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The 12 Things You Need To Know About Amazon’s HQ2 Announcement

Some public officials are mad, people say the company invented a neighborhood that never existed, and Amazon is getting even more incentive money than you thought.

Posted on November 13, 2018, at 2:41 p.m. ET

Virginia Gov. Ralph Northam speaks at a news conference after the announcement that Crystal City had been selected as home to Amazon’s new headquarters in Arlington, Virginia.
Kevin Lamarque / Reuters

Virginia Gov. Ralph Northam speaks at a news conference after the announcement that Crystal City had been selected as home to Amazon’s new headquarters in Arlington, Virginia.

After much fanfare, Amazon just revealed that the site of its second headquarters — which it has been referring to as “HQ2” — would be in not one, but two, cities: New York City and Arlington, Virginia. According to Amazon, these cities will join Seattle to become the company’s three ~official headquarters~.

But when you dig into the fine print, Amazon’s big unveiling starts to sound like a run-of-the-mill announcement that Amazon is opening three new offices in North America. (Yes, it’s actually three. In the company’s HQ2 press release, Amazon added that Nashville, Tennessee, would also be getting an Amazon “Operations Center of Excellence” — whose main distinction from the two new headquarters is that it’s only bringing 5,000 jobs to Nashville, compared to the 25,000 each that Amazon committed to New York and Arlington.)

This should serve as a moment of reflection for everyone involved in the HQ2 hype (me included). If Amazon ends up splitting its expansion into mini HQs, that is called...opening satellite offices, which scarcely deserves the buckets of ink spilled so far https://t.co/S5NB8V1f5k

That’s not all Amazon equivocated about in its flashy HQ2 announcement. Here are 12 things about Amazon’s new HQ2 that you may have missed in all the hype.

1. New York state is paying Amazon a whopping $1.525 billion in incentives, which is way more than what Virginia is paying.

To break it down, New York is giving Amazon a tax subsidy of $48,000 per job created, plus $325 million in cash from New York economic development corporation Empire State Development — no strings attached.

The state of Virginia, meanwhile, is paying Amazon a $550 million cash grant over 12 years. Amazon could also claim up to $200 million from the state, depending on how many jobs it creates in the future. The city of Arlington is offering $23 million in cash over 15 years, based on growth of the county hotel tax.

Tennessee is offering Amazon a $65 million cash grant, so long as the company delivers on creating 5,000 jobs over seven years. The state is also offering $21.7 million in state tax credits based on job creation. Meanwhile, the city of Nashville is offering a $15 million cash payment based on job creation.

2. If you thought $1.5 billion was the final sticker price for New York, you’d be wrong. The total is more like $3 billion, considering everything in the package.

New York’s $1.5 billion in incentives don’t include city “as of right” incentives — separate tax subsidies offered through city programs — that Amazon said it plans to apply for. Specifically, Amazon said it would apply to New York City’s Industrial & Commercial Abatement Program (ICAP) and New York City’s Relocation and Employment Assistance Program (REAP).

3. Public officials, like Representative-elect Alexandria Ocasio-Cortez, who will represent Queens, are already starting to protest the Amazon deal.

Amazon is a billion-dollar company. The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.

Ocasio-Cortez first shot to fame in the Democratic primary because of her progressive platform of Medicare for All and abolishing Immigration and Customs Enforcement. Now, she is speaking out on corporate responsibility too.

4. New York state Sen. Mike Gianaris and Queens City Councilman Jimmy Van Bramer are also mad and speaking out.

Joint statement from @SenGianaris & I regarding Amazon #HQ2 LIC deal:

“The burden should be ... on Amazon to prove it would be a responsible corporate neighbor,” the joint statement says. A rally is planned for 11:30 a.m. ET on Wednesday at the proposed site of Amazon’s headquarters in Queens to protest the deal.

5. Also...the New York site for Amazon HQ2 is in a flood zone.

And here's what the worst-case 2050 flooding projections look like for Amazon's new HQ in Long Island City.....yikes! https://t.co/fHdVVzRBbo https://t.co/epFLcL5Cz4

6. No one seems to have heard of the “National Landing” neighborhood where Amazon says it will open its Arlington headquarters.

The “National Landing” area Amazon refers to in its HQ2 press release doesn’t show up in a Google Maps search. “It’s not an actual neighborhood,” Sherif Abdalla, senior vice president of real estate agency Compass in Washington, DC, told BuzzFeed News. “They named it that as of 24 hours ago.”

7. Some people in other cities, like Los Angeles, are celebrating the fact that Amazon didn’t pick them for its headquarters.

L.A. loses Amazon’s HQ2 bid, and the reaction is… “Thank God. We have record low unemployment, skyrocketing housing costs, horrendous traffic and somehow we wanted to drop 50,000 overpaid techies into the middle of this? What the hell.” https://t.co/7CmrzWzbo6

Laura J. Nelson / Via Twitter: @laura_nelson

One resident, according to the Los Angeles Times, said: “Thank God. We have record low unemployment, skyrocketing housing costs, horrendous traffic and somehow we wanted to drop 50,000 overpaid techies into the middle of this? What the hell.”

8. It’s not just New York that’s nervous. Residents in Northern Virginia are wary of the possibility of widening inequality after Amazon comes to town.

I’m back on my race & econ/biz beat after a brief return to politics for midterms. First up, how Amazon’s arrival could widen racial and income chasms in the DC region. https://t.co/sZdB1TKR55

Tracy Jan / Via Twitter: @TracyJan

“It’s becoming a much less economically and racially diverse county, and a huge employer like Amazon coming in is only going to increase that pressure,” Philip Tegeler, executive director of the Poverty & Race Research Action Council, told the Washington Post.

9. Virginia agreed to give Amazon at least two days’ notice if the media or any member of the public filed a Freedom of Information Act requesting more information about their deal.

Under agreement between Amazon and Virginia, the commonwealth will give the company written notice about any FOIA requests "to allow the Company to seek a protective order or other appropriate remedy" https://t.co/BkVXdnoX2M

Via Twitter: @brfreed

According to the agreement, Virginia would give Amazon written notice about any FOIA requests so that Amazon could “seek a protective order or other appropriate remedy” and that it would also “cooperate with the company in responding to any such records request.”

10. According to the Wall Street Journal, even before Amazon had decided to put its headquarters in Long Island City, New York brokers sold units like crazy — even sight unseen, and via text message.

“This is like a gift from the gods for the Long Island City condo market,” a real estate agent told the Journal.

11. Some critics noted that New York and Northern Virginia aren’t quite the economically depressed regions that Amazon said it could rejuvenate.

This is all so stupid. They don't need to offer incentives. New York City is a monopoly provider of New York City. Northern Virginia is a monopoly provider of the Pentagon. The offer could be zero dollars plus we'll put a special tax on Amazon and Bezos might take it.

Matt Stoller, a fellow at the nonprofit Open Markets Institute, pointed out that Arlington in Northern Virginia is in close proximity to the Pentagon, and New York is...well, New York.

12. And others are just wryly describing how their tech companies created jobs in New York for a grand total of...*zero* billion dollars in subsidies.

Aw, I feel like a sucker, we built a tech company in NYC and created all these jobs for *zero* billion dollars in subsidies! 🤷🏾‍♂️

Technologist Anil Dash, who works for New York–based software company Glitch, helped build up the company since he took over as CEO in December 2016. Glitch’s offices are located in the financial district of Manhattan in New York City.

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