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Boston Positioning Itself To Give Amazon HQ2 The Best Deal – For Boston

With Boston advancing to the Amazon HQ2 shortlist, some local leaders say ask not what you can do for Amazon, but what Amazon can do for you. 

Some argue Boston's Amazon HQ2 bid is a generational opportunity to tackle affordability and infrastructure challenges.

“There are a couple of questions at stake in terms of landing Amazon,” Urban-Brookings Tax Policy Center Research Associate Megan Randall said. “But what I tend to focus on is asking how does a city land Amazon in a way that is actually beneficial for current residents and that fiscally benefits a city’s bottom line.”

The Amazon HQ2 race has narrowed from 238 contenders to 20 finalists, and Boston has a seat at the table. But many say the city should work toward regional improvements over pushing multibillion-dollar tax breaks. 

“As a native of Greater Boston, I think offering financial and tax incentives is a bad idea,” Alliance Residential Co. Managing Director Michael Boujoulian said. “Boston isn’t attractive because we can beg better than anyone else. We’re on the list because we are attractive already.”

One of former New Jersey Gov. Chris Christie’s final acts as leader of the Garden State was approval of an Amazon HQ2 tax incentive plan that could be as much as $7B, the largest publicly known tax break being offered to the company, which received bipartisan support. Not every bid has been made public, but several bidders are offering incentive packages of more than $1B, including Atlanta, Montgomery County, Maryland, and Chicago.

Boston's Amazon HQ2 economic package could include infrastructure upgrades like connecting the Red Line to the Blue Line.

Finding Billions In A Penny-Pinching City

Boston, a city where the reluctance to carry financial risk cost it its 2024 Summer Olympics bid, is not expected to offer a tax break in the same neighborhood as Newark’s. The city and state offered General Electric up to a $275M economic development package to lure the company out of Connecticut, which Randall said may not have had that much of an impact in its final decision. 

But the structure of the GE tax incentive, which was largely tied to infrastructure improvements, could be Boston’s model for HQ2, as some think sealing the deal will require a package that starts with “b” and not “m.”

“When you pair the data on site selection with what are the things that will help the community’s well-being, I think there’s a lot of overlap,” Randall said. “Invest in sustainable infrastructure, workforce development and not just tax breaks. Build sustainable things.”

Boston’s affordability, or lack thereof, is seen as its Achilles' heel in the bidding process — and was even taunted in New Hampshire’s failed HQ2 bid. The city is among the priciest in the country to rent an apartment, but one analyst said this can be fixed through zoning changes. Amazon could be the leverage to finally tackle and modernize Boston’s zoning laws, which date back to the 1960s.

Home prices and rent in Boston's Seaport are among the city's highest, which could be due to stringent zoning regulations.

“Boston has extremely restrictive zoning regulations,” Cato Institute Policy Analyst Vanessa Brown Calder said. "Restrictive zoning contributes to housing affordability issues. It’s basic supply and demand."

Calder’s 2017 report detailed how Boston’s zoning laws limited supply and sent prices skyrocketing. When a city has things like design, land and height restrictions, as Boston does, it contributes to reduced housing supply, she said. In turn, that raises the price of homes. 

“As Boston wants to continue to grow and supply a flourishing economy, it needs to contribute more housing and an affordable supply. You can do that through relaxed zoning,” she said. “Some see the front-runner cities as Atlanta and Raleigh. Not to say they are perfect, but they both have more relaxed zoning policies.”

A Kendall-Suffolk Downs Rail Incentive

A variety of ambitious Massachusetts infrastructure upgrades have been tabled for years due to soaring costs. Connecting the Red and Blue MBTA subway lines, a nearly $1B project the city mentioned in its HQ2 bid, is seen as vital. If Amazon were to pick Boston and go with the city-preferred site at Suffolk Downs in East Boston, it would provide easier access to tech-heavy Kendall Square

Somerville's HQ2 on the Orange Line pitch is part of a regional effort to place the second headquarters in five cities along the transit corridor.

But refining the bid does not necessarily mean focusing on a single site, as Boston seemed to do with its initial bid. Amazon seems to agree. While the initial shortlist reveal mentioned Boston, the company revised the announcement to say a bid from Somerville had also made the cut. 

“One of the cornerstones of innovation is collaboration,” Federal Realty Investment Trust Executive Vice President Don Briggs wrote in an email to Bisnow. “Municipal leaders and property owners crossing city boundaries and property lines need to collaborate with each other, the Commonwealth and Amazon to deliver a unique solution that benefits Amazon and the region as a whole.”

Bisnow made repeated attempts to get comment from Boston Chief of Economic Development John Barros for this story regarding the city’s next steps. He did not respond in time for publication.

Federal Realty’s Assembly Row in Somerville is the terminus of the city’s proposal to house HQ2 in five cities near the Orange Line, including Boston, Somerville, Cambridge, Everett and Chelsea. While Suffolk Downs is novel for being a rare large plot of land near central Boston under a single developer (HYM Development, which declined to comment for this story), Somerville Mayor Joseph Curtatone argued for a need for the region to break out of a “provincial and parochial mindset” and work across municipal lines. 

Others stress remembering which is the entity more in need in the bidding process. 

“The need in this relationship is Amazon’s [for] a new headquarters, not ours,” Boujoulian said. “We’re already great without Amazon, which is why they’re looking here. Let’s recognize that, and be confident that we’d be a great home for HQ2 without having to buy their favor with graft.”