- Amazon has made its decision on HQ2, and now comes the hard part: delivering.
- Arlington, Virginia and New York City have both offered Amazon millions in incentives in exchange for choosing sites in two districts.
- New York ended up offering about $US1 billion more, though.
The chips are down, and now it’s time for money to exchange hands.
Amazon has chosen Long Island City in Queens, New York and National Landing in Arlington, Virginia as its two cites for HQ2. Both will get roughly half of the promised HQ2 investment – $US2.5 billion and 25,000 jobs – dumped on the cities throughout the next 10 years.
Arlington, Virginia and New York City have both offered Amazon millions in incentives in exchange for the privilege of choosing sites in two districts.
That’s about where the similarities stop, though. The two packages offered by the cities and states are wildly different.
First off is the total package size. All told Virginia offered a sizable $US573 million in performance-based direct incentives. But New York opened its purse strings wide and has offered to the tune of $US1.525 billion.
Both are based on the company’s promise to hire for 25,000 jobs, and will be paid over the next 10-15 years.
New York State’s Excelsior Program is responsible for $US1.2 billion of the New York incentive number. It was calculated based on the salaries Amazon expects to pay employees over the next 10 years. Taking into account an average wage Amazon estimates will exceed $US150,000, that equals about $US48,000 of state subsidy per employee.
The $US1.2 billion will be paid over the next 10 years, as hiring for the new office ramps up. New York is also giving a $US325 million cash grant based on the 4 million to 8 million square feet of office space it intends to occupy, courtesy of Empire State Development.
Amazon has also said it will apply for other incentives including New York City’s Industrial & Commercial Abatement Program (ICAP) and New York City’s Relocation and Employment Assistance Program (REAP).
The smaller package offered by Virginia includes a similar incentive. Virginia will offer Amazon $US22,000 for each job the company hires for in the office over the next 12 years. Using for calculation of the predicted 25,000 jobs, that will equal $US550 million.
In addition to that, Amazon will also get a cash grant from Arlington for $US23 million if the company is able to grow the city’s tax on local hotel rooms over the next 15 years.
Read more about Amazon’s HQ2:
- Amazon officially announces its HQ2 will be split between New York and Virginia
- Amazon finally explains why it’s cutting its second headquarters in half
- Amazon gained a huge perk from its HQ2 contest that’s worth far more than any tax break
- Arlington, Virginia, lured in Amazon with promises of a helipad and a cash grant of up to $US550 million
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