A wrinkle on corporate headquarters: leaving the city as buildings age

State Farm four building complex in Richardson, Texas. Dallas Morning News photo.

In the late 1990s and 2000s there was for a time the move of corporate headquarters from the suburbs to the city such as Compuware and Quicken Loans in Detroit, Panasonic in Newark, etc.  

Plus Amazon's HQ2 quest focused on places well connected by transit, even if Arlington County, just outside of DC, is a suburb. GE to Boston ("Corporate headquarters relocating to the center city: GE chooses Boston," 2016), etc.

At the same time, firms still moved out of the city.  

For example, the wage tax in Philadelphia makes it hard to attract large businesses, although Comcast stays committed.  Plus, suburbs often lure city-based businesses with incentives ("Real Estate Giant CoStar Group Chooses Arlington for its Headquarters" Arlington County).

State Farm's suburban Dunwoody complex does have a subway connection, but most people get there by car.

And while Amazon was looking for an urban location, State Farm in Dallas and Atlanta built new complexes that were road-centric, given the small footprint of transit in those cities ("Businesses moving back to the center: not a universal trend," 2015).

Plus headquarters moving to city areas, but not directly in the city ("Boeing to move "headquarters" to Northern Virginia," ) but close to airports ("Do tax incentives pay off? : Illinois; Tennessee; Rosslyn + "The Airport Access Factor"").

In 2015, Mercedes-Benz moved to a suburban location in Atlanta--makes sense as they are a car company, but they still have a bus division (which isn't super active in the US compared to Europe).  They are further consolidating operations from around the country to Atlanta as well ("Mercedes-Benz relocating 500 jobs to Sandy Springs HQ, plus new R&D facility," Atlanta Journal-Constitution).

Downtown Dallas, with the Fountain Place building shown in the background, has the second-highest office vacancy rate of any downtown in the nation.

Dallas is seeing firms move to the suburbs to new buildings ("The reckoning: Downtown Dallas must wrestle with future after AT&T exodus," Dallas Morning News, "Dallas Is Booming—Except for Its Downtown," Wall Street Journal).

Companies are abandoning this neighborhood and its aging office towers. They are heading to the Uptown district or the thriving suburbs, often over concerns about crime and homelessness. Left behind are defaulted loans, foreclosures and deeply discounted property sales.

The building ATT is in today. 

Real-estate investors purchased $51.7 million worth of office property in downtown Dallas in the first three quarters of this year, compared with $1.8 billion in Dallas’s suburban markets, according to data firm MSCI.

The building ATT will be moving to is the former HQ campus of Electronic Data Systems. Although they may tear it down and build new. 

... Many of the forces weighing on downtown Dallas—from remote work to homelessness—are afflicting other urban core neighborhoods. Businesses and investors have fled the downtown districts of St. Louis, San Diego and Portland, Ore., for the relative tranquility of neighboring suburbs.

Also see "The reckoning: Downtown Dallas must wrestle with future after AT&T exodus," Dallas Morning News.

“If you look at the average large building, like something over 50,000 square feet, the median age is roughly 45 years old,” Triolet said. “The problem is in the (Central Business District) in the ’80s — people wanted the biggest and most glamorous. So, they made the floor plates bigger, and they wanted to make it a contest of who could build the tallest buildings.”

Corporate trends have swung another way. Toyota, American Airlines and now AT&T are examples. Companies want shorter and more horizontal buildings. Skyscrapers give way to campuses. It’s easier to sell smaller separate buildings than large high-rises, Triolet said.

Downtown buildings have aged, and more recently there hasn't been a lot of new construction, especially on a speculative basis, because of high interest rates and the discombobulation of the commercial office real estate market as a result of covid and the rise of work from home--although this is changing some, as more businesses are requiring workers to come back to the office, at least for a few days each week.

Cities have always had to deal with suburbanites fear of the city when it comes to working and visiting.  Covid related declines in quality of life and an increase in crime has also led firms to the suburbs, such as in Portland ("A Fire Sale of Portland’s Largest Office Tower Shows How Far the City Has Fallen," WSJ).  

After Digital Trends moved out of the U.S. Bancorp Tower in Portland, Ore., the technology publisher didn’t hold back about why it left. The property, once a premier address in the city, was afflicted with “vagrants sleeping in hallways of vacant office floors.” They were “starting fires in stairwells, smoking fentanyl and defecating in common areas,” according to papers the company filed in a lease-termination lawsuit.

Two years later, the city’s biggest office tower stands more than half empty. U.S. Bank, the largest tenant whose parent company’s name is on the building, pulled most of its employees out last year after more than a century in the city. The 42-story tower was recently put up for sale. The building affectionately known as Big Pink because of its pink-hued Spanish granite and pink glazed glass has an asking price of about $70 million, according to brokers. That is more than 80% below what the owners paid for it a decade ago.

Interestingly, the suburban office market still has problems, even though it doesn't in Dallas and certain other cities.  Large complexes, like the State Farm in Dallas, with the rise of work from home during and after covid, don't need so much space ("This company is trying to sublease over 400,000 square feet of office space in D-FW," Dallas Morning News). 

DC's office market is weaker because of the shrinkage of the federal government, so many buildings are being looked at for conversion to residential ("Washington D.C.’s Stockpile of Old Offices Makes It a Mecca for Housing Conversions," WSJ).  Could this be an option for cities like Dallas, St. Louis, and San Diego?  Salt Lake has one such building just opened ("A 1960s SLC office tower reopens as luxury apartments, showcasing reuse as path to new housing," Salt Lake Tribune).

Las Cruces (NM) Airport Master Plan | Airport Master Planning

 My writings about airport planning are pretty much limited to asking for there to be a transportation demand management plan as an element of a master plan.

-- "Manhattan Institute misses the point about the value of light rail transit connections to airports | Utility and the network effect: the transit network as a platform ," 2020
-- "Airport transportation demand management in flux," 2019
-- "Transportation demand management, transit: Los Angeles Airport (LAX) and Logan Airport, Boston," 2019
-- "London's Stansted Airport provides digital information on transit options," 2019
-- "Why not a bicycle hub at National Airport?, focused on capturing worker trips but open to all," 2017
-- "A brief comment on ground transportation at National Airport vis a vis VRE rail service," 2016
-- "Revisiting stories: ground transportation at airports (DCA/Logan)," 2017
-- "Airports and public transit access: O'Hare Airport and the proposed fast connection from Downtown Chicago," 2018
-- "More on airport-related transit/transit for visitors," 2013
-- "To and from origin stations can be difficult: More on the Silver Line and intra-neighborhood transit (tertiary network)," 2022

The Las Cruces plan is interesting in that they list economic development matters as a primary goal.  That's not that exceptional, but they way they lay it out may be.

