Amazon Officially Names 'HQ2' Sites in NYC and Virginia



Connecting state and local government leaders

Company also outlines billions of dollars of incentives—including tax credits and cash grants—promised by states and localities.

Amazon on Tuesday revealed that sites in New York City and Arlington, Virginia will serve as two new headquarters, and that it would also add a smaller operations facility in Nashville.

In each of the locations that the company selected, it is eligible to receive beefy economic incentives in the coming years which together could total upwards of $2 billion.

The online retailer's announcement ends a search that began in September of last year for a home beyond Seattle. Long Island City, in Queens, will be the site of the New York City location and the Virginia site will be in an area the company has dubbed "National Landing," near Reagan National Airport, outside of Washington, D.C.

Amazon says it will invest $5 billion across the two locations, with about 25,000 employees in each place.

Such an influx of workers promises to add pressure to strained subway systems and hot housing markets in both regions.

In New York, Amazon said it would receive about $1.5 billion in incentives, based on the company employing 25,000 people there.

These incentives include a refundable tax credit of up to $1.2 billion, calculated as a percentage of the salaries the company is expected to pay workers over a decade, and a cash grant of $325 million based on the square footage of buildings occupied in the next 10 years, according to the company. Gov. Andrew Cuomo's office pegged the capital grants the state was offering higher, at $505 million.

The company said it would apply separately for New York City incentives, including those available through the Industrial and Commercial Abatement Program, or ICAP, and the Relocation and Employment Assistance Program, or REAP.

Cuomo suggested at a press conference on Tuesday afternoon that the REAP and ICAP subsidies could be worth about $897 million and $386 million respectively. A press release from his office later explained that those amounts were based on projections through 2038.

The governor, a Democrat elected to a third term last week, said the competition among states to lure in Amazon was fierce and that other places offered bigger incentives packages than New York.

He cited estimates indicating that the package his state put forward would return $9 in revenues for every $1 in subsidies.

"This is a big money maker for us. Costs us nothing," he said. "We make money doing this."

But other elected officials remained less convinced of the deal's merits.

New York state Sen. Michael Gianaris, who represents a district that encompasses Long Island City, and Jimmy Van Bramer, a city councilman who represents a district that covers the neighborhood, both Democrats, slammed the arrangement in a joint statement.

"We are witness to a cynical game in which Amazon duped New York into offering unprecedented amounts of tax dollars to one of the wealthiest companies on earth," they said.

They added that the promised jobs would represent less than 3 percent of those typically created in the city over a decade. 

The Virginia incentive package totals $573 million, with a "workforce cash grant" from the commonwealth of up to $550 million, based on $22,000 for each job created over the next 12 years. Amazon will need to meet job-creation requirements in order to receive the incentive.

Arlington, meanwhile, is offering a cash grant of $23 million over 15 years, tied to the growth of a tax on hotel rooms.

Virginia also plans to invest about $195 million in infrastructure near the Amazon site, including subway stations, and a pedestrian bridge to the airport, along with other upgrades. And Arlington intends to dedicate an estimated $28 million in revenues from an existing "tax increment financing" district for infrastructure and open space.

Katie Cristol, chair of the Arlington County Board, in a tweet addressing residents, said Amazon's decision was a "validation of the community you’ve planned for and built, for decades: Sustainable, inclusive, civically engaged."

The Tennessee site will serve as a new hub for Amazon's operations business, which oversees customer fulfillment, and activities that have to do with transportation and Amazon's supply chain. It will be located near Nashville's Gulch neighborhood.

Tennessee's state government has committed to providing a cash grant for capital expenditures of $65 million, based on Amazon creating 5,000 jobs over the next seven years. Nashville will offer a grant of up to $15 million, or $500 for each job created over the same timeframe.

Those grants are in addition to a $21.7 million tax credit to offset excise and franchise taxes. 

Amazon's selection of the three sites comes after a sweepstakes style process that initially drew 238 proposals from locations seeking to host the company and the jobs and investment it was promising.

Many of the details of the proposals and the incentives the various governments were offering remained secret.

The Open Markets Institute, an advocacy group that takes a critical view of highly consolidated corporate power, derided Tuesday's announcement, saying that it amounted to a "bait-and-switch," with Amazon merely opening a pair of satellite offices instead of the second headquarters it originally described.

"Amazon demanded subsidies and terms from cities all over the country, demanded those terms be kept secret, then reneged on its promise to locate thousands of jobs," said Barry Lynn, executive director of the institute.

New York City Council Speaker Corey Johnson, a Democrat, said Tuesday that Amazon's site selection process had lacked community input and left the council boxed out of negotiations. He described this as "troubling" and said he remained skeptical of the deal.

"I have not been briefed on this plan, so I will withhold full judgment until I am," he added. "For now, all I can say is I am very concerned.”

But New York Mayor Bill de Blasio, a Democrat, said that for New York City alone the arrangement with Amazon was expected to yield a projected $13.5 billion in tax revenue over 25 years.

"Folks who look at this have to look at the whole picture," he said.

The mayor said the company's promise of 25,000 jobs was unprecedented. "Amazon had a national competition because they had something worth competing for," he added.

Virginia Tech said that as part of the higher education package the state offered, it will build a one million square-foot graduate campus in Alexandria, about two miles from the planned Amazon site.

The university said Tuesday the campus is expected to eventually involve $1 billion in investment, and that the state and Virginia Tech have currently committed $250 million each to get the project started.

“This is a big win for Virginia," Gov. Ralph Northam, a Democrat, said in a statement. He described the state's Amazon proposal as a "new model of economic development for the 21st century."

This story has been updated with additional comment and other information.

Correction: An earlier version of this story mistakenly reversed the respective amounts of estimated subsidies that could be available under the REAP and ICAP programs in New York.

Bill Lucia is a Senior Reporter for Government Executive's Route Fifty and is based in Washington, D.C.

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