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The Amazon HQ2 scramble: Minnesota's failed bid, in 3 short chapters

ST. PAUL—Amazon HQ2 won't be in Minnesota.

But not for a lack of trying.

On Thursday, Sept. 7, the Seattle-based online retail behemoth publicly announced it wanted to build a 50,000­ employee second corporate headquarters in a major North American city and would entertain pitches. The deadline: Oct. 19.

And everyone went nuts. Here and around the continent.

Within hours, Greater MSP — a Twin Cities regional development agency — had assumed the lead and was working with top state bureaucrats and planning a meeting for the next morning in the Governor's Residence to mount Minnesota's bid in what would be a six-week whirlwind that was done largely out of the public eye.

It didn't succeed. In January, Amazon announced that from among 238 proposals from Winnipeg, Manitoba, to Scarborough, Maine, there were 20 finalists. The Twin Cities was not among them. The closest was Chicago. The company said its final choice will be announced later this year.

But those behind Minnesota's roughly 100-page bid, which included 18 metro ­locations, say it was a worthy exercise in both its aspirations and in the crucible it created to bring to the fore what the state has to offer.

Much of it remains shrouded in secrecy. But last week, the state's Department of Employment and Economic Development released reams of public documents, notes and emails in response to public information requests by the Pioneer Press and other news organizations. The records filled three file boxes.

Here's some of the story they tell.

Chapter 1: Why go for it? Met Council study found Amazon HQ2 would bring 130,800 jobs and $130 billion to Minnesota

Amazon HQ2 is sexy.

A young, transformative company — which nearly everyone uses at least around the holidays — and its visionary founder promise 50,000 jobs with an average annual compensation in excess of $100,000. All contained in an alphanumeric hashtag.

Plus, we Minnesotans have a proud soft spot for corporate headquarters: Seventeen from the Fortune 500 list at last count, right?

For the potential 18th F500 Corp. HQ, the state would eventually pitch 18 sites.

But at what cost? A common populist refrain, leaders in politics and the business community knew, would be whether the hundreds of millions (billions?) in incentives the state would offer would outpace the actual benefit of a feather in the civic cap of the Twin Cities. Would this just be corporate welfare at the expense of locally founded — and headquartered — competitors Target and Best Buy?

It would have been worth it — easily — according to an analysis done by the Metropolitan Council.

Jobs, wages, people, housing, traffic: all up

Using information from Amazon and its impact in Seattle, the Met Council plugged a hypothetical Amazon HQ2 into economic forecasting software it uses to project the region's growth as it forecasts needs for infrastructure ranging from highway lanes to sewer lines.

It compared what the Twin Cities and state would look like 15 years from now, with Amazon and without.

The analysis assumed $4.5 billion (yes, with a "b") in taxpayer-funded incentives and 37,500 employees in 15 years, lower than the 50,000 Amazon was espousing.

Here's what it found, with Amazon HQ2:

•130,800 new jobs would come to the metro (93,300 in addition to the Amazon workers) and 12,800 new jobs in greater Minnesota.

•138,500 additional people would live here.

•Wages would rise an additional 2.3 percent.

•Housing prices would rise an additional 3.9 percent.

•The size of the state economy would increase by $18 billion annually, for a cumulative total of $130 billion over 15 years.

•Traffic congestion would increase, and that $4.5 billion in incentives would drain some areas of government spending.

"In summary, state and local business subsidies have a cost, but the associated benefits far outweigh these," the analysis concluded.

No further analysis done

In the end, the state didn't actually request an in-depth economic analysis, although overtures for one came from private companies, nonprofits and academics.

Officials said it was premature, since the state wasn't making any noteworthy investment — or promises — in its initial pitch.

State offered no incentives

Minnesota's pitch to Amazon never included a dollar of taxpayer incentives.

Practically speaking, it couldn't. Any major package would have required the approval of Gov. Mark Dayton and the Legislature, and the Legislature wasn't in session.

The state's Department of Employment and Economic Development (DEED) instead offered a two-page summary of existing programs over which it and the governor have discretion. They total $36.6 million.

Officials behind Minnesota's bid noted that Amazon didn't expressly request pre-approved incentives, and Dayton said the theme of the pitch was "modest."

Some behind the scenes wondered whether attaching real dollars to it would have made a difference.

Chapter 2: Bloomington's monorail and Forest Lake's 'red carpet': Here are the 18 communities that pitched Amazon HQ2

The pitches for Amazon HQ2 flooded in.

Some were from likely suspects, some not so much.

Bloomington pitched a monorail near the Mall of America, an architect wanted to construct a "lid" over the intersection of Interstate 94 and Minnesota 280, and a worker with an electric utility knew of some vacant land, according to the recently released public records.

It began the very day the news broke that Amazon was looking for a second North American headquarters. Officials with the DEED and Greater MSP didn't need any prompting to start speculating about sites in Minneapolis and St. Paul.

But there were also inquiries from officials as far away as Rochester, Pine Island and Duluth, who were promptly informed that their ideas wouldn't qualify, since Amazon wanted to be within 30 miles of a metropolitan area with at least a million people.

In the end, 18 sites were included in the pitch to Amazon. That actual pitch remains secret.

Greater MSP, which argues it isn't subject to the state Data Practices Act, has refused to release it, citing a three-year nondisclosure act Amazon required all pitchers to sign, as well as the competitive nature of wooing major employers. DEED, which is subject to state disclosure laws, claims it never actually possessed the pitch. Officials might have seen parts of it in meetings, but they never received a copy, and it can't hand over a pitch it doesn't have, said spokesman Shane Delaney.

