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Illustration: Rebecca Zisser / Axios

Cities across the country are falling over themselves to score the winning ticket in the biggest local lottery — Amazon's second North American Headquarters. Today's the deadline for them to submit proposals. But luring Amazon's promised 50,000 jobs comes with costs that may outweigh the benefits for some cities.

Why cities care: Mayors see dollar signs in Amazon's pledge to bring 50,000 jobs that pay an average salary of $100,000 to the winning city. They know "HQ2" will instantly put even the most obscure city on the map as a tech hub that will attract more businesses and talent. But an influx of people brings higher costs, and probably only marginal increases in local taxes thanks to the tax breaks most cities are prepared to offer.

The cost of tax credits: As Axios' David McCabe reported last month, bids for Amazon's new HQ could reach upward of $10 billion in tax breaks and other incentives. That high price tag could undercut a locality's ability to fund good public schools, hospitals and infrastructure — the very qualities Amazon is looking for.

The cost of population growth: 50,000 high-paying jobs are attractive to any city council. But they sometimes don't factor in the associated costs of population growth.

  • In Seattle, home to Amazon's first headquarters, the population has grown by 20% in past 10 years, and median home prices went up 50%, Ethan Phelps-Goodman of the organization Seattle Tech 4 Housing told Marketplace.
  • Cities will have to prepare for that boom to make sure low- and middle-income people don't get priced out of the housing market.

Home-grown growth: Some experts say the Amazon sweepstakes will likely go to a community that's already doing pretty well, rather than helping to lift up a struggling town. That's because Amazon's criteria — more than a million people, proximity to higher education, strong public transportation — are the makings of places that are already succeeding in the modern economy.

  • To meet Amazon's criteria and to be able to afford to offer a big tax incentive, a city is likely to already be doing relatively well in today's economy, said John Lettieri, Co-Founder and Senior Director for Policy & Strategy at Economic Innovation Group.
  • "Economic development strategy can't be based on these once-in-a-lifetime location opportunities," he said. "Cities can understandably go crazy over something of this scale, but it's no substitute for the benefits of having home-grown growth. That's the foundation for stable growth in the longer term, not the lottery ticket."

Spearheading collaboration: Regardless of who wins, bidding will spur city leaders to talk about ways to get attract companies — both big and small.

  • Detroit, for example, pulled together close to 100 consultants who offered their time for free to develop the city's bid. "I've never seen a community come together like that," said Dan Gilbert, CEO of Quicken Loans who has been involved in reviving Detroit's business scene. "If we don't win this bid, we're going to die trying."
  • Gilbert said Detroit teamed up with Windsor, Canada, just across the border, which "gives Amazon a huge edge on immigration issues" and international talent recruitment. "You're not going to get that in another city."

Startup focus: Cities who don't win the bid could consider putting that money and incentives toward investing in startups that trigger more organic job growth. "So hopefully the losers will keep fighting and use this process to be winners," said Steve Case, CEO of Revolution, a venture capital firm.

  • "If you put a pile of cash in a city, we're all going to invest in technology," Gilbert said. "I think money follows, it doesn't lead."

Go deeper

The dark new reality in Congress

National Guard troops keep watch at security fencing. Photo: Kent Nishimura/Los Angeles Times via Getty Images

This is how bad things are for elected officials and others working in a post-insurrection Congress:

  • Rep. Norma Torres (D-Calif.) said she had a panic attack while grocery shopping back home.
  • Rep. Jim McGovern (D-Mass.) said police may also have to be at his constituent meetings.
  • Rep. Adam Kinzinger (R-Ill.) told a podcaster he brought a gun to his office on Capitol Hill on Jan. 6 because he anticipated trouble with the proceedings that day.
Off the Rails

Episode 3: Descent into madness ... Trump: "Sometimes you need a little crazy"

Photo illustration: Sarah Grillo/Axios. Photos: Tom Williams/CQ-Roll Call, Chip Somodevilla/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 3: The conspiracy goes too far. Trump's outside lawyers plot to seize voting machines and spin theories about communists, spies and computer software.

President Trump was sitting in the Oval Office one day in late November when a call came in from lawyer Sidney Powell. "Ugh, Sidney," he told the staff in the room before he picked up. "She's getting a little crazy, isn't she? She's really gotta tone it down. No one believes this stuff. It's just too much."

Convicts turn to D.C. fixers for Trump pardons

Trump confidante Matt Schlapp interviews Jared Kushner last February. Schlapp is seeking a pardon for a biotech executive. Photo: Samuel Corum/Getty Images

A flood of convicted criminals has retained lobbyists since November’s presidential election to press President Trump for pardons or commutations before he leaves office.

What we're hearing: Among them is Nickie Lum Davis, a Hawaii woman who pleaded guilty last year to abetting an illicit foreign lobbying campaign on behalf of fugitive Malaysian businessman Jho Low. Trump confidante Matt Schlapp also is seeking a pardon for a former biopharmaceutical executive convicted of fraud less than two months ago.

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