February 14, 2019
Hindsight is always 20/20. It’s much easier to look back at what went awry, determine why a deal fell through than to manage it in the middle of the process. That being said, looking at how the proposed Amazoon headquarters in Long Island City collapsed in on itself is a very informative study for every organization involved in economic development.
There are two main components to analyze:
From Amazon’s Point of View
Many experts gave Amazon a lot of credit on making their HQ2 search so public – by getting hundreds of cities and regions to bid, they were able to gather an unprecedented amount of data that will be a boon for years to come as they expand their physical footprint across the country.
One could also surmise that the circus Amazon created with their search was the catalyst for this backlash. The list of 20 finalists was set for more than 10 months before the announcement. This gave investors the opportunity to build tailored investment funds and highlight specific properties they would purchase in whichever of the 20 finalists actually won.
In turn, this made the local government officials’ (and people in the community’s) concerns over rapid gentrification justified. If Amazon and New York’s state government had access to real time data showing how prices were adjusting and rising – both in the weeks preceding the HQ2 announcement and immediately afterwards – they could have put forward a strategy to address these issues and create a more favorable environment.
From the Economic Development Organization’s Point of View
The competition for HQ2 was a once-in-a-generation type of opportunity for Economic Development Organizations. In the rush to win with such tight deadlines, it is easy to devote all resources on simply meeting the requests outlined in the bid, losing sight of gathering input from the other stakeholders in the community.
To oversimplify, in this case the city and the state were advocating strongly for the project without much input from local economic development organizations – both public and private EDOs. Had they worked together in advance and created a strategic plan with key insights and data addressing localized effects – and outlining the myriad ways the local community would benefit – the local government officials against HQ2 wouldn’t have had as much of an opportunity to use the development as a wedge issue.
A comprehensive strategic plan that included to-the-minute data on how property values are changing, and included details of how to help small, local businesses find opportunities from HQ2, would have ensured the argument against the development would have been substantially weaker.
In the end, there will always be a push-pull within a community when it comes to economic development. Being familiar with the local needs – such as knowing if a community is largely renting their homes and can consequently be easily displaced – and having fresh data on how rapidly the market is evolving can provide economic development organizations the ability to better advise proponents of economic development on the obstacles in front of them and address any problems before they arise.