PITTSBURGH — When Uber started eyeing this city as a testing ground for self-driving cars back in 2016, Mayor Bill Peduto decided to “roll out the red carpet,” in his own words. Uber delivered the promised star power, elevating Pittsburgh’s image and thrusting the former steel town’s revitalization into the limelight. But beyond notoriety, Uber didn’t deliver everything Peduto expected.
Now, Pittsburgh is circling back with Uber in an attempt to get the relationship back on track. In an interview with GeekWire, the Pittsburgh mayor said he has spoken with new Uber CEO Dara Khosrowshahi, the former Expedia CEO who took the wheel of the ride-hailing giant from embattled co-founder Travis Kalanick last year. Peduto expressed optimism that Pittsburgh and Uber can repair their relationship.
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“Conversations have been good,” Peduto said. “I did talk to Dara, and I’m looking forward to meeting with him the next time he’s in Pittsburgh. I think there’s a culture change that’s happened.”
Here’s the big question now: Can Pittsburgh learn its lesson from the Uber deal as it bids for the second home of another tech titan? The city is one of 20 finalists for Amazon HQ2, the $5 billion second headquarters that the Seattle e-commerce giant plans to build in another North American city.
Pittsburgh is keeping a tight lid on its HQ2 bid, despite objections from open records advocates. Because the proposal is secret, it’s impossible to determine the extent to which Pittsburgh has learned from its dealings with Uber. Peduto’s comments to GeekWire show how Pittsburgh’s experience with the transportation network has influenced its economic development strategy, and how the city plans, at least, to deal with tech companies in the future.
But as Pittsburgh’s experience with Uber shows, the allure of a big corporate project can lead cities to take risks that don’t always go as planned.
A disappointing deal
Peduto had big expectations for Uber but didn’t get them in writing before giving the company the green light to test self-driving cars in his city. To establish goodwill and build Pittsburgh’s reputation as an innovator in transportation, Peduto’s office went the extra mile for Uber, according to emails obtained by PennLive. He fast-tracked zoning requirements to meet Uber’s timeline for the launch of its autonomous test track in the Hazelwood neighborhood and lobbied to get the Pennsylvania Public Utility Commission to reduce a hefty fine against the company.
Peduto, along with Pennsylvania Gov. Tom Wolf and Allegheny County Executive Rich Fitzgerald, asked the PUC to “address fairness in business regulation, and especially fairness toward one business — Uber.” The politicians said Uber “is investing hundreds of millions of dollars in the Commonwealth of Pennsylvania and is poised to invest millions more. However, all this could be lost if we send the message that Pennsylvania is not a welcoming place for 21st century businesses.”
If that sounds familiar, it’s because it echos the sentiment that economic development officials around the country are applying to Amazon HQ2. It also sounds a lot like Seattle’s reaction when Amazon announced its intention establish another headquarters outside its hometown.
In exchange for his support, Peduto expected Uber to be a partner in building the transportation system of the future in Pittsburgh. The mayor wanted Uber to invest $25 million to, among other things, connect the Hazelwood test track with Carnegie Mellon University. Peduto believed the investment would help Pittsburgh win a $50 million federal grant known as the Smart City Challenge. Put off by the cost, Uber rejected Peduto’s request and responded with a list of infrastructure upgrades Pittsburgh could make, on its own, to bolster its chances in the competition.
“You aren’t offering anything back to the public,” Peduto wrote in an email to Uber. “I guess we won’t be able to offer a proposal. I hope Austin and Google won’t beat us out because of this.” In the end, Columbus, Ohio, won the competition.
Enticed by the jobs and dollars Uber promised — and fearful that the company would pick another city as its self-driving testing ground — Peduto failed to establish a contractual agreement with Uber demanding the investments he wanted to see.
Amazon is running a far more competitive contest with a much bigger prize. Peduto says he wants Amazon to work with the city on issues like housing affordability and traffic.
“We want to be able to partner with Amazon to be able to address the issues that have come up in Seattle and be proactive,” he told GeekWire. He later added, “We want to address affordable housing before it becomes a crisis. We want to be able to address accessibility and mobility before the development occurs, and we want to be able to show Amazon that by coming into a region, they can benefit the entire community and not just a single bottom line.”
