World’s largest online retailer to get billions of dollars in tax breaks for the development of its second headquarters.
Online retail giant Amazon has confirmed that it will split its much-anticipated second headquarters between New York City and Arlington, Virginia, ending a period of intense competition between North American cities to win its promise of 50,000 new jobs.
The US retailer plans to spend $5bn on the two new developments and expects to get more than $2bn in tax credits and incentives, with plans to apply for more.
“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, founder and CEO of Amazon, said in a statement.
The decision was finally declared on Tuesday after a year-long bidding battle between more than 200 cities that had winded down to the 20 finalists last January including Chicago, Toronto and Los Angeles.
Amazon also announced an additional third investment in central Nashville, Tennessee, with the creation of a new “Operation Centre of Excellence” hub that will eventually produce another 5,000 corporate jobs.
The two new head offices combined are expected to be equal to the existing Seattle campus in Washington, which is an over 750.000sqm property divided into 33 building and hosting 24 restaurants.
The Nashville office is expected to be smaller and the company said it would start hiring in New York, Virginia and Tennessee in 2019.
In September, Bezos said that the US’ second trillion dollar company was using a public process to choose their second headquarters because they wanted “to find a city that is excited to work with them”.
In picking the locations, the company had stated preferences like “stable and business friendly environment”, “metropolitan areas with more than one million people” and “communities that think big and creatively when considering locations and real estate options”.
During the intense bidding war, provinces and states used tax breaks, benefits and even namesakes to woo the company.
Stonecrest in Georgia, offered to rename some of its land to “the city of Amazon”.
But the retailer made it clear that it was tax incentives and grants that is was looking for.
According to an Amazon statement, the company will receive “performance-based direct incentives of $1.525bn” over the next decade from New York based on creating 25,000 jobs in Long Island City.
Mayor Bill de Blasio called New York’s selection “a giant step” in the city’s development.
“New Yorkers will get tens of thousands of new, good-paying jobs, and Amazon will get the best talent anywhere in the world,” he said.
In Crystal City in Arlington, Amazon said it expects to receive $573m in incentives for their investment and that they project to generate $3.2bn in tax revenue in the same time period.
Virginia Governor Ralph Northam said Amazon’s investment was a “big win” which would bring “investments in our education and transportation infrastructure that will bolster the features that make Virginia so attractive: a strong and talented workforce, a stable and competitive business climate, and a world-class higher education system”.
But not everyone in New York and Virginia were happy about being chosen to become the spot for the new Amazon headquarter locations.
In a series of tweets late on Monday, New York Representative-elect Alexandria Ocasio-Cortez said that Queens residents’ response to the move was to express “outrage”.
“Amazon is a billion-dollar company. The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here,” she wrote.
In a joint statement, New York State Senator Michael Gianaris and New York City Councilman Jimmy Van Bramer asked why scarce public resources are being offered to one of the profitable corporations in the world.
In Virginia, state representative Lee Carter warned that thousands will be priced out of their homes with the influx of high-paid tech workers. She also raised the issue of overcrowded schools and traffic.
Meanwhile, Lina Khan, a senior fellow with the Open Markets Institute, wrote in a Twitter post on Tuesday: “Amazon extracting highly favourable terms, only to halve its promise and expect those same terms, is an exercise of bargaining power that will be familiar to many of the millions of merchants reliant on Amazon’s platform.”
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