A sigh of relief: That’s what some around Charlotte breathed last week, when Amazon announced the city didn’t make its shortlist for the massive second headquarters known as HQ2.
While local officials and economic developers have salivated over the 50,000 high-paying jobs and $5 billion worth of investment Amazon has said will bring to the chosen city, others worried about an Amazon-fueled boom driving up housing costs, increasing traffic, straining infrastructure and demanding expensive tax incentives.
“I’d call it a dodged bullet, frankly,” said Ray McKinnon, pastor at South Tryon Community United Methodist Church and a member of the Charlotte Housing Authority’s board of commissioners. “Charlotte hasn’t figured out already how we handle this crisis of housing. To add the headquarters of Amazon to the mix would, I think, just be too much, too soon.”
To be sure, forecasters don’t think the Charlotte region will stop growing, and short of a major economic crisis, housing prices aren’t likely to come down anytime soon. The region’s economy is growing and the number of houses and apartments remains extremely low. And Amazon isn’t the sole driver of breakneck growth in Seattle, which is also home to companies such as Microsoft, Starbucks and Costco.
But skeptics point to the unintended consequences of Seattle’s building boom, including heavier traffic, rising taxes and property values that are becoming unaffordable. Amazon, Seattle’s largest employer, says it employs more than 40,000 people in the city. By comparison, Charlotte’s largest employer is Carolinas HealthCare, which has about 32,000 employees in the region.
Seattle named 20 cities finalists for HQ2, whittling down the original 238 applicants. Heavyweight cities such as New York, Los Angeles, Atlanta, Washington, D.C., Dallas, Boston and Chicago made the list, as well as smaller cities closer to Charlotte’s size, such as Columbus, Ohio; Austin, Tex.; Nashville, Tenn; Indianapolis and Raleigh.
The huge influx of well-paid young professionals to Seattle has helped revitalize the city and drive a construction boom, but it’s also led to plenty of complaints from local residents, who are glad the company is looking elsewhere for its next phase of growth.
“As we’re plainly choking on the population influxes we’re already experiencing, the company’s stated intention of increasing staffing outside of Seattle should actually be cause for relief,” reader Bruce Bonifaci wrote in a September editorial in the Seattle Times.
The city has topped lists for fastest-rising housing prices, jumping almost 13 percent from the prior year, according to S&P CoreLogic Case-Shiller. The Seattle Times reported the median sale price for a house in Seattle reached $725,000 in December, an increase of $90,000 in just a year. Rents jumped from $1,020 in 2010 to $1,647 in 2017, an increase of more than 60 percent, the Seattle Times reported, though rent dipped slightly last year.
The cost of housing has been rising in Charlotte, too, worsening an ongoing shortage of places where low-wage workers can afford to live. The median price for a home sold in Charlotte this December was $235,000, up $25,000 from December 2016. The city’s average rent hit $1,115, up 33 percent in the past five years.
McKinnon, the pastor, said that while Amazon could be good for Charlotte property values, he didn’t think the benefits from high-tech jobs would spread across the city.
“The jobs would not be jobs where folks who were already housing-distressed would benefit from, and it would drive up prices across the board,” said McKinnon, “even more displacing or pushing out folks who already can’t afford the housing now.”
An analysis from Apartment List, an online research service, showed that Charlotte rents could be “moderately impacted” by Amazon’s arrival, adding another 0.7 to 1 percent annual rent increase each year over the next decade, on top of the annual rent growth already occurring.
Raleigh, with a smaller stock of housing, would see even more dramatic increases, with rents rising 1.5 to 2 percent a year on top of existing increases if Amazon picks that city, according to the economic projection.
Other annoyances in Seattle tend to the more mundane, such as closures of beloved mom-and-pop stores and dive bars, or the minor, such as Amazon flooding the city with free bananas, having handed out 1.7 million near its headquarters over two years. The tech giant seems to be capable of exhausting a city’s transit system: Last summer, Seattle had to add two additional buses to accommodate all of Amazon’s interns, according to the Seattle Times.
But the challenges Amazon has presented in Seattle are “problems of success,” according to Brooking Institute fellow Adie Tomer.
In other words, Seattle has felt growing pains because its biggest employer is growing so fast. It’s not like the city is straining for resources because people are leaving.
“Challenges of success are definitely the preference to challenges of failure,” Tomer said.
The influence of a behemoth like Amazon is enough to boost the statewide economy through more jobs and investment from Amazon, meaning Charlotte could stand to benefit even if Raleigh lands the company’s second headquarters, Tomer added.
He also noted that now that Charlotte is off Amazon’s list of potential new homes, local leaders can use the millions in incentives they’d contemplated offering Amazon to instead reinvest in schools, workforce training, tech incubators and other areas that support the city’s growth.
“The bullet they’re all going to dodge is incentives,” Tomer said of Charlotte and other cities that didn’t make Amazon’s short list. Tax incentives are often criticized as corporate welfare, or for not paying off in the long run for the cities and states that use them to lure companies.
Professor and urban theorist Richard Florida wrote last week that Amazon is “pitting city against city in a wasteful and economically unproductive bidding war for tax and other incentives.”
Local leaders have not disclosed details of Charlotte’s bid, including where sites they offered Amazon are located, and how much tax incentive money Amazon could get. A representative from the Charlotte Regional Partnership, the 16-county group that submitted Charlotte’s bid, could not be reached for comment Monday.
Some other localities did: Newark, which did make Amazon’s short list, is offering more than $7 billion in state and local tax incentives.
Charlotte leaders must ask themselves the rhetorical question, Tomer said: “We have this much for incentives. Where else can we throw that money?”
Charlotte City Council member Tariq Bokhari, who helped lead a group called Hivestorm with the Carolina Fintech Hub to support the Amazon bid, said whichever city Amazon picks will have to deal with “painful day-to-day tactical decision-making to meet the needs of the new company.”
Whichever city that is, he said, will have to make sure it remains a good deal for taxpayers.
But, Bokhari added, landing Amazon “is game-changing enough that it’s worth taking on that pain.”