A Vision for Las Cruces International Airport (LRU) 

The Las Cruces Master Plan process is built on eight guiding ideas that have been used to develop the overall vision for what LRU will be in the next ten years. Through the implementation of this plan, LRU will be: 

• Safe for all users
• Welcoming and supportive of business
• A hub for regional, national, and international tourism
• A center of education and job development
• Supported by the City
• In position to be an economic development engine
• Supportive of Aviation and Commercial Aerospace
• Important to the people of the Las Cruces region

-- "Economic impact of National and Dulles Airports," 2014
-- "Trial balloons in the Washington Post and Dulles Airport as an aerotropolis," 2013
--"Aerotropoli and rethinking the scale of mobility networks in the context of a global economy," 2013
-- "Do tax incentives pay off? : Illinois; Tennessee; Rosslyn + "The Airport Access Factor"," 2017

But the plan mostly covers airport needs like a new watchtower.   Likely that's the "fault" of FAA planning requirements which are pretty much limited to the infrastructure elements of flying in and flying out, just like how previous to the Biden Administration, airport revenues couldn't be spent on transit systems connecting to the airport versus airport-exclusive systems.

There are two mentions of parking and provision of lodging.

But there's no TDM element.

========

Local ad promoting improvements at the Orange County Airport in California.  Art by Darren McArdel.

User/visitor experience.  I have also written about this from time to time about airports, and how the very police like US officials vis a vis international air travelers doesn't show the US too well--it's worse now--a point made by Tyler Brule in a Financial Times column many years ago.  From a past blog entry:

Airports, visitability and international visitors: 
Bureaucracy dooms the brand promise of Brand America

Another "problem" is that three of the main entry points into "Washington" aren't in DC proper-- National Airport and Dulles Airport in Virginia and Marshall-BWI Airport in Maryland.  Each has a visitor information desk, but none of the services are comparable to the airports with the best visitor information set ups.

Plus, at Dulles Airport especially, the experience for visitors leaves a lot to be desired, which is something that Tyler Brule of Monocle Magazine mentions from time to time, especially in his weekly column in the Financial Times, where he has been very negative about Dulles Airport, because of big problems with the customs entry process.  From "Let’s play ‘Guess where I am?’":

I’ve just come off an airliner and it’s absolute pandemonium. There are gate agents screaming for transfer passengers, there are sniffer dogs, there are loads of immigration officers and there’s a general sense of disorganization. My fellow passengers look bewildered and flustered after their eight-hour, 45-minute flight from Frankfurt, and there’s a lot of huffing and puffing as we’re divided up into groups of arriving passengers and “connectors”. ...

description of 1,000 people waiting to go through ICE at shift change, when many people leave their posts, with the result that even fewer agents are there to work with the passengers.

As I approach the desk, I feel like giving the young gentleman a lecture about how bad this whole performance is for Brand USA – particularly on top of a whole week of television reports about the new fee that visitors will have to pay to get a visa and how these funds will be used to create a campaign to encourage more tourism to the US. I want to ask him if he (and his bosses not far away in the District of Columbia) think a 90-minute wait in a dumpy airport is any way to welcome the world and if his department is really that interested in having people visit the US.

Of course, this is even worse now given the "America First" and anti-global rhetoric and actions of the Federal Government as discussed in the previous entry, "National Tourism Week (May 7th - 13th), Public Diplomacy, National Heritage Areas, etc."

When air travel was "taking off", airlines touted airport improvements.  Now flying is pretty much a commodity, although many companies do distinguish service in multiple ways still.

New Pan American Airlines Worldport Terminal, JFK Airport, c. 1960

Combine this experience, plus the then less than sterling experience of getting to the city from the airport--this will change in a few years when there is subway service there, but the location of the subway station will be less than ideal--and then think about what this says not only for Brand America ("Brand USA, a campaign to lure back foreign tourists — and their money" Washington Post and "Re-branding America" from the Sunday Boston Globe) but BrandDC (see the blog entry "Creating Brand Washington"), and is it any reason that the number of international visitors to the US is falling?

Note that while the FT piece is from 2011, the problem at Dulles continues.  See "Editor's note: BWI is the big winner in the battle for passengers" from the Washington Post.  And the MWAA has responded with a advertising campaign.  But I would aver the problem is more structural and fundamental--something that marketing can fix, but advertising can't.

An evaluation of area airports in terms of the "visitability" approach is long overdue.   

I don't get Airport Planning magazine anymore but a lot of the articles are about the improvement of the visitor experience, throughput, etc., including the quality, range, and cost of retail amenities.  (Remember when it was a big deal that airports upgraded their retail offer?  Pittsburgh was a leader in this, partly because a British firm had the contract to implement what they already were experienced in doing).

-- "Some DC tourism issues (National Tourism Week: May 7th - May 13th)," 2017

This comes up in the NYT article "Airport Lounges Sound Luxurious. I Keep Getting Duped," about the quality (not very) of airport lounges.  That's another element of the visitor experience that smart airport executives and planning teams should consider when developing master plans.

The Wall Street Journal also runs an annual article on the quality of the airport experience.  From "Best Large U.S. Airports 2023":

Each airport is evaluated on 30 factors that span the trip, from buying a ticket to arriving at a final destination. Using data from government agencies, a survey of travelers conducted by our research partner Dynata and other sources, the Journal’s rankings highlight the airports that boast on-time flights, short waits throughout the trip and the amenities that travelers like best.

Smaller cities lose out when it comes to business consolidation and headquarters relocation: WInston-Salem, North Carolina

Winston-Salem is a secondary city in North Carolina, second to Charlotte, the largest city in the state, and to Raleigh-Durham, home to universities and large research operations.  

 When US business was not so concentrated in major cities, it was home to a large number of firms including major corporate headquarters.  

These days, not unlike Caterpillar living Peoria for Chicago, and now to Texas, Winston-Salem is experiencing the loss of those corporations, especially as they further consolidate and relocate.  If firms stay in North Carolina, they are moving to Charlotte.

The Winston-Salem Journal has a really great article about this process, "Triad weathers corporate HQ departures with manufacturing revival."  It's super rare for a smaller newspaper to have such a thorough, detailed, well-argued piece.

I've written a few entries on this topic in the past year and over the years: 

-- "Next Level Clustering of Business away from the Midwest," 2022
-- "Boeing to move "headquarters" to Northern Virginia," 2022 
-- "How the closure of a Pfizer research center in Ann Arbor, Michigan led to the development of a biotech sector there," 2021
-- "Why do Rust Belt rivals Cleveland and Pittsburgh have diverging economies?," 2021 
-- "Crystal City Arlington as Amazon one-half of HQ2 | Part 1: General + Housing impact," 2017
-- "Part 2: Leveraging Amazon's entrance for complementary economic development improvements," 2017

Ten smaller businesses versus one big business: which is better?  And a point in the WSJ article dovetails with a point made in the article about Ann Arbor and biotechnology, that Winston-Salem needs to recognize its place in the business ecosystem and focus on smaller businesses, and that for example 10 businesses, with more of their functions handled locally, has more impact than one business with the same number of employees, and fewer locally-based business functions, and is less dependent on any one business.

