Amazon picks New York, Virginia for headquarters

Bloomberg News

Bloomberg News

On Nov. 13, the company announced it is splitting its second headquarters between Arlington, Virginia and Long Island City, New York.

Amazon says it went with a public process because it wanted "to find a city that is excited to work with us and where our customers, employees, and the community can all benefit". Locating close to the Pentagon may also help Amazon win a $10 billion cloud-computing contract from the US Department of Defense, said Michael Pachter, an analyst at Wedbush Securities.

Ultimately, Amazon chose to select two additional locations, and will now have three official headquarters in America, including the main headquarters in Seattle.

Governor Andrew Cuomo, who said he'd be willing to change his name to "Amazon Cuomo" to land the deal at one point, said the state should be proud for landing, "one of the largest, most competitive economic development investments in USA history". Amazon ended the frenzy by dividing the spoils between the two most powerful east coast United States cities and offering a consolation prize of a 5,000-person centre in Nashville, Tennessee, focused on technology and management for retail operations.

The sites in Long Island City, Queens, and in Arlington, will be a boon for the NY and Washington D.C. metro areas and highlights Amazon's willingness to target big talent pools with pricey payroll over smaller markets offering lower costs of living.

Are these the cities that would have benefitted most?

Hiring for all three sites is slated to start in 2019.

It also led to a lot of free publicity for Amazon.

Jeff Bezos, Amazon's chief executive and the world's richest person, privately owns the Washington Post, which has written critical articles about Trump.

"I think so", he said.

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Amazon says one of the key factors in its search for the new headquarters was the ability to attract talent. The Washington, D.C. area stood out with a large educated workforce of three million people and a transit system that has plenty of capacity.

The tech giant will receive up to a $505 million grant from the state to build an up to 8 million-square-foot office campus around Anable Basin in Long Island City, according to a memorandum of understanding among Albany, City Hall and Amazon.

The proposal would have given a 100 percent property tax abatement for the headquarters site, and reimburse Amazon up to $75 million for land acquisition and site preparation after 15 years. Amazon generates 300,000 hotel stays a year in Seattle, Hoskins said.

However, Cuomo promised that the state will see a ninefold return from the 25,000 to 40,000 workers added to the city's economy and the money that Amazon will invest directly in the megaproject. An affordable housing crisis there prompted the city council to adopt a head tax on businesses in May, which Amazon helped overturn in a subsequent city council vote.

Rawlings said the economic incentives offered by New York City and New York State amount to $61,000 per job, while incentives from both Dallas and the State of Texas he said amount to $22,000 per job.

Yes, the numbers are staggering-New York state's pledge of $1.52 billion for 25,000 jobs works out to more than $60,000 in taxpayer support per new job created-but Amazon appears to have selected NY and the D.C. area based on more than just how many zeroes local officials agreed to put on the giant cardboard check.

"It's not just the Amazon jobs".

In New York, a similar storyline was playing out in a section of the city in the midst of transformation from its industrial past. It also pledged to invest in infrastructure improvements and new green spaces. Bloomberg pushed aggressive development in Long Island City while he was mayor. The site will also benefit from an estimated incremental tax revenue of $3.2 billion over the next 20 years as a result of Amazon's investment and job creation.

That includes a refundable tax credit worth $US48,000 per job for 25,000 jobs with an average wage of over $US150,000.

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