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Will Amazon be good for Nashville?

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Not everyone’s sold

nashville skyline Shutterstock

The mood around Nashville last week was one of celebration mixed with relief. The city got something from Amazon—a promised 5,000 jobs—but escaped the logistical nightmare of an official designation as the company’s second headquarters, with its estimated 50,000 positions.

Gov. Bill Haslam called the news a “game changer,” and Nashville Mayor David Briley said the announcement “further underscores our city’s vibrancy.”

Still, one couldn’t help noting the irony of the news that the tech company will occupy an office tower on the former site of LifeWay Christian Resources, the publishing arm of the Southern Baptist Convention—which downsized to smaller offices thanks in no small part to Amazon’s cannibalization of book sales.

The replacement of an office tower prominently sporting a giant cross, now imploded, with Nashville Yards—a planned massive complex of office space, apartments, a luxury hotel, dining, retail, a movie theater, a concert venue, an upscale bowling alley, and possibly thousands of West Coast transplants—couldn’t be a more on-the-nose metaphor for the changes and challenges facing Nashville.

A rendering depicting the Nashville Yards development where Amazon will set up shop.
Courtesy of Nashville Yards

And while no one is exactly complaining about 5,000 new jobs (which the state projects will create an additional 8,000-plus industry-related jobs, although some conservative economists question that modeling), there’s a feeling around town that the Amazon announcement marks a sea change.

“What many people don’t yet realize is that many—or maybe most—of these jobs won’t be filled by Nashville residents,” says Paulette Coleman, an activist with Nashville Organized for Action and Hope (NOAH). “And the very educated, higher-income residents of Nashville are not the ones who need jobs.”

Coleman says she’s worried that the influx of high-salaried positions will further exacerbate the city’s shortage of affordable housing and points to the spiking rates of homelessness in tech hubs like San Francisco and Seattle.

“We need to look more holistically at the consequences,” Coleman says. James Fraser, a professor at the University of Minnesota who studies housing issues and lives part-time in Nashville, says the city already has a deficit of 35,000 units of low- to moderate-income housing. According to Zumper, Nashville is the 23rd most expensive rental market in the country, with an average rent of $1,330 for a one-bedroom apartment in October, a 12.7 percent increase from 2017.

“This cycle of gentrification continues to grow, and the city’s response does not match the scale of the problem,” Fraser says, predicting Amazon relocations will only make things worse. “In Nashville, 25 percent of renters pay half their income in rent, and 25 percent pay over 30 percent of their income. It’s going to hit a breaking point where the city becomes less competitive, because we’re talking about firefighters, teachers, police officers who can’t afford to live here.”

Fraser says it would be great if Amazon and other corporations with a large Nashville presence would partner with the city to create a community land trust that would operate a portfolio of affordable housing, though he’s skeptical that will happen. But Metro Nashville council member Bob Mendes says that housing and equity issues will likely be the focus of next year’s mayoral race.

“I think in recent years this city has been very good at whatever it prioritizes, and sports and tourism shouldn’t be the number one priority at this time,” Mendes says, referring to recent economic incentives given to a soccer stadium and a private waterpark at the Opryland hotel. “Schools and housing should be our number one priorities. Equity issues should be our number one priority.”

The city is expected to give Amazon up to $15 million over seven years, dependent on the exact number of jobs created, while the state will shell over another $87 million—far less in incentives than what has been doled out in the past. (Volkswagen, for example, was given $800 million to build its plant in Chattanooga, Tennessee, and employed around 2,000 people when it opened.) But Nashville’s budget is facing shortfalls, and a promised 3 percent salary increase for city employees was postponed this year. “Where is this money coming from?” Coleman asks.

Last week, Amazon announced that its Nashville “Operations Center of Excellence” will be a $230 million investment. Yet Mendes questions how much tax revenue the city will see from the company, as it is renting space (and thus not paying property taxes) and that space is located in a development district where the profits from sales tax go to paying down the city’s new convention center’s bond debt.

“It’s exciting to get 5,000 jobs, so everything about that is great,” says Mendes. “But I think there are a lot of questions that still need to be answered on the incentives.”

Unlike Virginia, which immediately released the details of its Amazon contract, Tennessee has not yet made it public, saying that details are still being finalized. Not even the council members have seen the fine print. Update: On November 29, Mayor Briley’s office released Nashville’s original incentives offer to Amazon for HQ2, which included a $500-per-job grant over fifteen years, half of property taxes waived for the same period, and funding for infrastructure improvements related to the project; for the smaller operations center the city will now get instead, the city will offer the same job grant, but over a period of seven years.

“I have a huge problem with the transparency of this whole process,” says Mark Cunningham, a spokesperson with the Beacon Center, a libertarian-leaning think tank that generally opposes tax incentives. “If you are taking government money, we should have the right to look at [the] books, so to speak.”

The Beacon Center also opposed a referendum earlier this year to increase the city’s sales tax to create a pool of funds to build out light rail—a plan also opposed by most affordable housing activists in the city, who were worried that it would make the city’s gentrification problems even worse, as the first built-out line would have been through the hipster hub of East Nashville.

Although advocates said a network of light rail would be the best way to prevent Nashville’s traffic from getting worse, critics also noted that the one light-rail line that already exists in the city, the Music City Star running east out to Wilson County, is very lightly used. Amazon did tout the line in its press release, but a commuter rail with a last evening run leaving at 5:45 p.m., except on Friday evenings, isn’t feasible for most downtown workers.

Mayor Briley has said that if he’s re-elected, he does not plan to push for another referendum on transit, no matter how much worse the new Amazon employees could make traffic, which is already snarled. The Nashville Yards complex is right off the interstate downtown, but that section of I-40 bottlenecks with every wreck, which occurs daily. (For what it’s worth, Amazon estimates one-third of its workers will walk, bike, or take the bus to work. But Nashville is a hard city to get around without a car.)

“People want to Nashville to go forward, but what does that look like?” asks council member Jeremy Elrod. “I think we as a council need to do a better job of gathering more data, so we will have better idea of what’s a good idea for the city when it comes to incentives and growth.”