It’s been 14 months since Amazon, the world’s largest online retailer, declared its intention to build a second headquarters. Founded in Seattle some 23 years earlier, Amazon said it had gotten so big that it needed a second home base in another city.
The company’s year-long selection process had a decidedly sweepstakes-like feel to it. Amazon laid out its expectations for what it wanted in a second hometown and promised a bonanza of 50,000 jobs and a $US5 billion investment to whichever lucky city it picked.
City governments and officials scrambled to outdo each other and woo the online retailer, dangling tax breaks, exemptions of all types and even promises to change their names.
Now, Amazon has zeroed in on New York City and Virginia- and “HQ2″ will actually be two separate offices. The move has left a sour taste with some people who accuse Amazon of having deviously gamed the system.
Here’s a look at the sequence of events during Amazon’s controversial “HQ2” adventure, and the strange spectacle that Amazon whipped up in the process.
Amazon’s current and first headquarters is located in Seattle, Washington. Around 45,000 workers are employed there.
In 2017, Amazon announced that it was searching for a location for its second headquarters.
The retailer said its new headquarters would come with 50,000 new jobs and a $US5 billion investment in the new home city.
Along with the announcement, Amazon listed out its expectations for cities that were applying. It asked for “incentives” like tax breaks and exemptions, and fee reductions.
Here are some additional requirements that Amazon laid out:
- A site within 30 miles of a “population center.”
- Mass transit options located on-site
- The ability to travel to/from an airport within 45 minutes
- Up to 8 million square feet, after the initial requirement of 500,000
- Fibre connectivity and acceptable cell phone service
- A “business-friendly environment and tax structure” that provides tax breaks and exemptions, fee reductions, workforce grants, and utility incentives, among other incentives.
- A “highly-educated labour pool” and a “strong university system.”
- “Elected officials eager and willing to work with the company.”
- A high quality of life for the 50,000 employees to be located there.
Dozens of cities began submitting proposals to Amazon, each trying to outdo the others and woo Amazon with its promises.
- Raleigh, North Carolina: Over $US50 million for infrastructure, up to 100% tax reimbursement for new jobs created for up to 25 years.
- Denver, Colorado: More than $US100 million in incentives.
- Los Angeles, California: $US300 million to $US1 billion in tax breaks over 10 years.
- Atlanta, Georgia: $US1 billion in incentives.
- Chicago, Illinois: At least $US1.7 billion in incentives, $US400 million in infrastructure and capital spending.
- Philadelphia, Pennsylvania: More than $US1 billion in tax breaks, and up to $US2 billion in tax exemptions over 10 years.
- Columbus, Ohio: A 15-year, 100% property-tax abatement at every site included in HQ2, a refund of 35% on income-tax withholdings from new full-time hires. These would add up to $US2.3 billion in incentives.
- Newark, New Jersey: $US7 billion in tax breaks over 10 years.
- Montgomery County, Maryland: $US8.5 billion incentive package
By December 2017, Amazon had narrowed its list down to 20 cities.
Here are the 20 cities that Amazon considered:
- Atlanta, Georgia
- Austin, Texas
- Boston, Massachusetts
- Chicago, Illinois
- Columbus, Ohio
- Dallas, Texas
- Denver, Colorado
- Indianapolis, Indiana
- Los Angeles, California
- Miami, Florida
- Montgomery County, Maryland
- Nashville, Tennessee
- Newark, New Jersey
- New York, New York
- Northern Virginia
- Philadelphia, Pennsylvania
- Pittsburgh, Pennsylvania
- Raleigh, North Carolina
- Toronto, Ontario
- Washington, DC
With the list narrowed down, people began to speculate which cities were most likely to be chosen by the retail giant.
- Some analysts considered Atlanta, Georgia the most likely city to be chosen, due to its affordability, economy, and tech-friendly environment.
- Washington, D.C. also seemed to be a worthy contender, as it’s the location of Amazon CEO Jeff Bezos’$US23 million mansion and the home of the Bezos-owned Washington Post.
- Some doubted New York City would be chosen, as it’s expensive to live and develop there.
- Wells Fargo’s AI, named Aiera, predicted the top-five contenders to be Boston, Chicago, Atlanta, New York City, and Toronto, in that order.
- Some economists and housing experts chose Atlanta, Georgia and Northern Virginia as the two most-likely locations.
- Bank of America’s top-five cities were Atlanta, Denver, Washington, DC, Boston, and Raleigh, North Carolina
- The analyst who predicted Amazon would buy Whole Foods said only two cities had the potential to be chosen: New York City and Washington, DC.
On Tuesday, November 13, Amazon announced plans to build offices in two cities instead of one: New York City, and Arlington, Virginia.
Its second “headquarters” will actually be two offices in Long Island City, Queens, and the Crystal City area of Arlington, Virginia. This announcement concluded the year-long search for a new headquarters location.
Virginia had been seen as a likely choice for a while, but New York came as a bit of a surprise.
Northern Virginia has been called the “bull’s-eye of America’s internet,” and it’s estimated that nearly 70% of the world’s internet traffic flows through the area.
New York City’s pitch to Amazon included the fact that Long Island City is 15 minutes from LaGuardia airport, one of the most-disliked airports in the US. In addition, New York Gov. Andrew Cuomo made an interesting promise to the online retailer: “I’ll change my name to Amazon Cuomo if that’s what it takes,” he said.
To some, Amazon’s decision to split its second “headquarters” between two cities is a sign that the retailer just wanted to game the system and get the most attractive incentive package by making cities compete heavily against each other.
“If Amazon is able to get away with essentially robbing Virginia and New York of millions of dollars in tax revenue and not even offering up in return what it originally promised, what else is it capable of?” writes Business Insider’s Dennis Green.
Although city officials were jumping over each other to be chosen by Amazon, things might not necessarily be so great for the residents of the future HQ2 location.
- Rent could skyrocket.
- Traffic could get worse, especially with public transit.
- Local businesses could be forced out of business or suffer losses.
- Heavy gentrification could occur.
- The massive tax exemptions are throwing away money that could be used by local governments.
In addition to the two HQ2 locations, Amazon plans to build an “Operations Center of Excellence” in Nashville, Tennessee as a consolation prize. This location will handle “customer fulfillment, customer service, transportation, and supply chain,” according to Amazon.
The $US230 million investment will add 5,000 new jobs, Amazon said. The Nashville mayor’s office called the agreement “single biggest job announcement in the history of Tennessee.”
Amazon will reportedly receive up to $US102 million in direct incentives from the city of Nashville and the state of Tennessee.
Not everyone is happy with Amazon’s decision, however.
Some tech leaders voiced their disapproval with Amazon and CEO Jeff Bezos – one leader called the tax breaks and incentives “blatant loot” that Amazon will take from local governments.
Additionally, newly-elected congresswoman Alexandria Ocasio-Cortez and other NYC politicians said they’re concerned with Amazon’s upcoming development in the city, citing the tax incentives and potential housing price hikes.
Amazon’s Virginia development will be located in Crystal City — but the retailer, and its voice assistant Alexa, strangely refer to the area as “National Landing.”
Amazon seems to already be rebranding the home of half of its new headquarters by naming it “National Landing.” Locals only know the area as Crystal City, and some are confused by Amazon’s choice.
Even Amazon’s voice assistant Alexa is onboard, and has already begun referring to the location as “National Landing.”
The tax incentives seemingly weren’t enough for Amazon, however. The retailer is requiring New York and Virginia to assist the company in getting federal approval for helipads at both locations.
Amazon said it will pay for the helipads itself, but is making local governments assist in the approval process as part of the agreement both parties signed.