Amazon will get $1.5 billion in tax breaks and grants from New York to host half its new headquarters in Long Island City.
The company announced Tuesday, after weeks of speculation, that it will open new headquarters in Queens, and Arlington, Virginia. Each location is expected to be home to more than 25,000 employees, the company said, and hiring will begin in 2019.
“We are excited to build new headquarters in New York City and Northern Virginia,” company head Jeff Bezos said. “These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come.”
The decision to split the company across two major metro areas with large talent pools on the East Coast comes after a lengthy courting process in which smaller cities and regions offered up all kinds of incentives in hopes of getting the economic boost that Amazon would bring.
In New York, Amazon said the company will receive “performance-based direct incentives of $1.525 billion” if it creates 25,000 jobs in Long Island City.
The incentives include a refundable tax credit through New York State’s Excelsior Program of up to $1.2 billion, calculated as a percentage of salaries Amazon expects to pay employees over the next 10 years. It works out to $48,000 per job for 25,000 jobs, Amazon said, with an average wage of more than $150,000. The incentives also include a cash grant from Empire State Development, the state’s economic development arm, of $325 million based on the square footage of buildings Amazon occupies in the next 10 years.
The tax breaks and grants will come to Amazon over the course of the next ten years, assuming it hits incremental job creation goals and occupancy targets, the company said.
Critics of the project have argued that the government should not spend public dollars to lure the company — which has contributed to the decline of brick-and-mortar retail — to a city that is already an attractive location for companies like Amazon. They’ve also argued that the project could rapidly raise rents and the cost of living in Queens and throughout the city — something that happened in Amazon’s first home, Seattle — pushing out working class people. And they’ve raised concerns about how the HQ2 could effect infrastructure in the community, from schools to the ailing subway system.
Amazon said it will also provide funding to the community through a Payment in Lieu of Tax, or PILOT program, based on Amazon’s property taxes on a portion of the development site. The money paid as a PILOT will be used to fund community infrastructure improvements “developed through input from residents during the planning process.”
The company will donate space on its campus for a tech startup incubator, and will donate a site for a new elementary or middle school.
The retail workers union called the offer to Amazon “embarrassing.”
“We should be demanding that they give back to the community and not drain public resources,” Stuart Applebaum, president of the Retail, Wholesale and Department Store Union. “Instead we got played. Amazon can afford to come here without handouts. It’s embarrassing to think that such a great city would need to beg them to come. They are coming here because they need to come here - because we offer so much. Tax payers shouldn’t be on the hook to help Amazon be profitable – it’s a massively profitable private business. New York, we can and should do better,”