R&D functions and manufacturing proximity.  It also illustrates another point although the author doesn't mention it per se, about "doing versus coordinating."  Corporate headquarters or at least research and development for manufacturers--with Boeing being a big exception--tend to stay proximate to major manufacturing clusters.

Airports.  A key point mentioned is airports and the number of destinations served.  International companies like Caterpillar can't rely on a local airport for simplified connections.  Same with firms in Winston-Salem.

--  "Do tax incentives pay off? : Illinois; Tennessee; Rosslyn + "The Airport Access Factor"," 2017

Education.  The article mentions the importance of higher education in particular technical education and engineering, something that Greensboro, a peer city, has been particular good at.

-- "Universities as elements of urban/downtown revitalization: the Portland State story and more," 2014

-- "Naturally occurring innovation districts | Technology districts and the tech sector," 2014

-- "Better leveraging higher education institutions in cities and counties: Greensboro; Spokane; Mesa; Phoenix; Montgomery County, Maryland; Washington, DC," 2016

-- "Revisiting past blog entries: College Park as a college town and economic development | PG County and Amazon,," 2018

-- "University President Freeman Hrabowski and an agenda for urban universities," 2021

-- "The other George Miller idea: creating multi-college innovation centers in (cities) Philadelphia | Creating public library-college education centers as revitalization initiatives," 2021

Technological change can redistribute business location.  And while I haven't written about it, how quantum technological change within an industry can change its location patterns.  

For example, now that the auto industry is moving from gasoline engines to electric motors, the new firms and their suppliers are increasingly located outside of the Midwest.  It's not that Michigan and other states aren't landing some of the business, but so are states like Georgia, Oklahoma, Texas, etc., shifting supply chains and where added value is developed.

Interestingly, oil interests are fighting this in Republican-led states ("Georgia judge's incentives ruling threatens Rivian EV plant," Atlanta Journal-Constitution).  It's positioned as fighting corporate welfare, but it's really a different type of corporate welfare attempting to ward off competition.

Next Phase of Clustering of Business away from the Midwest

Around 2015, there were a number of instances of corporate headquarters moving to the South, such as Mercedes USA moving from New Jersey to Atlanta.  

Atlanta and Dallas were particularly successful in gaining large corporate or regional headquarters, and sadly in locations that were minimally served by transit.

Although at the same time, there has been a number of examples of corporate headquarters moving from suburban locations back to the center city, although the impact of covid on people actually coming to work versus working from home has countered that in many instances. 

-- "Could bringing premier regionally headquartered business enterprises to the Pennsylvania Avenue Corridor be key to its renewal and revitalization?," 2014
-- "A lesson that seeing is believing: Panasonic's new building in Newark, NJ as an example, positive and negative, in businesses coming back to the city center," 2015
-- "Businesses moving back to the center: not a universal trend," 2015
-- "DC, Transformational Projects Action Planning, and the Baltimore-Washington Maglev project," 2021

Relatedly is all the discussion about firms moving from California/Silicon Valley to Texas ("Companies are rapidly leaving California, study finds. Here’s where they are going " KXAN-TV), and how industries going through technological change shift their locations as well (e.g., electric vehicle battery and car/truck production to Arizona, Texas, Georgia, and potentially Oklahoma, etc.).

Although given the reality of Western drought and how manufacturing tends to require great amounts of water, I would think the Midwest has a long term competitive advantage in terms of access to water supplies. 

In May I wrote about Boeing relocating its headquarters to Northern Virginia, from Chicago, when it had already been moved from Seattle, where the company was founded and still has its largest manufacturing operations ("Boeing to move "headquarters" to Northern Virginia ").

Then a bit more than a week ago, Raytheon, another large defense manufacturer, announced it was also moving its HQ to Northern Virginia ("Raytheon will move headquarters to Arlington ," Washington Post), bringing all of the largest companies to the DC area, all but Lockheed Martin (in Montgomery County, Maryland) in Virginia.

San Antonio as a developing automotive cluster.  Around that time I came across an interesting article about the development of Greater San Antonio becoming a corporate R&D cluster, building out of industrial plants for Toyota, Navistar, and others ("Driving force: San Antonio picks up speed in auto industry," San Antonio Express-News, access with printfriendly).  

Manufacturing has moved South and West because most of the states have labor laws that make unionization of the workforce difficult, so they can offer lower wages compared to plants in the Midwest.  Over time, corporate functions are following.

The article is long and detailed, and illustrates how corporations can shift their "centers" as they develop new centers of business concentration. 

Caterpillar moving to Texas.  Yesterday's announcement that Caterpillar, the heavy equipment manufacturer once based in Peoria, Illinois, having shifted to Suburban Chicago in 2017 ("Do tax incentives pay off? : Illinois; Tennessee; Rosslyn + "The Airport Access Factor"," ) is now moving to Irving, Texas ("Caterpillar to move headquarters to Texas, marking second major corporate departure from Illinois in 6 weeks," Chicago Tribune).  

Although they do have various manufacturing operations in the state, Illinois remains much more significant. And the number of employees, 230, isn't huge.

Conclusion.  I'd say it's early to draw overarching conclusions but the trends do not look good for center cities (especially with the post-covid shift to working from home) generally and in the Midwest specifically.  Although Midwestern states with ample water supplies ought to be putting that front and center in the economic development and business recruitment positioning.

Quantum change in technologies can change industrial agglomeration economies, business and sector organization, location etc. | Electric vehicles

One of the things that has struck me about the introduction of the electric car is how it is transforming the automobile manufacturing industry which has been clustered in Michigan and the Midwest after the initial period of experimentation and development in the early 1900s, although some manufacturing was always distributed around the country such as in New Jersey, Maryland, Missouri, New York, California, etc.

But in the 1980s, increasingly companies, especially non-US based manufacturers, began opening plants in the South, because it is more difficult for successful labor organization of the workers at those plants, therefore generating lower labor costs.  In the 1990s, seeking even lower labor costs, firms moved more production to Mexico as well. 

Increasingly, engineering and design functions are developing in Southern locations, especially when the companies are outside of the traditional Big 3 firms ("Driving force: San Antonio picks up speed in auto industry," San Antonio Express-News).  From the article:

The shift to automotive research and development could make San Antonio a hub for high-wage jobs in zero-carbon transportation in the years ahead, city officials say. DeLorean said its San Antonio employees will earn, on average, about $140,000 annually. 

