Just as the dust began to settle from the frenzy that was Amazon's HQ2 selection, a new plot twist occurred: New York was dropped over the incentives controversy. I'm not interested in disparaging other markets, rehashing our own bid or making another case for Tampa Bay. But I would like to share some important lessons learned from Amazon's unusual process.
1. Talent is king
As was the case with Amazon, access to a strong and deep talent pool is the number one priority for companies seeking to relocate or expand in a new market. Not many metro areas can offer the quantity of tech workers that Amazon was seeking for HQ2, which is why it was split into two-and-half pieces: Arlington, Long Island City, and Nashville. To put it in perspective, a typical expansion project for a center that requires the diversity of talent that Amazon was looking for is several hundred, maybe a thousand jobs. For example, last year global law firm Baker McKenzie announced plans to create 300 new jobs in Tampa, and in 2017 biotech company Amgen announced that it would create 450 jobs here. Both were significant projects for the area, but nothing approaching the 25,000 jobs that Amazon intends to hire.
2. Incentives can't make a deal, but they can break one
While incentives have taken a back seat to talent these days, they ultimately killed the deal in New York. Even though there would be no Brinks truck backing up to Amazon's door to unload cold hard cash, some government leaders and residents were still shocked and angry about the $3 billion-dollar incentive package assembled to attract one of the world's most valuable companies. The inaccurate assumption that companies are receiving billions of dollars in up front cash payments to relocate to communities doesn't help our efforts to debunk myths about economic development or incentives. It just adds to the confusion.
So, let me break it down. In Florida, and in many other states, incentives are not a cash giveaway. Rather, they are performance-based, designed to be a carrot to induce specific behavior such as the creation of certain types of jobs in high impact areas or targeted industries in order to help diversify a local economy. Companies that satisfy the requirements get a refund after they deliver what they promised – typically high wage jobs and capital investment in a community. If no jobs or investments are made, nothing is awarded.
Qualified Target Industry Tax Refund, Florida's most common incentive, is available to companies that create high-wage jobs in targeted industries such as IT, life sciences, financial and professional services, defense and security, distribution and logistics, and manufacturing. The state and local governments both chip in to provide the refund.
Incentives involve far more than tax rebates. There are programs that help companies hire and screen new workers, or get grants to train their employees, and much more.
3. Tampa Bay can compete for the big deals
The HQ2 process proved we can come together as a region to compete against some of the country's largest markets. When you boil it down, HQ2 is just a catchy way to brand a shared services center. And Tampa is ground zero when it comes to such centers that house corporate operations like finance, HR, marketing and IT. Major global companies like Amgen, Bristol Myers-Squibb, Citi, DTCC, MetLife, and USAA have set up "HQ2s" in Tampa and continue to expand here thanks to our excellent talent pool, pro-business climate, low taxes, collaborative community spirit, and enviable quality of life.
There are still more investments we need to make to win the war for talent. We must address our transportation woes and support our K-12 education systems - issues that our residents voted to invest in last November. We have excellent infrastructure: smart city technology, a top-rated airport, and Florida's largest port – but we must continue to invest in these economic engines to maintain our competitiveness.
As I said, this isn't an attempt to get Amazon to reconsider Tampa Bay's HQ2 bid. That ship has sailed. There are other projects in the pipeline, though, and site selectors are taking notice of our market's collaborative nature and burgeoning talent, which is leading to big wins for our entire community.
Craig J. Richard is president and CEO of the Tampa Hillsborough Economic Development Corp., the lead designated economic development agency for Hillsborough County.