Published: Thu, November 15, 2018
Markets | By Jeffery Armstrong

Amazon names New York, Virginia as two locations for new headquarters

Amazon names New York, Virginia as two locations for new headquarters

It said on Tuesday it will receive performance-based direct incentives of US$1.525 billion from the state of NY, based on the company creating 25,000 jobs in Long Island City.

Some experts in regional economics suggested that the payoff for the selected cities would go well beyond Amazon's initial investment.

Alexandria Ocasio-Cortez, a newly elected member of Congress who represents Long Island City, the NY neighbourhood Amazon has chosen, said her office had received numerous calls from constituents expressing "outrage" about the tax benefits the firm is due to receive.

On Tuesday, the U.S. cities selected by Amazon for the company's massive expansion celebrated the prospect of thousands of new jobs and billions in investment.

Amazon will begin hiring employees for all three sites in 2019.

In each case, the deal is largely the same - Amazon has reached performance-based direct incentive agreements with each city. Add in warehouse and delivery jobs, and Amazon already employs roughly 4,000 people in MA, with more coming in the Seaport and elsewhere.

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Amazon said it would separately apply for another tax incentive offered to all companies that add jobs in New York's outer boroughs, which is worth $3,000 per employee over 10 years, as well as a property tax abatement for commercial construction. In Nashville, it's $102 million for 5,000 jobs. The average per-job cost in so-called megadeals - incentive packages of over $50 million - is $658,000, according to Good Jobs First, which tracks government investments in business.

What do the cities themselves get for all that effort?

"We're not seeking to "get money back"; we just want to ensure that the investments are made and that they come to fruition", said Monica Backmon, Northern Virginia Transportation Authority executive director.

While Virginia's offer seemed in line with many other public bids for the number of jobs, LeRoy said, NY has always been among the most generous in terms of giving tax breaks.

Yet over the weekend, open house attendance in Long Island City suddenly tripled as word of Amazon's announcement became public, said Christopher Austad, a real estate broker with Douglas Elliman.

It also led to a lot of free publicity for Amazon. "One of the things that makes housing so expensive here is that we have areas that are not zoned for higher levels of density".

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A water taxi approaches the Long Island City waterfront and skyline, in the Queens borough of NY. Also according to Kimmelman, tech workers, "increasingly.demanded the diversity and benefits of city life".

"We are excited to build new headquarters in New York City and Northern Virginia", Bezos said. Virginia's is the 26th, just above the $750 million deal Solar City secured to build a factory in Buffalo in 2014. The PILOT model was also used by the state and the Bloomberg administration to help finance Hudson Yards, and it has been panned by both researchers and watchdog groups for failing to bring in enough revenue to pay down the development's debt during the first several years of the project.

The same trend, critics note, has always been evident in such high-tech centers as San Francisco, San Jose, California, and Seattle, where Amazon is based.

Amazon received bids from 238 cities.

Amazon has done well, here, from the perspective of its shareholders. "I've had a dozen new buyers and investors reach out this week". As the land-grant research institution, we stepped up to claim our role of driving economic development by leveraging our strengths in technology and engineering and building on our strong partnerships in Washington, D.C. The Innovation Campus will bring together the highest-caliber students, world-class faculty, smart ideas, and forward-thinking companies. But I don't know that I'd be sighing with relief upon hearing the news.

"That neighbourhood was very different 25 years ago", she said.

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