“The long-term play is to get more of the value-added work. So when you see Navistar coming here, they didn’t just bring a truck factory, they brought their engineering plant,” Marquez said. “That’s what our county strategy has been from the beginning.”

The onset of the electric car has created a similar kind of exogenous shock, with Tesla having plants in California and Texas, Rivan opening a plant in Georgia, states like Oklahoma are vying for plants ("What to know about Oklahoma's embrace of the electric vehicle industry," Daily Oklahoman), and distributing development, design, and engineering functions away from the Midwest, etc.

The Detroit News has an interesting article about GM and how its president, Mark Reuss (son of a former GM president also) remains committed to keeping Michigan and the Midwest as central locations for the production of electric vehicles, rather than moving elsewhere.  

-- "Mark Reuss kept GM investing in Michigan, Detroit to build EV future here"

Transportation costs.  An article in the New Yorker about logistics said that with the rise of the container, shipping costs dropped from almost $6 per ton to 16 cents ("When Shipping Containers Sink in the Drink").  That's why firms became free to move manufacturing overseas.

If the rise in the cost of energy and the difficulty of having enough truck drivers persists, along with other supply chain and logistics problems, it could well be that moving automobile manufacturing outside of its traditional areas could be costly in terms of sourcing parts, etc.

Political costs: legacy versus new industries | Fossil fuels versus green energy industries. Another thing is that by moving plants into Republican states, they can be subject to more criticism and opposition, which may be fomented by businesses committed to a fossil fuel based economy ("The pollution paradox," Guardian).   And what I call the intra-national "Petro State" effect, where states like Texas and Oklahoma promote pro-fossil fuel policies.

For example, Governor Kemp of Georgia has been criticized for providing tax incentives to Rivian ("Rivian electric car plant blasted by foes at Georgia meeting," AP).  (The Economist argues that such lobbying helps countries like China, who are more focused on developing new technologies and industries rather than saving old ones. See "China’s plans for the electrified, autonomous and shared future of the car.")

But what will happen to states like Texas and Oklahoma as electric vehicle related firms rise in importance?  Will the states have to be more "fair" about representing multiple sets of interests?  Probably not, fossil fuels in the short run are far more important economically to the economies of those states.

Boeing to move "headquarters" to Northern Virginia

According to the Post ("Boeing's move to Virginia will mean few new jobs in DC"), it's not as big as a deal as it seems, because it will add relatively few people to Boeing's existing operations in the area, which are focused on military procurement.  

When I first saw the news I thought five things: 

(1) it demonstrates that Boeing thinks that the military business will be even more significant going forward ("Boeing is losing the plane race. So it packed up and moved to Washington," CNN);

(2) I wondered if this was because Boeing wanted to communicate it was more concerned about fixing its relationship with its regulator, the Federal Aviation Administration, given all the various failures over the 737MAX program ("How ‘Boeing’s Fatal Flaw’ Grounded the 737 Max and Exposed Failed Oversight," New York Times, "Q&A: What led to Boeing's 737 MAX crisis," Seattle Times, "A Tale of Two Boeing Boards — The Disparate Conclusions of the Justice Department and the Delaware Chancery Court," JDSupra, "The Long-Forgotten Flight That Sent Boeing Off Course," Atlantic Magazine).  

... just like the old MCI long distance phone company located in DC because its formative years were spent suing AT&T and lobbying the Federal Communications Commission on opening up of the telephony market. But then again, there is the issue of "regulatory capture."

But if that mattered wouldn't they have chosen an in DC location?

(3) why isn't DC proper particularly successful in landing high profile business headquarters? There is lots of coverage in planning circles about companies moving back to cities, after having decamped for the suburbs.  But this movement seems to bypass DC:

-- "Could bringing premier regionally headquartered business enterprises to the Pennsylvania Avenue Corridor be key to its renewal and revitalization?," 2014
-- "A lesson that seeing is believing: Panasonic's new building in Newark, NJ as an example, positive and negative, in businesses coming back to the city center," 2015
-- "Businesses moving back to the center: not a universal trend," 2015
-- "DC, Transformational Projects Action Planning, and the Baltimore-Washington Maglev project," 2021
-- "Do tax incentives pay off? : Illinois; Tennessee; Rosslyn + "The Airport Access Factor"," 2017

I can think of four instances now: Hilton; Nestle; Amazon HQ2 (but there, DC's response didn't meet the stated criteria for a large amount of contiguous office space); and Boeing for which it appears DC proper was never considered.

The Post article said that Northern Virginia leaders lobbying Boeing for this to increase the area's visibility and to get a win, even though it doesn't appear to be that significant:

The jet and weapons manufacturer’s decision to relocate was the result of a lengthy lobbying campaign by leaders in the region, reflecting the Washington area’s growing appeal to global corporations. Yet the shift appears unlikely to accompany a major economic boost in the short term. 

Amy Liu, a vice president at the Brookings Institution and director of its Metropolitan Policy Program, said the company’s Northern Virginia move is a win for the region — at least in terms of perception. 

 “It’s a big vote of confidence that this is a community that can hold a global brand,” she said. “Even if there are not major job changes that are attached to the move, the fact that the corporate headquarters is in Northern Virginia means that the company wants to be known and branded in this region.” 

She predicted Boeing would eventually add or shift other services to Arlington, eventually adding more jobs. Other companies will see Boeing’s shift as a sign that Northern Virginia is leaving behind its identity as a home only for government contractors, she said, while establishing itself as a high-tech hub.

To the person who asked me about this, and sent me an article about it, I did suggest that DC's economic planners and development officials aren't particularly good.  C. 2003 when I knew a lot less about urban planning and economic development than I do today, I thought they were much better.  Mostly, they are followers.

The city is decently successful around law and lobbying firms, and trade associations, plus multiunit housing, entertainment districts, and to some extant, retail, but not in keeping federal agencies nor in landing large businesses that desire proximity to the federal government.  WRT Northern Virginia and to some extent, Montgomery County, lap the city significantly ("The East-West Divide | DC area regional economic development: anchors and where they are placed matter + airports | But military spending matters the most." 2021).

(4) At the same time, I wonder if the "animus" about "Washington" directed by much of the general public wrt national politics based here--although they forget that that Washington is produced by their voting choices back home, and they create the cesspool by making bad voting choices--makes it harder for DC to recruit corporate businesses to the city proper, because they don't want the association? ("Basically Everybody Under 40 Hates Washington," Time Magazine).

(5) and finally, will crony capitalism send more business headquarters to the DC area?  Given that Republicans are inclined to "get all up in the business of business" given the actions by Florida Governor DeSantis to punish Disney Corporation after it spoke out against State-passed culture war laws ("Disney government dissolution bill signed by DeSantis," AP, "Sen. Josh Hawley's Move to Strip Disney's Copyrights Called 'Blatantly Unconstitutional'," Variety), will businesses relocate to be around the national center of power, the way that it happens in other countries.  

