Amazon’s HQ2 promises huge benefits. But as these cities can tell you, it won’t come cheap.
The prospect of landing Amazon.com Inc.’s second headquarters has public officials and economic development experts salivating at the chance to land what is being billed as a $5 billion, 50,000-job investment to their hometown.
But as the Oct. 19 bidding deadline fast approaches, cities also are grappling with a sobering reality: HQ2 is going to be an expensive proposition.
More than 50 cities throughout North America have announced plans to submit bids to Amazon for its new HQ2 facility. As such, Amazon is in a powerful position to potentially secure billions of dollars in taxpayer subsidies and related incentives. It’s a position with which the company is well acquainted.
The Business Journals have identified at least $1.24 billion in taxpayer incentives and abatements awarded to Amazon over the past decade. More often than not, those subsidies have come in return for pledges by Amazon to locate facilities and bring jobs — sometimes thousands of them — to nearby communities. It’s a process that has frequently pitted cities and states against one another as they compete to lure Amazon their way.
The battle for HQ2 is shaping up in a similar fashion, only bigger. New Jersey reportedly is preparing to go all in with its bid: tax breaks worth up to $10,000 per job, or $5 billion if the company delivers on its promise of 50,000 jobs.
Likewise, city officials in Nashville determined that it could take at least $1.7 billion of taxpayer incentives for the city to score HQ2. That comes to about $34,000 per job. Not far away, the Memphis City Council voted to approve a package offering Amazon $10 million to win the project. The package requires the company to provide 2,500 net new jobs with an annual compensation of $60,000.
If the company delivers, Memphis would reimburse Amazon $5,000 per job for any direct costs incurred by the company related to the HQ2 project, up to $50 million.
Other competing cities hope Amazon will focus on local amenities that go beyond financial perks.
Denver’s pitch, for example, will emphasize the region’s highly educated workforce, quality of life and global connectivity through its international airport. Financial incentives will be downplayed, said J.J. Ament, president and CEO of the Metro Denver Economic Development Corp.
Other cities, including former industrial hubs in places such as Buffalo, Cleveland, Detroit and St. Louis, hope to sell the company on the long-standing infrastructure, central locations within the United States and easy access to major highways and waterways as potential selling points that might offset their ability to match the billions in incentives to be dangled by competing cities.
Source: Austin Business Journal
Jeff Jeffrey, National Digital Producer