Twin Cities don't make the cut as Amazon narrows list of possible second HQ cities

Maybe we're too close to Seattle. Or too cold. Or too stingy. Or not smart enough. Nah, it can't be that.

Amazon.com Inc.'s list of 20 places still in the running for its second corporate home, released Thursday, did not include the Twin Cities, a psychic blow to a region that repeatedly tops "best of" and "quality of life" lists and where many quietly believe the satirical boast that "all the children are above average."

The Seattle-based retailer whittled the list from 238 site proposals for an office complex that will eventually employ 50,000 people.

"It was a stiff competition," said Shawntera Hardy, commissioner of the state Department of Employment and Economic Development, which co-authored Minnesota's pitch with Greater MSP, a nonprofit that promotes the region.

Michael Langley, chief executive of Greater MSP, said he spoke to an Amazon representative Thursday and hopes to learn more about why the Twin Cities was eliminated.

"Projects like this sometimes have more than one life and so we need to continue to make sure that Amazon knows that this a great region for their future," Langley said.

Minnesota offered $3 million to $5 million in incentives to Amazon, according to portions of the proposal released to the Star Tribune in December after a data request. That was far smaller than the more than $1 billion in incentives offered by at least nine of the 20 cities still on Amazon's list.

Minnesota's proposal noted that the state has spent hundreds of millions on some recent big capital projects, such as the new Vikings stadium in Minneapolis and Rochester's medical business expansion, and suggested such money may also become available to the company.

But Amazon chiefly narrowed in on cities in the Southeast and East, suggesting geographical considerations were at work. Every big city in the Northeast corridor, from Boston to Washington, D.C., is still in play. Silicon Valley and Portland, Ore., were cut, but Los Angeles is still in. Denver made it among the mountain region candidates, but Phoenix and Salt Lake City didn't. Chicago and Indianapolis were the only cities in the Midwest on the list.

Amazon said it expects to make a final selection later this year. "Getting from 238 to 20 was very tough — all the proposals showed tremendous enthusiasm and creativity," Holly Sullivan, a public policy executive for Amazon, said in a statement.

The company, which started in 1994, is one of the fastest-growing ever and one of the rare firms to sustain its rapid growth after reaching a large size. In 2018, it will likely surpass $200 billion in revenue, just three years after crossing the $100 billion revenue mark. Its employee base has soared from 88,400 at the end of 2012 to 542,000 in September last year.

To manage that growth, Amazon announced in September it would spend $5 billion to build a second headquarters that would eventually employ about the same number of people it now does in Seattle. The new site, the company said, would require up to 8 million square feet of space, easily one of the largest commercial real estate projects in the U.S.

Amazon asked civic and business leaders around the country to assess regional attributes and resources and craft a pitch in just six weeks. That process in Minnesota revealed constrained economic development funds and political reluctance to help a rival to existing regional businesses.

Rep. Tim Mahoney, DFL-St. Paul, said he was disappointed but not surprised that Amazon eliminated Minnesota. He said the state met several of Amazon's criteria, such as workforce quality, but called its effort "a long shot to begin with."

"I wish we had put together a better proposal that would have gotten their attention," Mahoney said. "I don't think that there was the enthusiasm from state leadership to do something like that."

Minnesota's top leaders expressed less enthusiasm about the Amazon opportunity than officials in other states. Gov. Mark Dayton and then-Minneapolis Mayor Betsy Hodges were cautious from the start, citing the presence of Target Corp. and Best Buy Inc., which are based in the Twin Cities and employ about 20,000 people in the region. Dayton declined to comment Thursday.

Legislators in 2016 cut funding for the state's two main economic development programs in half from $27 million to $13 million annually. Republican lawmakers who control the Legislature have portrayed such funds as less necessary when the state's economic performance is strong and labor market tight.

DEED's Hardy downplayed the impact of incentive funding.

"If more resources are to come, we can do more work," Hardy said. "But I believe that how we invest in businesses in Minnesota is the way that you are supposed to go."

In the past 10 years, states around the U.S. typically offered $30,000 per job in incentives to companies making expansions or relocations, according to multiple studies and a Star Tribune review of Good Jobs First data. Neighboring states Iowa and Wisconsin have been far more successful than Minnesota in recent years in landing corporate expansions.

Had Amazon chosen Minnesota, its complex would have dwarfed every existing office space. The state's largest office center now is Normandale Lake Office Park in Bloomington, at 1.7 million square feet. Terminal 1 at Minneapolis-St. Paul International Airport, one of the largest structures in the state, has 2.3 million square feet.

Amazon would also have been the first new firm since 1977, when Minnetonka-based UnitedHealth Group was formed, to employ more than 5,000 people in Minnesota. Amazon had no presence in the state until 2015 and now employs about 2,500 at warehouses in Shakopee, Eagan and Minneapolis and a software development office in Minneapolis.

Dozens of communities around the country disclosed details about their pitch to Amazon, but Minnesota's has remained largely secret. Asked Thursday if more details will be released now that the state is out of the running, Hardy said, "Not at this time."

Rep. Peggy Scott, the Andover Republican who chairs the House civil law and data practices committee, called for the agency to reveal the proposal.

"Minnesotans deserve transparency, and the state should release our bid so we can see we did everything we could to bring 50,000 jobs to Minnesota," Scott said in a statement.

Staff writer Jeffrey Meitrodt contributed to this report.

Evan Ramstad • 612-673-4241

Nicole Norfleet • 612-673-4495