For example, Thessaloniki lost its preeminence as Greece's center for business and industry as more companies felt they were better served by relocating to Athens, to be closer to the politicians.  (Turkey and Istanbul is another example.)

======

DC has a branding problem.  WRT DC proper, it needs to refocus on branding and identity development, and how to create a brand for the city that isn't tainted by national politics ("City Branding (Place Branding) | Meaning, Stages & Examples," PlanningTank, "Strengthening the city’s reputation in the age of cities: an insight in the city branding theory," City, Territory, and Architecture).

-- THE BRANDING OF CITIES: Exploring City Branding and the Importance of Brand Image, masters thesis

The city has "leaned in" on being the national capital and leader of the free world.  (I joke that because the US is still the strongest nation, even after Trump's destruction of so many elements of the nation's leadership, that people in DC define anything they do as "world class" whether or not it is.)

But at the same time, "the nation and the world" define DC solely in terms of its place as the political headquarters of the US, diminishing the local brand and any sense of an independent, local identity.

I've written about this a lot, starting with, "Town-City branding or "We are all destination managers now"" (2005).  

-- "City branding versus identity | Branding versus Urban Strategy," 2019 (this entry has multiple links to previous entries on the topic)

But this is much more than about making a community great for residents ("placemaking") and attractive to tourists.  It's about a noxious reputation created by others over which "the city" has minimal levers to impact.

======

FWIW, the move of Boeing's HQ to Chicago from Seattle is seen as a bad move, in disconnecting the administration of the company from its core business, plane production, especially as the firm started in Seattle (although now it has significant operations in Wichita and Charleston, South Carolina, among others).  Part of this was to distance the company from the strong union presence at the Seattle area manufacturing facilities.

-- "Inside Boeing's Big Move," Harvard Business Review, 2001

Tax incentives to attract business: Wisconsin's Foxconn debacle

Foxconn is an Asian company specializing in the third party manufacturing of technology goods, like smartphones.  They operate at a huge scale.  

But they also have a history outside of their home base in China of making big announcements for new facilities in other countries, and never following through ("Foxconn’s history of broken promises casts a shadow on Wisconsin news," MarketWatch).

The Foxconn groundbreaking featured President Trump and Wisconsin Governor Scott Walker.  Getty Images photo.

The Verge has a great piece, "Foxconn's empty buildings," on the Foxconn debacle in Wisconsin.  The state and localities promised up to $4 billion in incentives and the company promised to create a North American technology research and manufacturing center with at least 13,000 high paying jobs.

They built a couple buildings--much smaller than what they said they would, with no real manufacturing capabilities--and hired people every so often so they could hit their hiring requirements to trigger incentive payouts by the end of the year, but basically nothing is going on.

Abandoned Fisher Body Plant #21, Detroit.  

This project was touted by President Trump and then Governor Scott Walker as a quantum change in manufacturing employment, the place of the US in the tech manufacturing ecosystem ("Why not build an iPhone in the USA?," USA Today), and a sign of a resurgence in the so called Rust Belt, where large scale manufacturing of products, cars, steel, and other goods has been in long term decline.

Wisconsin was once a big center of automobile manufacturing for both Jeep and GM ("A decade later, Janesville confronts life after GM," Automotive News), and a major manufacturing site for many other products.

While I did mention in this piece, "An example when I may disagree with Richard Florida: incentives for landing the Amazon HQ2," that this might make sense because it wasn't merely moving a business from one state to another, but creating new business, it was questionable because the Midwest isn't a known center for electronics manufacturing (washers and dryers, sure), because Foxconn has made similar announcements in other countries and never followed through, and because Trump and Walker are not to be trusted.

Photo: JOSH MARX. The Janesville Assembly Plant was GM's oldest plant when it closed in 2008 and employed 7,000 people in its heyday.

Interestingly, the Verge article makes the point that the local and state economic development officials presumed that Foxconn was being forthright and truthful and basing their announcement on sound economics and business planning, not recognizing that like Trump and Walker, they had other motives for making the announcement and it wasn't likely they would follow through.

It's also interesting, considering that Governor Walker's political decision to not support High Speed Rail development in Wisconsin, because it was proposed by Barack Obama, led Talgo, a rail manufacturing company to move its plant out of Wisconsin.  Talgo had been recruited by previous Democratic Party officials ("https://isthmus.com/opinion/opinion/you-thought-wisconsin-losing-high-speed-rail-was-bad/," Isthmus).

Politics and business (which often is a form of "crony capitalism") too often is a bad combination.  

This happens because the politicians want the ribbon cuttings, and their desire for action and maybe their inability to make sound judgments about whether or not business plans are sound.  But too often, there isn't much accountability, because by the time the project fails, the elected officials have moved on.

Of course, a city like Mount Pleasant, Wisconsin, where the facility was supposed to be developed, doesn't have that luxury.  

Even if they don't have to pay out incentives, they've already invested hundreds of millions of dollars in utility, transportation, and other infrastructure that isn't needed, and they displaced property owners, houses, etc.

Economic development versus building a local economy.  One the things I try to make a distinction between is what is typically called "economic development" -- focused on business recruitment versus "building a local economy" -- which is focused on leveraging existing advantages, higher education, existing businesses, and creating opportunities for new types of business.

The latter is harder and more time consuming, but can be much more successful over time.

-- "Lessons from CNN story on Allentown, Pennsylvania," 2020
-- "Economic dynamism: Northern Virginia ascendant, while DC and Suburban Maryland lag," 2020
-- "Naturally occurring innovation districts | Technology districts and the tech sector," 2014
-- "Better leveraging higher education institutions in cities and counties: Greensboro; Spokane; Mesa; Phoenix; Montgomery County, Maryland; Washington, DC," 2016
-- "Do tax incentives pay off? : Illinois; Tennessee; Rosslyn + "The Airport Access Factor"," 2017

GE scales back its ambitions in Boston

Since GE announced plans to move from suburban Connecticut to urban Boston ("Corporate headquarters relocating to the center city: GE chooses Boston," 2016), the corporation has totally and completely tanked and significantly changed its focus, obviating the need for a larger headquarters campus with lots of space so people could work on digital initiatives that the company has now abandoned.

In less than two years, CEO Jeffrey Immelt was fired, and so was his successor, John Flannery, who has been replaced by Larry Culp, who had worked for the DC-based holding company, Danaher.

-- "What incoming CEO Larry Culp brings to GE," CNBC
-- "Larry Culp's long to-do list to fix GE," Washington Post

The Boston Globe reports ("GE says it will pay back Mass. $87m in incentives") that they've dropped the project, are returning $87 million in incentives they've already received, and are marketing the property where the campus was to be built.

