fargo Duluth, Rochester, St. Cloud and Mankato are not metro areas of over a million people like the Minneapolis metro region of 4 million) that is much larger than most mega regions in the US. So the Minneapolis metropolitan region is like a sleeping giant that is much larger and could become far larger than it is currently because it has no shortage of land in any direction. There are also mid sized cities that surround the twin cities(St. Cloud, Mankato, Rochester, La Crosse, Eau Claire and all areas in between. If you draw a circle around the whole area connecting the mid sized cities, you have an area that has around 4.5-5 million people…that is the talent area they would be pulling from. I don’t think they would have that much trouble finding talent locally or pulling it in from elsewhere).

        So while many on this site try to deny this area credit for not being what amazon wants, I actually believe it is exactly want Amazon wants and needs. What other area has more competitors in so many areas of interest to Amazon(health, retail, medical, banking, transportation, technology, manufacturing) that is still fairly affordable for wages, housing, and offers a strong talent base that has risks of such few natural disasters? How are we not setup for Amazon when so many competitors are already here? Why are they here in the first place? A workforce that works harder than most with higher participation rates, where people go the extra mile exists here. Online retail is always open…why would they want their business on either coast or in the far south where a hurricane could shut the company down for long periods of time? I doubt they would pick cities and states with major financial and crime issues that are not affordable in the first place. If you read Amazon’s list of items…they are explaining a region just like the twin cities on every single point. The best location in my view for them to locate would be the farm across from Mall of America. Why? Great views of the Minnesota river valley…massive entertainment and dining options right across the street, light rail line across the street…and the MSP airport next door…around 200 acres with utilities available with all the empty lots. Most other cities can’t offer anything like that. The national media doesn’t know much about Minnesota, so while they keep suggesting Denver, Boston, Philadelphia, Detroit or Chicago, Amazon needs to keep costs down and choose a safe safer area to do business with exceptional talent that has much extra area for housing…the state could easily relax the building codes and development lines and add more transportation options and start spending more money and if a big operation wants to come to town, politicians from both parties with suddenly get on the same page and made it happen. It’s not an opportunity they or most other areas would turn away! So unlike most of the pessimists out there, I think the area has a greater chance to land the company than most of us think, but time will tell. It also depends on if Amazon is smart enough to see what’s really available here compared to other areas.

  4. Dan September 15, 2017 at 12:09 pm #

    The real reason to be skeptical about the Amazon HQ landing here is that it would involve massive give-aways in tax concessions and what-not. Amazon isn’t dumb, they’re going to hold up their new host city for however many billions of dollars in concession to build their new headquarters there. This won’t work out as a short term benefit for the city; and it remains to be seen whether it works out as a long term benefit. Its not like any government office giving out these concessions is going to make Amazon sign a contract to do what it is ‘suggesting’ it will do; that is, if Amazon only makes 20,000 jobs instead of 50,000 jobs, its not like the city/county/state governments are going to get their money back.

    A secondary reason is this: what is wrong with Target? Isn’t Amazon going to put them out of business? Target has around 11,000 employees in the Metro area and has invested a lot of money in Minneapolis (like building skyscrapers, etc), which is its home-base headquarters. Since Target’s headquarters are here and half the stadiums are named after them, it is reasonable to assume that Target is more interested in Minneapolis’ success than Amazon ever will be. Target may not be as sexy as Amazon is, but it is reasonable to ask why we expect Amazon to create 5x as many jobs in their secondary headquarters as Target (#38 on the Fortune 500!) has in their primary headquarters.

    In interpersonal terms, abandoning Target to hang out with Amazon is like leaving your middle-class husband to become some rich man’s mistress. You might get a diamond necklace or two, but how long is the rich guy going to care for you?

    • Bill Lindeke
      Bill Lindeke September 15, 2017 at 1:06 pm #

      Agree with all this.

