Newark woos Amazon by adding $1B in tax breaks to HQ2 pitch
Image: Axel Drainville via Flickr.
Since Amazon announced they’d be deciding which city would become the location of the mega corporation’s second headquarters by the end of the year, competition between contenders has heated up. Along with 20 cities that include Los Angeles, Denver, Miami, New York, Boston, three sections of the Washington, D.C., region and, in Canada, Toronto, Newark is still in the ring from an initial field of 238 possible locations. On Wednesday the city approved a new addition to the $7 billion package the state is offering to sweeten the pot in hopes of scoring HQ2, as it’s being called. The added incentive comes in the form of a trio of ordinances offering nearly $1 billion in payroll tax exemptions to companies that create at least 30,000 jobs and invest $3 billion in the city in the coming 20 years, Bloomberg reports.
Aisha Glover, president of the Newark Community Economic Development Corp pointed out that the incentives would apply to other companies–provided, of course they have $3 billon to invest–even if Amazon says no to Newark. “This is not Amazon legislation. This is for transformative projects.”
Though most of the contenders haven’t made their offers public, Newark’s pitch package is one of the largest among those which are known. Along with Newark, Montgomery County, Maryland, stands out from the pack with an incentive package of $6.5 billion. For their part, Amazon claims that it has invested more than $100 billion in the U.S. and created 200,000 jobs, saying that it has generated $1.40 for Seattle’s economy for every dollar it has invested there in addition to contributing tens of millions to affordable housing.
Newark’s Mulberry Commons; Rendering via Sage & Coombe
A public hearing about the ordinances included passionate opposition from community members who say Newark is, “already a mecca,” and has no need to subsidize the payroll taxes of a billion-dollar corporation. Newark is already is home to the headquarters of Amazon audio books subsidiary Audible Inc. The city has launched several major real estate projects in recent years including a new tower for Prudential Financial Inc., a new department store with a Whole Foods supermarket and a high-rise luxury residential tower.
The downside of large offers is that they’re likely to spur higher bidding from all involved–and they risk offsetting any economic gains the cities might have enjoyed from the deep-pocketed company’s investment. Greg LeRoy, executive director of Good Jobs First, a nonprofit that tracks economic development spending said, “The whole public auction was staged to make everyone more aggressive. They’re trying to take advantage of the huge number of bids that never had a prayer to get leverage on the places that were already on the shortlist before they even announced this.”
[Via Bloomberg]
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