Cities Pile on Tax Breaks, Perks to Host New Amazon Headquarters

On Oct. 19, cities across North America submitted their proposals for Amazon to choose one of them as the location of the e-commerce and cloud computing giant’s second headquarters, known as HQ2. The proposals were in response to Amazon’s announced plans invest up to $5 billion to develop a second headquarters that eventually would house 50,000 “high-paying jobs.” Amazon set an October deadline to receive those proposals and municipalities of all sizes responded.  But Amazon’s proposal has caused concern for some civic leaders around the country, who questioned whether HQ2 is really as good for cities as the e-commerce giant might argue. This slide show will dig into Amazon’s HQ2 and discuss the possible pros and cons of the company moving to a city near you.

Amazon HQ2 is the name for Amazon’s second headquarters, which Amazon said it wants to build somewhere in North America. HQ2 it won’t serve as an annex to its current headquarters in Seattle. Rather, it will be a standalone headquarters for domestic and international operations.

Chief among the likely reasons for another headquarters is the company’s massive growth and relatively limited options to expand its presence in Seattle. Amazon’s move is also likely a financial one, since many of the metropolitan areas that have submitted proposals are offering massive tax incentives and grants to become the host city.

In a bid to attract metropolitan areas, Amazon said it’s prepared to invest more than $5 billion in the area it chooses for HQ2. The company also said once its operations have begun, HQ2 could produce for the surrounding community “tens of billions of dollars in additional investment.”

Amazon says it could hire as many as 50,000 people for “high-paying” jobs at HQ2. The company predicts, if all goes well, “tens of thousands of additional jobs” being created in the area because of its investment and ongoing operation.

Amazon didn’t pull those numbers out of a hat—the company based its estimate on the growth of its first headquarters in Seattle. Amazon said it contributed $38 billion to Seattle’s economy between 2010 and 2016, and its first headquarters now spans 33 buildings and 8.1 million square feet of space. For every $1 it invested in Seattle, Amazon said, the city generated an additional $1.40.

Amazon has said it will locate its new headquarters only where the business and tax environments are attractive and there’s enough space to accommodate its presence. Amazon also wants the winning site to be close to a popular center, have access to mass transit routes and be within 45 minutes of an international airport.

In an open letter dated Oct. 17, civic leaders nationwide outlined their concerns about Amazon’s proposal. The leaders want Amazon to pay for any required infrastructure changes and to hire people from the local community. They also are concerned Amazon would take too much in tax incentives and not give enough back to the communities. They’re not sure HQ2 is as good a deal for towns as Amazon claims it will be.

More than 100 cities submitted plans to bring Amazon HQ2 to their communities, including Austin, Atlanta, New York, Portland and San Diego. Some smaller municipalities also are vying, including Tampa, Florida, and Newark, New Jersey. Even Gary, Indiana, submitted a proposal.

To be clear, Amazon’s proposal isn’t only for a U.S. city. The company was careful to say in its announcement that wants to open HQ2 in North America. That’s why so many Canadian cities applied, including Winnipeg, Vancouver, Toronto and Edmonton. What’s more, Detroit partnered up with Windsor, Ontario, in a joint bid that would allow Amazon’s HQ2 to span both the U.S. and Canada.

Now that proposals are in, Amazon is on the clock to review its options, seek some clarification and make its decision. Amazon has kept its announcement date close to the vest, but has said it will choose a city and begin construction in 2018.