New York and Virginia Offered Amazon More Than $2 Billion in Incentives for HQ2

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Amazon has officially ended her search for a new headquarters, and what a surprise! We’ve got a tie.

In September 2017, Amazon asked cities to send in formal proposals for hosting its HQ2. Framed as a competition, the company said it expected incentive packages beyond “business-friendly environment and tax structures”. Two East Coast locations – New York City and Arlington, Virginia were chosen by the company as the site for its second headquarters dubbed HQ2.  

On Tuesday’s announcement, Amazon also announced that it had selected another city Nashville for its new Centre of Excellence for its Operations business. This would be responsible for customer order fulfillment, transportation, and other activities.

It seems that along with Seattle, Amazon’s three headquarters will all be located in North America.

Hundreds of cities in North America joined in the competition for the $5 billion project by offering the company steep tax subsidies and several other incentives. According to New York’s governor, Andrew Cuomo when he talked to reporters on Tuesday; New York’s incentive agreement with Amazon exceeding Virginia’s own incentive agreement with Amazon was necessary for them to have won the bid.

“To get Amazon here did we have to win the competition? Yes, we had to win the competition,” New York Governor Cuomo said on Tuesday. “If you’re Amazon and you’re looking at Texas or Virginia, they have half the income taxes we have. It’s not a level playing field, to begin with.”

Of all the 238 cities that applied, New York City and Northern Virginia made it to Amazon’s short list of 20 locations. To be more specific, HQ2 will be split between National Landing in Arlington, Virginia and Long Island City in Queens, New York City.

According to the company, Amazon will receive performance-based incentives of $1.525 billion based on the company creating 25,000 jobs in Long Island City in New York. Virginia is not left out as performance-based incentives of $573 million will be received by Amazon based on it providing 25,000 jobs with an average wage of over $150,000 in Arlington. For its new Nashville operation, Amazon will also receive performance-based direct incentives leading to $102 million based on the company’s creation of 5,000 jobs with an average wage of over $150,000 in the city.

About 25,000 employees will be needed by each new office and hiring will start 2019. There has been a lot of excitement about this as CEO, Jeff Bezos, said in a statement: “These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come.”

A lot of local governments jumped at the chance to get the $5 billion in investments and the 50,000 jobs promised by Amazon’s sitting of HQ2. New Jersey promised an incentive package of $7 million, an ad was paid for in the New York Times by Gary, Indiana and was directed at Amazon referencing the city’s people as “resilient, eager to work”. Tucson, Arizona was not left out as it sent the company cactuses.

Several cities rejected by Amazon in the first round told Curbed that the proposals helped in the improvement of their economic development plans. The 19 cities that made it to the company’s shortlist, will likely use their proposals (some of them made public) to woo other businesses.

There is sure to be a major impact in the arrival of Amazon to Long Island City and North Landing Area. Seattle, where the main headquarters is located has witnessed a major transformation over the course of last decade.

Amazon owns one-fifth of the office space in Seattle. Seattleites complain over the rising rents and not so good traffic and blame Amazon for this. As Northern Virginia and New York City anticipate HQ2’s arrival, there will be a flurry of real estate and investment deals even as business owners and developers scramble for a piece of the HQ2 profit.

Protests have risen up from residents in Chicago, New York, Philadelphia, Pittsburg, Atlanta, and Washington DC as they claim that Amazon’s potential arrival in April will drive up rents and squeeze dry its city budget.

 

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