Now, in line with the previous post on Amazon and NYC, I would have said that betting on GE was if not a sure thing, a good decision. So what do I know? (I had suspicions that GE did a lot of financial engineering and bad decision making, given the corporation's history with environmental contamination and various business disasters at GE Appliance, but who knew the extent?)

At the time, Strategy & Business had made a good point ("Corporate HQ and the Magnetic Pull of Cities"). As GE shifted away from financial services (and tv) they no longer had a reason to be so tightly connected to NYC. With their intent to refocus on manufacturing, Boston was a good choice because of the universities and Rte. 128 technology companies.

Other posts on the general topic of corporations moving back to the city include:

-- "A lesson that seeing is believing: Panasonic's new building in Newark, NJ as an example, positive and negative, in businesses coming back to the city center," 2015
-- "Businesses moving back to the center: not a universal trend," 2015

Not what I would have done, but the fact that citizen opposition led to the Amazon HQ2 NYC venture being dropped is important to acknowledge

From the BBC News article "Amazon cancels New York City campus plan":

Amazon has said it will not build a new headquarters in New York, citing fierce opposition from state and local politicians. The dramatic turnabout comes just months after the firm named New York City one of two sites selected for major expansion over the next decades.

City and state leaders had agreed to provide about $3bn (£2.3bn) in incentives to secure that investment. Those subsidies had prompted fierce backlash in some quarters.

Amazon said its plans to build a new headquarters required "positive, collaborative relationships with state and local elected officials who will be supportive over the long term".

It said: "A number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned.

"We are disappointed to have reached this conclusion."

======
While I consider myself a progressive leftist, the reality is that my politics and recommendations are mediated by the reality of working within the capitalist system and aiming to achieve as much social and public good as possible, given how the private sector does most of the actual doing when it comes to revitalization-focused real estate development.

So yes, I understand and support, depending on the case, tax and other incentives to facilitate certain kinds of development.

Offer the best package of tax incentives for the locations and projects that do the most to spur change and additional private investment. Instead of offering tax incentives on a first-come, first-served basis, without much in the way of criteria or focus, the best set of incentives should be targeted to those locations--anchor projects-- that are determined to have the most potential for spurring additional private investment because of they example of "quality" that they provide, which without the incentives, would not occur for many years, given the current investment climate and perceptions of the submarket.

Only give tax abatements to quality projects. Similarly, tax incentives should be directed to projects that are special rather than to projects that are ordinary and/or sub-optimal.

That means don't do what they do in Tennessee, where reports say that on average incentives are about $1.2 million per job ("State's largest tax credit for biz costs $1.2M per job, study finds," Nashville Tennessean) and Illinois, where an analysis of the State's main tax credit programs by the Chicago Tribune found that most of the projects did not generate significant economic return ("Chicago Tribune investigation on state tax incentive deals with corporations").

Amazon.  On that basis, from a benefit-cost analysis standpoint, providing financial incentives to Amazon, even $1 billion or more, is beneficial because of their obvious track record in meeting the contract terms in terms of actual jobs and buildings developed.

From "An example when I may disagree with Richard Florida: incentives for landing the Amazon HQ2":

... wrt this specific project I will say:

1. The cost/benefit is a helluva lot better compared to a stadium or other sports facility
2. It doesn't involve competition for the relocation of an already existing facility (e.g., Mercedes Benz moving to Atlanta from New Jersey; GE moving from Connecticut to Boston; etc.)
3. The firm seeking the incentive package has a high quality track record making the proposal significantly less risky compared to a business not already operating in the US or a start up firm or a project seeking to redevelop a brownfield site.
4. There are clear, monetizable benefits from landing this project.

Amazon is a much different case than the typical one.  Not just Foxconn in Wisconsin, as the firm has a history of not following through on "commitments" but more generally.  And definitely not for sports stadiums and arenas.

And the business, depending on what it is (warehouse jobs no, business development and technology jobs yes) has the opportunity to be leveraged to further develop related education disciplines and business activity, like how Virginia Tech is developing a computer sciences related school adjacent to the future HQ2 project in Crystal City/Arlington County, Virginia ("A look at Virginia Tech's planned $1 billion Potomac Yard campus").

Why not locate in an area that needs an economic boost?  Me, for social and other reasons, I would have suggested Baltimore -- which didn't make the cut; or Newark, which did, or Philadelphia.
But given that Amazon's HQ2 search hasn't focused on criteria I would have thought that mattered:

-- "The Amazon second headquarters "****show": Part 1 | Where could it go?," 2017
-- "Amazon second headquarters list of finalists," 2018

that wasn't the way the decision went.

Amazon's choice of Long Island City for half of the second HQ.  Amazon originally chose to split the new HQ2 between Crystal City in Arlington Virginia, across the Potomac River from DC, and a commercial district in Queens, New York City.

That made sense to me, because the DC area has large government customers as well as agglomeration economies when it comes to Internet backbone and related services, and because New York City is a center for both financial services and advertising, clusters where Amazon aims to generate more business.

The building that Amazon intended to locate its LIC-based HQ2 activities.  

Both places seemed to be selected on the basis that they had a lot of commercial space immediately available.  But yes, I was surprised that Amazon chose Long Island City in Queens, New York City.

Pushing higher housing costs up even higher.  Not because LIC is a bad place to do business, but because one of Amazon's originally stated reasons for not continuing to expand in Seattle was because of the negative effects on housing and the cost of doing business.

New York City is the highest cost place to do business in North America.  Sure, Queens is cheaper than Manhattan, and the former Citicorp building in Long Island City has plenty of empty space, virtually all that Amazon needs.  But there will be massive effects on the cost of housing and other negative effects.

Opposition.  There has been lots of opposition to the deal for New York City, both against incentives to be provided by the State of New York and separately by the City of New York.  So Amazon has backed out.

While I would have argued in favor of the deal, were I living in New York City, I can see why other people disagree and would fight the deal.   While I don't agree with them, I am amazed that this opposition caused Amazon to change its mind.

Interestingly, more than 50% of the population in a recent poll supported the incentive package ("Majority of New Yorkers support Amazon HQ2 deal, according to poll," CNY Central).

Chance to make a better decision.  But then, because of the impact on the housing market specifically, I thought that Amazon choice of New York City was wrong-headed.

And maybe now there is an opportunity to direct the investment to a location where the effects can be mediated and have extra-normally positive effects, by contributing to business development in a place that is underdeveloped, rather than a place that is already economically overdeveloped by comparison.

When big corporations move their headquarters, it's interesting to read the press coverage in both the winning and losing towns

In December, it was announced that Norfolk Southern railroad is leaving Norfolk ("Real damage from Norfolk Southern's departure may be to Hampton Roads' image," Experts still hopeful about downtown despite loss of Norfolk Southern," and "Virginia, Norfolk may seek up to $4 million refund over broken promise as Norfolk Southern move advances," Norfolk Virginian-Pilot) for Atlanta ("Norfolk Southern CEO confirms HQ move to Atlanta," Atlanta Journal-Constitution).