But records DEED released show some sites, as well as a list of every government agency with a site included in the final pitch.

St. Paul

St. Paul's preferred site centered around the riverbluff location of the former West Publishing buildings along Kellogg Avenue. From there, a downtown campus stretched through occupied buildings to include vacant areas like Fifth and Cedar streets. In the end, city leaders did not pitch the vacant site of the former Ford plant in the Highland Park neighborhood, although on the day Amazon announced its plan, one DEED official said in an email to a pair of Greater MSP staffers: "We could be bold and recommend the Ford site ... regardless of what the Mayor wants."

Bloomington's MOA monorail

With the Mall of America's blessing, Bloomington envisioned a crescent of glass-walled buildings overlooking the Minnesota Valley National Wildlife Refuge as the jewel of a campus south of Interstate 494 near the megamall. The campus would be integrated with the Blue Line light rail, and another segment of the campus north of the mall would be accessible via a "monorail extension," according to renderings.

The other 16 sites

Minneapolis was considering four sites, and it's unclear from the public records which site was finally sent along. According to the documents and published media reports, among the ones the city considered were a site near Target Field, the Upper Harbor Terminal along the Mississippi, and "Linden Yards" near the Bassett Creek Valley.

Ramsey County pitched the 427-acre former Twin Cities Army Ammunition Plant in Arden Hills, now being marketed as Rice Creek Commons.

Forest Lake offered a 178-acre site south of Minnesota 97 between Interstate 35 and U.S. 61. "The city is extremely supportive and we will all roll out the red carpet for the HQ2 opportunity," wrote Chris Eng, economic-development director for the Washington County Community Development Agency.

Woodbury mapped out a series of parcels south of I-94 at Cottage Grove Drive called "Northeast Business Park."

Inver Grove Heights pitched a site known as the "Ace in the Hole" property.

Rosemount floated 160 acres in the northeast quadrant of UMore park, part of the University of Minnesota's land holdings.

Hugo offered a 385-acre plot of farmland southeast of 180th Street and Elmcrest Avenue.

Apple Valley featured a sand and gravel mine. The 414-acre mine is owned by Rockport LLC, on Dakota County Road 42 at Johnny Cake Ridge Road. Roughly 160 acres of the mine will be depleted by the end of 2018 — and ready for development.

Other pitches included sites in Lakeville, Maple Grove, Chaska, Anoka County, Elko New Market, Shakopee, Brooklyn Park and North Branch, records show.

Chapter 3: Amazon HQ2 behind the scenes: 'Hyperloops,' the universal health care incentive, and was it worth it?

Minnesota's bid for Amazon HQ2 was "unique," according to DEED spokesman Delaney.

The six-week deadline Amazon laid out is unheard of in the world of corporate courtship, but the scope, potential impact and heightened attention of this particular effort were unprecedented for such a time frame, he and others involved said.

"The overall nuts and bolts were similar to other projects, but this was very public and very large," said Mike Brown, vice president of marketing for Greater MSP.

"Typically, it's done a little more behind the scenes," said Delaney.

But the media was clamoring for information, political leaders at the highest levels of state government were involved, and thoughts, ideas and tips from the general public were in no short supply.

According to emails the flowed into DEED, the University of Minnesota and the Minnesota State colleges and universities system offered their assistance. Information technology firms offered either insight or their services, for a fee. (In the end, Greater MSP worked with Boston Consulting Group, which offered its services pro bono.)

And anyone with an idea let it be known.

'Hyperloop' and universal health care

One self-described "futurologist" envisioned a hyperloop, a theoretical mode of transportation that would link HQ2-Twin Cities to Chicago — in 45 minutes. Thus, he argued, the Twin Cities could take its nearest competitor out of the equation.

State Sen. John Marty, DFL-Roseville, floated his idea for an incentive: The state commit to establishing universal health coverage. Not only would all of Amazon's employees be covered at a bargain for the company, all Minnesotans would be, he said in emails to officials.

Links to news stories touting the state's attributes and charts like "America's Smartest States" (Minnesota was No. 2) arrived in inboxes unsolicited.

Behind the scenes

While those involved brainstormed talking points — would Minnesota's union presence be "bad for Amazon?" one worker wondered — and ideas that could be used to cater existing pitches to Amazon, staffers at DEED attempted to blunt clamor for information from the media.

At the Capitol, political appointees drafted, revised and redrafted public statements, including one important document: a letter to Amazon founder and CEO Jeff Bezos, signed by Dayton and the leaders of the state House and Senate for both parties. This bipartisan request was important to show Amazon the state was united in its overture — and could be relied upon for incentives, if it came to that, according to DEED Commissioner Shawntera Hardy.

The revisions-by-committee were tedious. "If this makes them all happy and gets ­signatures, it really doesn't matter what they say," one staffer concluded amid debates over whose suggestions for the letter to include and whose to ignore. The letter was completed and signed by all Oct. 16.

Noticeably absent, perhaps, from the thousands of pages of records reviewed by the Pioneer Press was this: bickering. From early on, Greater MSP was established as the lead, and groups wanting to pitch their sites were funneled through them. No one appeared to buck that order, at least not in the records available.

Was it worth it?

It's unclear why Minnesota wasn't picked, according to interviews with several people involved. Brown said Greater MSP remains in touch with the company, which already had business operations here before Amazon HQ2 was announced. But the company hasn't provided reasons why unsuccessful bidders were passed over.

"We don't consider the work to be for nothing," Brown said. "It was great to create these partnerships and be at the ready if another company comes along with similar goals. We feel very comfortable with what we submitted."

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