By Jimmy Vielkind
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 6, 2020).
ALBANY, N.Y. -- State officials offered Amazon.com Inc. $800
million more in incentives than was previously known to win its
second-headquarters contest and were even prepared to pay part of
some employees' salaries if the tech company developed a campus in
New York.
Documents reviewed by The Wall Street Journal show the scope of
what state and local officials initially put on the table as part
of the 2017 HQ2 competition, in which more than 200 cities
submitted bids to host a facility that Amazon said would house
50,000 jobs.
The company said in November 2018 that sites in Northern
Virginia and the Long Island City neighborhood of Queens would
split the new headquarters. New York state and city officials
agreed to give $3 billion of incentives to the e-commerce giant to
hire as many as 40,000 employees.
Facing opposition from some local elected officials, Amazon
abandoned its plans for New York on Valentine's Day last year.
The Journal obtained the records through a Freedom of
Information Law request to Empire State Development, the state's
economic development authority.
The documents show that in its first formal bid to Amazon, in
October 2017, the state offered to provide up to $2.5 billion of
incentives to the company for a campus in New York. The offer also
applied to sites that state and local leaders proposed in the
Hudson Valley, Albany, Central New York, Buffalo, Rochester and on
Long Island.
The state's initial offer included $1.4 billion of tax credits
based on the number of employees hired and $1.1 billion of various
grants. That was $800 million more than the ESD agreed to in a
memorandum of understanding signed a year later: The state provided
$1.2 billion of tax credits and $505 million to reimburse some
construction costs.
Before Long Island City was selected, different New York
localities made site-specific incentive offers. Nassau County
officials offered $2.2 billion in tax exemptions to build a
facility at the Belmont Park.
On top of the state's final $1.7 billion package, New York City
ultimately offered Amazon up to $1.3 billion of extra incentives
through two programs open to any company.
Officials also presented alternative campus sites, including
near the World Trade Center in lower Manhattan, on the island's
West Side near Penn Station and in downtown Brooklyn. The city
proposed that Governors Island, a former Coast Guard base between
Manhattan and Brooklyn, could serve as an "island retreat" for
Amazon employees.
ESD initially proposed to spend $500 million to create a Center
for Commercial Innovation near the selected site that would let
Amazon partner with various colleges for research relevant to its
business. The site would also subsidize job-training programs,
according to the proposal, and the state pledged to pay 25% of
certain graduates' first-year wages with Amazon to help it achieve
workforce diversity.
An ESD official said on Friday that the initial offer was higher
to reflect the original, larger scope of HQ2 and to draw Amazon to
the negotiating table. The workforce incentives were designed with
upstate areas in mind, the official said, and to help disadvantaged
populations.
"Throughout the negotiating process, we sharpened our incentive
package and ultimately secured a better return on investment for
the state and the biggest economic development opportunity in New
York's history," ESD spokesman Matthew Gorton said.
Amazon executives have said the HQ2 decision was based on where
their employees would want to live more than incentives. Neither
Virginia nor New York presented the most generous packages during
the nationwide competition: Newark, N.J. dangled $7 billion, while
officials in Maryland offered $5 billion.
A company representative declined to comment. City officials
have said they presented the best proposal they could to attract
the company to strengthen the city's tech economy.
State Sen. Mike Gianaris, a Democrat from Queens and one of the
leading opponents of the Long Island City campus, said news of the
initial offer underscored his call to re-examine state incentive
programs.
"The more we learn about this twisted process, the worse it
appears," Mr. Gianaris said. "I think it's good we didn't have to
provide any incentives to get Amazon here, because they appear to
be coming anyway."
In December, Amazon announced plans to lease space for 1,500
employees in Manhattan's new Hudson Yards neighborhood.
New York Gov. Andrew Cuomo, a Democrat, has repeatedly pointed
out that Amazon's Queens campus was projected to increase city and
state tax revenue by as much as $27.5 billion over 25 years.
Kathryn Wylde, president of the Partnership for New York City, a
business group, said the incentive offers were justified.
"They demonstrated to Amazon that New York City and state cared
about the project and that they had skin in the game. That's really
the point when you're trying to attract major headquarters
operations," she said.
Write to Jimmy Vielkind at Jimmy.Vielkind@wsj.com
(END) Dow Jones Newswires
January 06, 2020 02:47 ET (07:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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