The Seattle, Washington-based E-commerce giant laid out its plans for the country’s two biggest economic development projects – even as questions were being raised about what the deal will mean for the two cities, the scope of the agreement, and how Amazon conducted the search in the first place, reports The Verge.
Amazon also said the company will be developing a smaller site in Nashville, Tennessee and will be hiring 5,000 employees. The Nashville site will focus on operations and logistics, according to the New York Times. The company said it would start hiring in New York, Virginia, and Tennessee in 2019.
Eye-popping incentives
In the New York deal, Amazon will get up to $1.2 billion in a refundable tax credit, tied to the creation of jobs, and a $325 million cash development grant. Amazon will also be applying for existing tax incentives, likely making the total subsidies close to $2 billion.
Additionally, in the New York agreement, Amazon will also be responsible for some infrastructure improvements, including the creation of a nearby public space and a waterfront esplanade. Amazon will also offer programs like job fairs and technology training in the neighborhood, including in the nearby Queensbridge housing projects.
Virginia, on the other hand, will pay Amazon up to $573 million in cash grants for the Arlington investment if it creates the promised jobs. However, in the Virginia deal, the state has agreed to pay for a number of transportation projects, including a pedestrian crossing for Route 1 and a connector bridge to Reagan National Airport.
“These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come,” Jeff Bezos, Amazon’s chief executive, said in a statement.
Gov. Andrew M. Cuomo of New York said in a statement that “with Amazon committing to expand its headquarters in Long Island City, New York can proudly say that we have attracted one of the largest, most competitive economic development investments in U.S. history.”
Stephen Moret, president, and chief executive of the Virginia Economic Development Partnership, said, the project is a “transformational opportunity to diversify the economy” of Northern Virginia, which is heavily dependent on government contracting. “The majority of our entire package is a historic investment in doubling the tech talent pipeline in Virginia.”
Little is known about the bidding process
When Amazon announced its search for a second headquarters 14 months ago, it set off a competition across the U.S. and Canada as cities, large and small, hoping to lure the tech giant to their location. At least 238 cities placed their bids.
However, in January, Amazon narrowed its list of prospective sites down to 20, and that’s when things became secretive. Cities in the final list were required to sign non-disclosure agreements, often declined to even acknowledge those agreements existed.
But as the New York Times notes, even then, critics put out warnings against using public money to help one of the most valuable companies in the world, and of the potential for higher housing costs and traffic problems.
Joint statement from @SenGianaris & I regarding Amazon #HQ2 LIC deal: pic.twitter.com/Ipj9L2kMJW
— Jimmy Van Bramer (@JimmyVanBramer) November 11, 2018
A subsidies reform group called Good Jobs First tracks similar deals like this one around the country. They called the non-disclosure agreement a “veer to secrecy,” one that placed a veil over negotiations for the rest of the year, and one that keeps citizens from knowing how public funds are being spent.
“Amazon’s HQ2 project can go down in history as a monument to high-tech arrogance and tax-break favoritism. Or it can usher in a new normal in economic development that is inclusive and accountable,” said Greg LeRoy, executive director of Good Jobs First and the study’s author.
Amazon is not the only company doing this
Jay Carney, a senior vice president at Amazon, said the company looked at more than 100 aspects of each location, but “during the process, it became clear to us that the overriding criteria was going to be the ability to find and attract talent.”
I didn't want Amazon in Cleveland because it would have ruined the city, but this whole process has been joke. They made cities jump on command with no intention of serious consideration, leading to wasted money and disappoinment. #HQ2 November 9, 2018
Well, finding talent may be just one aspect of the search, but there are some questions to consider. Amazon kept their dealings secret because if cities don’t know what others are bidding, they’ll be unable to effectively coordinate with competitive cities. “When companies conduct site location searches, it’s almost always a secret affair,” Leroy says.
Keeping things secretive has also led to many citizens wondering how their hometown was going to pay for the additional housing and infrastructure needed. But the big question on many people’s minds was why the richest company in the world would need tax-breaks and incentives?
Politicians were taken in by the promise of jobs and the promise of $5 billion in investments. Only a few cities turned Amazon down, including San Jose, Calif., and San Antonio, who publicly declined to throw millions at the giant.