    • Erik September 15, 2017 at 1:42 pm #

      “Isn’t Amazon going to put them out of business?” Or buy them like they did Whole Foods. I think this is one of the more intriguing aspects of Amazon potentially setting up shop in MSP.

    • Monte Castleman
      Monte Castleman September 15, 2017 at 4:03 pm #

      11,000 Target jobs are superior to 50,000 Amazon jobs? Even if you’re one of the 39,000?

      If Target goes under it will be of their own doing. They seem to think that to fix the problem in their grocery section they need fancier shelves and more super-deluxe-fancy-pants-organic stuff, and not that the issue is figuring out how to keep Land-O-Lakes butter in stock so shoppers don’t have to go to another store

      • Bill Lindeke
        Bill Lindeke September 16, 2017 at 10:51 am #

        I don’t know what the exchange ratio of actually-existing corporate HQ jobs to made-up-hypothetical corporate HQ jobs should be, but my guess would be 1:10 or so…

      • Dan September 18, 2017 at 8:04 am #

        The point is: if Target only has 11,000 jobs, why do we think that Amazon will be have 50,000 in their _secondary_ headquarters? The side point is, even if Amazon is only providing 10,000 jobs or so, how many of them will come at the expense of Target? Trading Target jobs for Amazon jobs is a bad deal, because Target is more interested in the health of Minneapolis than Amazon will ever be, since its roots are in Seattle.

  5. Monte Castleman
    Monte Castleman September 15, 2017 at 6:29 pm #

    Assuming Dayton changes his mind and decides Minnesotan’s having decent paying jobs is worthwhile like Walker did with Foxconn, here’s my thoughts as to locations:

    TCAAP: No rail transit. Amazon doesn’t seem to want a place in the cornfield type headquarters like Target North. As hard as it is to even get a rail line to serve downtown St. Paul I don’t see a new line extending up there even though Minnesota taxpayers paid for the capability for the I-35W bridge to support light rail. This also rules out other palace in the cornfield type locations in the exurbs.

    Downtown Minneapolis: Has the vibe Amazon wants. The obvious location on the east side has now been eaten up by Ziggi’s palace and associated redevelopment. Maybe there’s enough room by where the soccer stadium was going to go. On the downside the regulations that drive up the cost of business that Minneapolis seems to entertain every few weeks might make them skittish even if they already use cardboard containers in their cafeteria and all their employees are already worth at least $15 an hour.

    Downtown St. Paul: No real rail line to the airport. I don’t think a streetcar will cut it even if that does get build, which is not certain.

    Kelley Farm: About the size they want, on the rail line, near the airport and their distribution center but even with Cray and the Mall of America Bloomington isn’t hip enough. We don’t even have a brewpup yet:

    Golden Triangle. Assuming the Green Line actually gets extended, a lot of underutilized land in the area, and easy drive to Bearpath and McMansions for executives but even less hip then the South Loop area of Bloomington.

    • Bill Lindeke
      Bill Lindeke September 16, 2017 at 10:52 am #

      Re: St Paul: A streetcar would “cut it”. It’s mostly semantics. It would get you to the airport in 40 minutes in comfort.

  6. John September 16, 2017 at 2:24 pm #

    Thank you for a well thought out and readable article. I particularly appreciate your thoughts on the first two points, there is no real comprehensive planning which of course makes consensus more difficult. I looked back at other articles you have authored and thought the transit density maps to be most telling and a cause for the lack of consensus moving forward.

    To me, the SWLRT project is sucking up so much political and other financial capital that we are literally stalled over a transit line that will, in no way justify the financial, political and environmental costs paid in.

    Part of the problem is that I feel that I must say that I am not AGAINST mass transit, just oppose this line for the reasons noted above, plus I hate being lied too and the Met Council figures concerning ridership, cost and equity have not been challenged for reasons I really cannot explain.

    I followed the link to this article from MinnPost and that organization has repeatedly failed to conduct a comprehensive review of the entire project, which I pointed out in a piece they did not publish.

    I am a new reader and will check back again – thanks for the good work.

    Cheers.

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