Today it was announced that SunTrust Bank of Atlanta ("New details, reaction to SunTrust merger with BB&T," AJC) is merging with BB&T, consolidating in Charlotte, North Carolina ("BB&T, SunTrust announce blockbuster merger as Charlotte gains a new bank headquarters," Charlotte Observer), with BB&T relocating from Winston-Salem, North Carolina ("BB&T buys SunTrust in $66 billion deal; combined bank to move HQ to Charlotte," Winston-Salem Journal).

Revisiting past blog entries: College Park as a college town and economic development | PG County and Amazon

The Washington Business Journal has an interesting article, "Exclusive: Here's what Prince George's pitched for HQ2 — and why it lost," about why Prince George's County's bid for the Amazon second headquarters wasn't one of the short listed sites, even though DC, Montgomery County, Maryland, and Northern Virginia (Arlington, Fairfax, Loudoun Counties) each made the final Top 20.

From the article:

Weeks after being shut out of Amazon's short list of contenders for HQ2, Prince George's County learned Wednesday morning why it did not make the
cut: The county doesn't have a large enough pool of senior-level software engineers.

... The answer brings some closure to a multifaceted effort by Prince George's to attract Amazon's second headquarters with a strong proposal that county officials say met all of the online giant's requirements in terms of talent, land and transit.

The county's nearly 120-page proposal, obtained by the Washington Business Journal through a Freedom of Information Act request, reveals that Prince George's pitched College Park and Greenbelt together as a way to fulfill Amazon's plans to develop 8 million square feet for 50,000 employees.

In 2005, I interviewed for an economic development job in Hyattsville, a few miles south of College Park and the University of Maryland, and the main point I made was that they looked for their economic energy to emanate from DC up the Rhode Island Avenue/US 1 corridor, and yet the University of Maryland is a leading research university, and that if you did a Google search on "Prince George's County" and "creative economy" (a term used by Charles Landry and others) you got fewer than 100 hits.

One of the things I suggested was trying to get the University and Prince George's Community College to relocate their arts related academic programs to Rte 1 in the "Gateway Arts District"--imagine the College of Art anchoring the arts district, etc.

Another was that they should strive to be great, for example by changing their town slogan from "A good place to live" to "Maryland's Rising Star."

A few years ago I wrote a couple pieces about how College Park and the Prince George's County economies are crippled by the city's adamant desire to not be a college town, even though big college towns like Ann Arbor, Madison, Cambridge, and Berkeley are awesome (and small towns anchored by colleges can be great too, such as Walla Walla, Washington; Chestertown, Maryland; and Shepherdstown, West Virginia).

-- "To be a great city, College Park Maryland needs some "there", it needs a center," 2013
-- "More Prince George's County: College Park's militant refusal to become a college town makes it impossible for the city(and maybe the County) to become a great place," 2015
-- "College town follow up: alumni as residents and contributions to community capital," 2015

To be fair, it is the case that those area communities are starting to figure out that that this is important ("How Wallace Loh is impacting development in College Park," Washington Business Journal; "University of Maryland is bringing upscale hotels," Washington Post).

President Loh has made a difference, reversed the university's previous animus about a more direct campus routing for the forthcoming Purple Line light rail ("UMD and City of College Park officials show excitement for Purple Line," Diamondback), the University and developers are creating what is being called the "Discovery District," north of the campus, which will be a mixed use  academic, research, and commerce district ("University of Maryland debuts Discovery District," press release), etc.

In my writings about the quest to land the Amazon project, I mentioned that in any case, the process was a good opportunity to objectively assess where a community is, to do what's called a SWOT (strengths, weaknesses, opportunities, threats) analysis, to figure out where it can do better.

Rendering showing a Purple Line light rail train on the routing through the University of Maryland campus.

I specifically mentioned how communities with weaker higher education programs in the sciences and engineering need to look at that and come up with responses such as those initiated in places like Spokane ("President of Washington State University dies: fostered development of the "University District" adjacent to Downtown Spokane," 2015), Greensboro ("Better leveraging higher education institutions in cities and counties: Greensboro; Spokane; Mesa; Phoenix; Montgomery County, Maryland; Washington, DC," 2016 ), Portland State University ("Nohad Toulan: The University in the City," PSU Metroscape Magazine), New York City with Mayor Bloomberg's technical university initiative on Roosevelt Island, the biotechnology focus in Cambridge, Massachusetts ("A real estate empire grows in Kendall Square" and "State pushes for biotech beyond Kendall Square," Boston Globe), and Harvard's push to develop an expanded engineering and business programs emphasis in the Allston district of Boston ("Harvard unveils plan for major commercial development in Allston," Boston Business Journal; "Harvard's Expanding Allston Plans," Harvard Magazine).

Prince George's needs to do a deeper re-assessment. Which I have written a fair amount about including shifting their development paradigm around transit:

-- "The future of mixed use development/urbanization: Part 3, Prince George's County, where's the there?," 2011
-- "A recommended new planning direction for Prince George's County," 2011
-- "Another lesson that Prince George's County has a three to five year window to reposition based on visionary transportation planning," 2011
-- "Prince George's County still doesn't get "transit oriented development" and walkable communities: Greenbelt edition," 2012

and the PG-related recommendations in my 2017 series of Purple Line articles including:

-- "Setting the stage for the Purple Line light rail line to be an overwhelming success: Part 1 | simultaneously introduce improvements to other elements of the transit network"
-- "Part 2 |   the program (macro changes)
-- "Part 4 |   Making over New Carrollton as a transit-centric urban center and Prince George's County's "New Downtown""
-- "Part 6 |  Creating a transportation development authority in Montgomery and Prince George's County to effectuate placemaking, retail development, and housing programs in association with the Purple Line
-- "Part 7 | Using the Purple Line to rebrand Montgomery and Prince George's Counties as Design Forward."

=====
Separately, Maryland is figuring out the value of linking the University of Maryland campuses in College Park and Baltimore--the Baltimore campus focuses on life sciences ("Lawmakers approve University of Maryland partnership," Baltimore Sun).

An example when I may disagree with Richard Florida: incentives for landing the Amazon HQ2

See the past blog entries, "The Amazon second headquarters "****show": Part 1 | Where could it go?" and "Amazon second headquarters list of finalists."

From email:

From Richard Florida:

The level of incentives being talked about for Amazon HQ2 is pretty bad. Worse is that so many of these bids are not even public. We are talking about BILLIONS in public handouts - the worst in modern history.

This will take precious public money that could be used for housing or schools or transit or inclusive development and hand it over to one of the most valuable companies and richest men on earth. It will set a precedent for these billion dollar mega-deals and more companies and cities will follow suit.

