Amazon Officially Passes Up Newark, NJ For New Headquarters

NEWARK, NJ — It’s official. Amazon won’t be bringing its lusted-after new headquarters to Newark, New Jersey.

On Tuesday, the retail giant announced that it chose the New York City neighborhood of Long Island City and Arlington, Virginia as the locations for its new headquarters, dubbed H2Q. While Amazon’s unexpected choice to split an estimated 50,000 jobs and $5 billion of investment between the two cities was good news for some, the other 20 finalists – which included Newark – had a tough pill to swallow after many of them pulled out all the stops in the national feeding frenzy to land the new headquarters.

Despite an eager effort from local and state officials, many saw Newark as an underdog to land H2Q, so much so that Saturday Night Live mocked the very idea in a segment earlier this year.

The new locations in NYC and Arlington will join Seattle as the company’s three headquarters in North America.

In addition, Amazon announced that it has selected Nashville, Tennessee for a new “Center of Excellence” for its operations business, which is responsible for the company’s customer fulfillment, transportation, supply chain, and other similar activities. The Nashville center will create an estimated 5,000 jobs, Amazon said.

Hiring for all new positions is expected to start in 2019, the company stated.

Amazon will benefit from gargantuan tax breaks at each of the new locations, the company reported (see details below).

For their part, New Jersey and Newark officials offered Amazon a staggering $7 billion in combined state and city tax incentives. The package that Newark offered to lure Amazon to the city was mostly kept under wraps until Newark city officials released a redacted version of their 200-page proposal to the retail giant at the request of Steven Wronko, a New Jersey open-records activist who sued to get the information.

Newark’s full proposal to Amazon can be downloaded at NJOPRA.com here.

After reports of Amazon’s final choices leaked to the media last week, a 7-year-old Brick City resident who owns stock in the company issued a social media plea for it to come to Essex County for “the children of Newark.” (Story continues below video)

Despite the harsh blow to Newark on Tuesday, the young Amazon stockholder’s plea won’t be for naught, according to Mayor Ras Baraka, who issued the following statement:

“I want to thank Amazon for considering Newark for HQ2. The attention that Amazon brought to Newark by keeping us under consideration down to the wire greatly helped us showcase our city’s unprecedented progress and attractiveness to technology and other businesses. I also want to thank the governor, our federal and local legislators, our business community, clergy, colleges and universities for their unprecedented collaboration in the campaign to attract Amazon. News that Newark was a finalist highlighted our key advantages: proximity to New York City at a more affordable cost, access to mass transportation, a talent pool fed by half a dozen colleges and an internet infrastructure that allows Newark to offer the fastest and broadest free outdoor Wi-Fi in the country, development opportunities including land with riverfront and park views, and our diversity, a large African-American and Hispanic population. Real estate professionals tell us that other corporations have been taking a look at Newark, and several are strongly considering relocating to the city, since Newark was named as one of the 20 finalists.”

Governor Phil Murphy said that Newark is “undoubtedly stronger” and has benefited tremendously from the spotlight it has been under for more than a year.

“New business inquiries are up significantly,” Murphy said of the Brick City. “Because of our collaborative, all-in effort, now everyone knows that not only is Newark a city on the rise, but that New Jersey’s cities have the tools to be homes for leaders in the global innovation-driven economy.”

“Newark and New Jersey may not be getting HQ2, but our proximity to Queens means we’re certainly going to benefit,” Murphy added.

Senate President Pro Tempore M. Teresa Ruiz said that despite the company’s decision, the City of Newark came out of the Amazon competition as a winner.

“While Newark would have been the best location for Amazon’s new H2Q, I am extremely proud of all the work and effort that my hometown did in becoming a finalist,” Ruiz said. “This was a highly competitive endeavor and the City of Newark demonstrated it can go toe-to-toe with any major city in the country in attracting companies such as Amazon. We showcased the assets that we have for businesses and employees alike. Without question, Newark has all the advantages – its location, transportation infrastructure and a workforce that is second to none. I look forward to continuing our efforts in promoting Newark as the ideal home for companies to locate their business.”

Michele Siekerka, president and CEO of the New Jersey Business & Industry Association, also said that it was an honor for Newark just to be in the running for H2Q.

“We should take a moment to feel proud that Newark was considered as a finalist for Amazon HQ2 among the most prominent cities in the nation,” Siekerka said. “Newark’s exciting rebirth, where we have seen billions of dollars in high-tech investment, serves as a model for how New Jersey can own the innovation mantle in the 21st century and replicate it in urban areas across the state. We should now consider how to take this potential investment through incentives and turn it into a new opportunity for Newark or elsewhere in the state.”

However, Siekerka added that the Garden State needs to remain mindful of “the challenges that a high-tax, high-cost state presents for future employers looking to make New Jersey their next home.”

This latter point was a rallying cry for a pair of Republican members in the state Legislature, who used Amazon’s decision to blast their Democratic peers for creating an “anti-business” tax climate in New Jersey.

“The Democrats’ high-tax and over-regulation policies made the decision easy for Amazon,” said Assemblyman John DiMaio, who represents Warren County. “Billions of dollars in tax credits don’t cover for our state’s anti-business tax climate; it only makes it more obvious. The unfortunate truth is that New Jersey has been rated the worst state to own a business for years and it keeps getting worse.”

