Dallas mayor passed over by Amazon's HQ2 selection says officials ultimately had 'an East Coast bias'

Key Points
  • Amazon announced the location of its second headquarters will be split between Long Island City in New York City and National Landing in Arlington, Va.
  • Dallas Mayor Michael Rawlings spoke to CNBC about what it was like to be among the final 20 cities under Amazon's consideration and how it will impact the city moving forward.
  • Rawlings said he felt that Amazon truly considered Dallas but ultimately decided it wanted to be on the East Coast.
Dallas mayor Mike Rawlings reacts during an election night party for Democratic candidate Colin Allred shortly after Allred was announced a projected winner for the Texas 32nd U.S. congressional house district at the Magnolia Hotel Dallas Park Cities in Dallas, Tuesday, Nov. 6, 2018. 
Andy Jacobsohn | AP

As Amazon dubbed not one, but two East Coast locations as its new headquarters Tuesday morning, cities in the middle of country lost a chance at becoming an emerging tech market.

Dallas Mayor Michael Rawlings told CNBC Tuesday he was disappointed his city wasn't selected, but was not entirely surprised by Amazon's choice.

"I do believe there was an East Coast bias at the top level of the organization, which is fine," Rawlings said in a phone interview. He said that Amazon's priorities likely evolved throughout the process and the desire to be near the political and media magnates of New York and D.C. "became a higher priority than the benefits that a Dallas provide."

"Any time a company takes a year to make a decision, and this was an important decision, they're going to change their levels of importance through that process, that's just natural," Rawlings said. "I don't believe that people at the beginning of this process said, 'we're going to be in the East Coast' because I believe Amazon people are good people and would not have put the country through this if this was the case."

Amazon's HQ2 selection raises questions for taxpayers
Amazon's HQ2 selection raises questions for taxpayers

Amazon galvanized hundreds of cities across the country to woo the tech giant to their area with the promise of 50,000 jobs and a $5 billion investment. In the end, Amazon announced Tuesday morning it would split its headquarters between two predictable East Coast locations, Long Island City in New York and an area of Arlington, Virginia, just outside D.C. It also announced it would create a new Operations Center of Excellence in Nashville with 5,000 workers.

Despite receiving up to $2.2 billion in performance-based incentives from its three new locations, Amazon stressed that available talent, rather than incentives, was a top priority in its headquarters selection. According to Dallas' recently-released proposal, the city would have offered Amazon a $600 million incentive to move in its second headquarters with 50,000 employees, plus an additional $10,000 per job from the Texas Enterprise Fund, which would have amounted to $1.1 billion, Dallas News reported.

By contrast, for half the number of workers, Amazon will receive more than $1.5 billion in performance-based incentives for its Long Island City location and $573 million in performance-based incentives for its National Landing location in Virginia.

Still, Rawlings said he believes that incentives were not a key driver in Amazon's decision, adding that the company told him that its desire to be on the East Coast and need for a strong tech talent pool in the short term drove them to choose Long Island City and National Landing.

Amazon's Carney says tax breaks did not decide where they put HQ2
Amazon's Carney says tax breaks did not decide where they put HQ2

Dallas has several large universities within driving distance, including the University of Texas and Texas A&M. But while Rawlings said Dallas will be equipped with a strong talent pool in the long-term, he agrees that "from a pure numbers standpoint" the New York and D.C. areas already have more of the talent Amazon is looking for.

Critics have wondered how much it has cost cities to even have a chance at winning over Amazon. Rawlings said the city of Dallas spent thousands, but not tens of thousands, of dollars pitching Amazon. He added that the Dallas Regional Chamber, which is in charge of economic development for the city, fronted most of the additional costs.

Already, Amazon has eyed Dallas for other projects, such as two new shipping hubs in the area. Rawlings said the city's dealings with Amazon over its distribution centers were separate from its discussions over HQ2.

Even though Dallas will not be the home of Amazon's new headquarters, Rawlings believes the process made his city stronger and more prepared to future opportunities.

"I think it's sharpened our edge better for pitching ourselves to future businesses," he said. "This was a first class process and the data we were able to pull we will be able to use for the future."

Amazon declined to comment beyond its announcement earlier Tuesday.

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