But given the stakes, it’s hard to imagine him (or any mayor) making demands of Amazon that could hurt the chances of landing HQ2.
Job creation and displacement
When Uber opened its self-driving test track at Hazelwood Green — a former steel mill that is now a brownfield awaiting development — the company told community leaders that it wanted to hire people who live in the neighborhood, according to The New York Times. A local pastor named Tim Smith gave Uber a list of candidates who reside in Hazelwood.
Peduto told GeekWire that Uber now employs more than 1,000 people in Pittsburgh — exceeding its commitments. However, no one from Smith’s list has been hired, the Times reported.
Uber is still aggressively hiring self-driving engineers. The company showed off one of its self-driving cars on the CMU campus last week, drawing hundreds of students to a packed auditorium to learn about the company’s summer internship program.
During the recruiting event, an Uber representative boasted about being one of the first companies with customers paying for driverless rides, highlighting a disconnect between Uber and the city it has made its autonomous playground. Uber’s original pitch to Pittsburgh suggested driverless rides would be free, according to the Times.
Uber’s small footprint on the 178-acre Hazelwood Green site could be viewed as a harbinger of things to come. A massive development is planned for Hazelwood Green, designed to welcome one or more major technology companies to the riverfront property. Hazelwood Green is now considered a leading contender for Amazon HQ2 if Pittsburgh were to win. Already, the promise of what Hazelwood Green could become is impacting the neighborhood. Last month, a speculator bought up 18 properties in Hazelwood for more than market price, according to one neighborhood leader.
Welcoming a big tech company like Uber or Amazon undoubtedly adds jobs to a community, but there’s no guarantee of broad benefit.
“If Amazon comes, the win is not for the majority of folks who live in Pittsburgh,” said Carl Redwood, a leading affordable housing activist and adjunct professor at the University of Pittsburgh. “There are segments that win if Amazon comes here, but it won’t be the majority of folks and it definitely won’t be low-income folks and it definitely won’t be black folks in Pittsburgh.”
Uber’s future in Pittsburgh
Peduto’s experience with Uber left him with a hefty dose of skepticism and an appreciation for companies that are willing to partner with Pittsburgh on its goals.
“If you look at the conversations we’ve had with Uber, they’ve been up and down,” he told GeekWire. “It’s very different when dealing with a company like Uber than dealing with a company like Ford.”
Ford invested $1 billion for a majority stake in Pittsburgh-based self-driving software startup Argo AI.
“With Argo AI and Ford, they came in understanding that they wanted to be partners with the community, and they wanted to find ways that they could invest in Pittsburgh,” Peduto said. “It wasn’t an ask.”
Uber, on the other hand, “has not learned that part of it yet,” according to Peduto. “That’s where the frustration happens between a city like Pittsburgh that respects workers’ rights, respects accessibility for all, and doesn’t want that to be a side conversation after the fact, but wants to see it baked in at the beginning.”
Peduto looked to a positive spin on the city’s inability to land the Smart City Challenge grant, pointing out that Pittsburgh has repurposed the work it put into its proposal, working now on its own smart city corridors, using solar power, sensors and smart traffic signals. Many consider Pittsburgh a long-shot for Amazon’s HQ2, but even if it doesn’t win, the city could repurpose the work it put into that proposal to pursue another corporate project, such as Apple’s new U.S. campus.
Much of Pittsburgh’s frustration with Uber occurred under the Kalanick’s reign. Uber has a new leader in Khosrowshahi, and Peduto is optimistic about what the future holds. The mayor says he believes that Amazon could be a true partner in developing Pittsburgh into a world-class future city, even though collaboration with city leaders hasn’t been a hallmark of the company’s approach in its first hometown of Seattle.
“I think there’s a lot that a city like Pittsburgh can learn from Amazon but just as much that Amazon can learn from Pittsburgh,” he said.
Whether that optimism will forge a public-private partnership that is truly mutually beneficial or entangle Pittsburgh in another unsatisfying relationship with Big Tech remains to be seen.