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The best reason to bring Amazon to Philly

Bringing the retail giant here could be a great experiment in equitable economic development

As soon as Amazon announced that it was searching for a new city to host its headquarters, Philadelphia and all North America’s major cities began working on their pitches. Called “the trophy deal of the decade” the headquarters will come with 50,000 jobs, plus all the spillover revenue new employees bring. The total economic boost will be in the billions.

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Competition is stiff, though. As Amy Liu and Mark Muro at the Brookings Institution wrote in the Harvard Business Review online, the Amazon RFP “sets out a compelling list of the attributes cities must have if they aspire to be a serious part of America’s growing digital economy.” Beyond a suitable piece of real estate that could support a new 500,000-square-foot building, with another 7 million square feet for future development, Liu and Muro note that Amazon is looking for a city that has capacity to produce skilled, technical talent; access to domestic and global markets through modern infrastructure; connected and sustainable placemaking; and culture and diversity.

As many have already noted, Philly has these things. We have a pipeline of students from 90-plus nearby universities. Our city has highly accessible infrastructure for trucks, airplanes and trains, and two of the assumed potential locations for a headquarters—Schuylkill Yards and the Navy Yard—are directly adjacent to highways, within 15 minutes of the airport. Schuylkill Yards even sits on top of subways and regional rail. Our convenient location between New York and DC only makes this infrastructure more valuable. We have dedicated ourselves to being tops in sustainability and placemaking. And we have a diverse population that is growing due to an influx of millennials. By 2026, as the country celebrates its 250th anniversary, it would be an amazing round trip for Philly to be the once and future star of the country.

But there are some roadblocks. The RFP also calls for a “stable and business-friendly environment.” Of major American cities, Philadelphia has one of the highest business tax rates. Our growing pension liability is a drain on our city budget, our transportation authority might see cuts in the next state budget, and our relationship with state legislators leaves much to be desired.

But the Amazon bid provides the much needed impetus to change some of that. Indeed, winning the Amazon bid would radically alter the city’s calculus. In the past few years, Philadelphia has seen a building boom, fast job creation and an influx of millennials. Amazon would only accelerate these trends, and without proper focus on inclusion, this could prove problematic.

Amazon is looking for a city that is essentially shovel ready, and in terms of our physical amenities, Philly is competitive on those terms. But to win this bid, Philly must show that we’re ready and eager to put new programs in place that will not only create a better business climate, but create a better city for all.

One need look only to New York where economic growth has been great, but undoubtedly come at a cost. While the city has undertaken massive transformations in the past 20 years—building new economic centers in Brooklyn and the Far West Side, expanding its employment base beyond the financial industry to tech and tourism, rezoning almost half the city—the city still struggles with persistent inequality. Homelessness rates are at the highest they have been since the Great Depression, and the number of those in shelters has risen by 76 percent in the past decade. The fact that middle-income people, not to mention the full fifth of the city living below the poverty line, have been left behind mars achievements like the High Line, Hudson Yards and the Second Avenue Subway.

The tantalizing aspect of the Amazon bid is the opportunity to get equitable economic development right, and to prove that greater economic growth doesn’t have to mean greater inequality. Philadelphia is uniquely poised to do this because of the very DNA of the Kenney administration and City Council. Mayor Kenney’s focus on immigrants’ rights, schools, neighborhood parks and public spaces all speak to his deep concern that all Philadelphians participate in and enjoy the benefits of a safe, vibrant city. Numerous councilmembers prioritize affordable housing, family-sustaining jobs, preventing homeless and reducing blight. We are lucky to have local government leadership wholly aware of and concerned for the less fortunate. What we haven’t had are the job creators to shift the current paradigm. The combination of these civic priorities and Amazon’s economic force could be win-win for Philly.

Amazon’s RFP calls out the need for cities to provide incentives. Given that the Navy Yard and Schuylkill Yards are in Keystone Opportunity Zones, there are wide-ranging enticements available. But Philly should go a step further to focus on equitable development incentives, taxes and policies for the benefit of the entire city.

As has been suggested by many, the city should lower its business taxes in favor of higher commercial real estate taxes. This would be benefit all the small businesses in the city, not just Amazon. And it would enable those businesses that trickle down from Amazon (the restaurants, the vendors, etc) to truly capitalize on their success.

The RFP also calls for a “stable and business-friendly environment.” Of major American cities, Philadelphia has one of the highest business tax rates. Our growing pension liability is a drain on our city budget, our transportation authority might see cuts in the next state budget, and our relationship with state legislators leaves much to be desired.

In addition to providing a site for Amazon’s headquarters, the city must think about housing. As 50,000 new employees will result in a huge housing boom, the city should consider how to reap property tax revenue from new development that will support public schools, upzone appropriate areas to meet needs for increased housing supply, and discuss way that inclusionary zoning or incentives could encourage developers to build more than just luxury condos.

Amazon is bound to attract many employees beyond the region, which could provide an exciting infusion of new people. But Amazon should also be made aware of the successful programs run by local universities that help train people already living in the community and the benefits of community workforce agreements that ensure those in the community are given some preference to outside applicants. Philadelphia has experience building jobs pipelines and could balance the needs of both natives and newcomers.

With Amazon’s recent purchase of Whole Foods, the company is bound to be thinking about digital food delivery. Philadelphia invented the Fresh Food Financing Initiative program that Michelle Obama later championed at a national level, and is home to innovators in the food space such as Common Market, which aggregates small organic farmers so they can compete with larger standard farmers. Amazon could use Philadelphia’s food expertise as a testing ground for expanding high quality food access to people of all income levels and perhaps open a food distribution center in an underserved neighborhood.

Finally, the city’s minimum wage should be raised to $15 per hour, simply as a safeguard against displacement of those at the bottom of the economic ladder. As Seattle billionaire, Nick Hanauer, notes following Seattle’s own wage hike, paying people a decent amount is fundamental to our collective success.

Amazon is looking for a city that is essentially shovel ready, and in terms of our physical amenities, Philly is competitive on those terms. But to win this bid, Philly must show that we’re ready and eager to put new programs in place that will not only create a better business climate, but create a better city for all.

Diana Lind, a Citizen board member, is Managing Director of the Penn Fels Policy Research Initiative.

Header Photo: Amazon Go

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