I am organizing an open letter imploring the cities and states that are finalists to avoid these giveaways and perhaps even organize themselves into a pact which limits or avoids such incentives.

Robert Putnam, Ed Glaeser, Robert Reich, Amy Glasmeier, Jeff Sachs, Jason Furman, Stephanie Kelton, Alan Kruger, Ben Hecht, Bruce Katz, Saskia Sassen, Pat Sharkey, Scott Stern, Erik Brynjolfsson, Joel Kotkin, Dani Rodrik, Genie Birch, Michael Storper, Allen Scott, and a variety of other prominent economists, urbanists and social scientists have already agreed to support this effort.

======
Also see "Amazon sweepstakes can be great even for the losers," Bloomberg. From the article:

... there’s a worry that the scramble to lure HQ2 will give rise to wasteful urban policies and set a bad precedent. Already there is speculation that Apple Inc. will build an HQ2 of its own, sparking a similar competition. What if this sort of industrial sweepstakes, used in the past to win everything from auto plants to sports teams, becomes the norm?

Many urban policy experts are worried that Amazon-style competitions will hurt cities by enticing them to spend too much on tax incentives and other giveaways. A recent roundup of opinions by the Penn Institute for Urban Research showed that this concern is widespread.

My response:

you guys make me feel like a conservative neoliberal, when I think of myself as a progressive. Yes, generally incentives work out in favor of the recipient, because local jurisdictions are in asymmetric and very negative positions, especially vis a vis the competition from other localities.

But wrt this specific project I will say:

1. The cost/benefit is a helluva lot better compared to a stadium or other sports facility
2. It doesn't involve competition for the relocation of an already existing facility (e.g., Mercedes Benz moving to Atlanta from New Jersey; GE moving from Connecticut to Boston; etc.)
3. The firm seeking the incentive package has a high quality track record making the proposal significantly less risky compared to a business not already operating in the US or a start up firm or a project seeking to redevelop a brownfield site.
4. There are clear, monetizable benefits from landing this project

For cities like Washington or counties like Montgomery in Maryland, which have "local" personal income taxes, the economic benefits can be even greater compared to cities that rely on property and sales taxes for the bulk of their locally generated revenues.

Plus, while I am not too sure on how they are calculated, the company will pay some level of corporate income taxes which a locality would not normally reap from a firm of Amazon's size.

So I would argue that the Amazon project--because it is decidedly 100% new economic activity not likely to be otherwise generated by a company with a real track record--and similar projects like Foxconn (Wisconsin) and Toyota-Mazda (Alabama) are quantumly different from the typical incentive-based project, which tends to involve poaching of existing businesses located elsewhere or sports facilities.

How much is the right amount to offer is another question, and I am not so well versed in financial calculations to be able to say.

But it's a combination of a multi-year stream of revenues from (1) commercial property tax; (2) commercial income tax revenues; (3) the likely percentage of workers you can capture as residents and the income, property, and sales taxes they generate; (4) the economic impact of visitors to the complex, both daily employees who don't choose to live in the locale plus business related travel.

Versus the opportunity cost of the incentives. (E.g., I don't see why DC is prioritizing the hiring of veterans at $30,000 each; I just don't see how that is specifically a local priority vis a vis other segments of the unemployed/underemployed _within the city_.)

Figure out the first and you can lay out a reasonable Net Present Value and a range of incentive packages at which the economic return from incentives remains positive.

Sports facilities/relocation of existing facilities: often a bad deal.  But concerning incentive projects for:

1. sports facilities
2. competition for relocating already existing facilities

I'd say the concern is real and I wish there were overarching federal legislation to limit this.

Even so:

Some sports facilities better than others.  Some locations are better than others.

1. with regard to sports facilities, depending on the type (baseball, basketball, hockey vs. football), up to a point, it may be worth laying out some level of incentives, if a reasonable and independent case can be made for positive economic return.

With regard to DC, while I am against incentives for sports teams generally, objectively speaking, the return to the city of hockey and baseball at the now named Capital One Arena (its third name in 20 years) was an important element of rebranding and the city's currently positive trajectory. Similarly, the Washington Nationals stadium helps to anchor and brand the ever developing Capitol Riverfront/Navy Yard district.

To the contrary, Detroit hasn't been so successful in getting suburbanites to attend events at the new Downtown hockey and basketball arena--basketball relocated from the suburbs, hockey has never left the city ("New arena hasn't led to new fans for Pistons," Los Angeles Times).  Similarly, the New York Islanders hockey team hasn't been so successful at attracting fans to Brooklyn and is relocating back to Nassau County.

However, it's only a few months into the new Detroit arena and it's far too soon "to judge." (Also see "An arena subsidy project I'd probably favor: Sacramento.") It took a few years, and the parallel improvement programs of the Downtown DC Business Improvement District to fully reap for the city the benefits of the sports arena as an anchor and image builder.

Residential property tax abatements: Philadelphia.  Separately, Philadelphia City Council President Darrell Clark has raised the issue of the city's generous 10-year property tax abatement on new residential properties (both conversion of existing buildings and construction of new buildings as well as certain investments in current properties) costing the economically pressed city too much money. See "Time for an honest discussion about fair taxation in Philly," Philadelphia Inquirer.

-- Philadelphia Tax Abatement Program, Building Industry Association
-- "Dispelling common myths about Philadelphia's 10-year tax abatement," Philadelphia Business Journal
-- "No property taxes, no problem: Study finds controversial abatement has been positive for Philly," Philadelphia Inquirer

The abatement program, launched in 2000, was an important initiative that helped to rebalance and reposition the attractiveness of residential living in Philadelphia at a time when the city had lost out to the suburbs in competition for residents, commercial activity, and retail. But after 20 years, maybe it's time for a reassessment. From the article:

From 2014 to 2016, the city granted 10-year tax abatements on 4,286 properties, thus forgoing more than $420 million in revenue. Nearly $8 billion in taxable property value is currently abated, resulting in $111 million in forgone revenue in 2016. A conservative estimate based on recent market trends finds that more than $1 billion in property tax revenue will be withheld from the School District and the city over the next 10 years.

Without a doubt, our rapidly transforming skyline and growing population are in part the result of the abatement program. But, given the larger fiscal and policy environment in the commonwealth and in Washington, it is time to revisit the 100 percent, 10-year tax abatement in its current form as part of a broader conversation about equitable growth.

The city's school system continues to face significant problems and there isn't enough money to invest properly in transit. Maybe it's time to adjust the abatement program?

Note that Baltimore has a similar but subtly different issue wrt residential property tax abatements. There, it creates two classes of owners, legacy property owners paying higher taxes, and newer property owners paying lower taxes. Often newer owners are higher income, so older property owners are subsidizing the better off. Then again, especially now, the city needs more initiatives that can successfully attract new investment.