Amazon on HQ2: We're going to offer residents high-paying jobs

Randal Sanchez
November 14, 2018

The company says it will receive "performance-based direct incentives of $1.525 billion" under its agreement with NY, and $573 million from its agreement with Virginia.

Some see the billions in tax breaks as corporate welfare while others are anxious about home values and school overcrowding in areas where it's already a problem for many residents.

In Virginia, state representative Lee Carter warned that thousands will be priced out of their homes with the influx of high-paid tech workers.

But some sources cited by The Wall Street Journal and others said recruiting enough tech talent was the reason for a split-city decision; it also helped ease potential issues with housing and transit.

Although details of the incentive plan offered to Amazon was not disclosed, the Indy Chamber Chief Economic Development Officer Maureen Krauss added, "Simply by being in Amazon's top 20, we are winners".

Online retail giant Amazon has confirmed that it will split its much-anticipated second headquarters between New York City and Arlington, Virginia, ending a period of intense competition between North American cities to win its promise of 50,000 new jobs.

Alexandria Ocasio-Cortez said the Queens community has responded with "outrage" to the news Amazon HQ2 will be partially located in Long Island City.

Mayor Bill de Blasio called New York's selection "a giant step" in the city's development.

The US retailer plans to spend $5bn on the two new developments and expects to get more than $2bn in tax credits and incentives, with plans to apply for more.

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Northam is calling the state's proposal to land the headquarters a "new model of economic development for the 21st century". The estimated initial tax break for Amazon looks to be $1.5 billion spread over 10 years depending on hiring targets, construction, and occupancy of their property as outlined below.

Amazon says it also will build a new Center of Excellence for its Operations business, in Nashville, Tennessee, set to create over 5,000 jobs.

But the retailer made it clear that it was tax incentives and grants that is was looking for.

During the process, Amazon narrowed 238 bids to 20 finalists, including Chicago, Denver, Nashville and Miami.

A person familiar with the plans say Amazon will split its second headquarters between Long Island City in NY and Crystal City in northern Virginia.

Meanwhile, Lina Khan, a senior fellow with the Open Markets Institute, wrote in a Twitter post on Tuesday: "Amazon extracting highly favourable terms, only to halve its promise and expect those same terms, is an exercise of bargaining power that will be familiar to numerous millions of merchants reliant on Amazon's platform". The person was not authorized to speak publicly ahead of that announcement and spoke on condition of anonymity.

So all else being equal, assuming labor makes up roughly half of construction costs at the Long Island City complex, Cuomo would have to offer Amazon an extra $50 million to hire union-only contractors for construction work that might be completed for $400 million by "open shop" competitors - which is presumably what the company would use if it was funding a project this big fully on its own dime.

Ultimately, it did not come as a big surprise to many people that Amazon didn't choose Indianapolis, but local economist experts say there are some positive lessons to be learned.

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