“Our highly skilled workforce and proximity to global markets aren’t enough,” DiMaio opined. “If we want to bring the Amazons of the world to New Jersey we need sincere tax reform that lowers the cost of doing business and the cost of living.”

Last week, Senate Republican Leader Tom Kean used the reports of Newark’s dwindling chances to land the Amazon HQ2 to take a political shot at Gov. Phil Murphy.

“New Jersey was well on the path to creating the stable, predictable tax environment that employers like Amazon require until Governor Murphy’s budget reversed nearly a decade of fiscal discipline,” Kean said. “The massive multi-billion dollar business tax increase signed by Governor Murphy in July was the nail in the coffin for Newark’s proposal to host HQ2.” (Story continues below video)

NEW JERSEY’S HUGE TAX BREAKS FOR AMAZON

During the courting process between Amazon, New Jersey and Newark, some critics in the Garden State questioned the plan to offer the company a tax break through the state Economic Development Authority (NJEA) that could have reached $5 billion over 10 years. Newark city officials also offered the company a municipal property tax abatement worth $1 billion, as well as a city wage tax waiver worth an estimated $1 billion over 20 years.

Amazon would have been required to create at least 30,000 new full-time jobs and represent a capital investment of at least $3 billion to earn the tax credits. The project would have also been required to yield a net benefit to the state of at least 115 percent of the tax credits the company receives.

Here’s what the winning cities offered Amazon, the company reported Tuesday:

LONG ISLAND CITY

• “Amazon will receive performance-based direct incentives of $1.525 billion based on the company creating 25,000 jobs in Long Island City. This includes a refundable tax credit through New York State’s Excelsior Program of up to $1.2 billion calculated as a percentage of the salaries Amazon expects to pay employees over the next 10 years, which equates to $48,000 per job for 25,000 jobs with an average wage of over $150,000; and a cash grant from Empire State Development of $325 million based on the square footage of buildings occupied in the next 10 years. Amazon will receive these incentives over the next decade based on the incremental jobs it creates each year and as it reaches building occupancy targets. The company will separately apply for as-of-right incentives including New York City’s Industrial & Commercial Abatement Program (ICAP) and New York City’s Relocation and Employment Assistance Program (REAP).”
• “The community will benefit from New York City providing funding through a Payment In Lieu Of Tax (PILOT) program based on Amazon’s property taxes on a portion of the development site to fund community infrastructure improvements developed through input from residents during the planning process.”

ARLINGTON

• “Amazon will receive performance-based direct incentives of $573 million based on the company creating 25,000 jobs with an average wage of over $150,000 in Arlington. This includes a workforce cash grant from the Commonwealth of Virginia of up to $550 million based on $22,000 for each job created over the next 12 years. Amazon will only receive this incentive if it creates the forecasted high-paying jobs. The company will also receive a cash grant from Arlington of $23 million over 15 years based on the incremental growth of the existing local Transient Occupancy Tax, a tax on hotel rooms.”
• “The community and Amazon employees will benefit from the Commonwealth investing $195 million in infrastructure in the neighborhood, including improvements to the Crystal City and the Potomac Yards Metro stations; a pedestrian bridge connecting National Landing and Reagan National Airport; and work to improve safety, accessibility, and the pedestrian experience crossing Route 1 over the next 10 years. Arlington will also dedicate an estimated $28 million based on 12% of future property tax revenues earned from an existing Tax Increment Financing (TIF) district for on-site infrastructure and open space in National Landing.”

NASHVILLE

• “Amazon will receive performance-based direct incentives of up to $102 million based on the company creating 5,000 jobs with an average wage of over $150,000 in Nashville. This includes a cash grant for capital expenditures from the state of Tennessee of $65 million based on the company creating 5,000 jobs over the next 7 years, which is equivalent to $13,000 per job; a cash grant from the city of Nashville of up to $15 million based on $500 for each job created over the next 7 years; and a job tax credit to offset franchise and excise taxes from the state of Tennessee of $21.7 million based on $4,500 per new job over the next 7 years.”

‘THE DOWNWARD SPIRAL’

State Assemblyman John Wisniewksi, a Democrat from District 19, previously said that the Amazon “bidding war” was putting New Jersey on a downward spiral.

“While the proposal would provide good jobs in the region, it also robs the state of the very revenue needed to address the consequences of such growth and development,” Wisniewksi said.

“If we add 50,000 employees to downtown Newark, where’s the money to maintain and expand the system?” Wisniewksi questioned. “Who would pay for the additional wear and tear on roads or the additional police and firefighters needed to ensure public safety?”

In October 2017, two radically different New Jersey think tanks came together at a press conference in Trenton to announce their opposition to “New Jersey’s tax subsidy insanity.”

“Offering $7 billion in tax breaks to a single corporation is terrible policy and a big step in the wrong direction,” said Jon Whiten of the New Jersey Policy Perspective.

“In order to succeed in the long run, Amazon’s new HQ2 needs sound public investments – like efficient and affordable public transit, new affordable homes and more – not enormous tax breaks,” Whiten said. “It’s appalling that eight years into a record-breaking surge in overly generous corporate subsidies, New Jersey’s political leaders haven’t learned their lesson, and are instead leading this national race to the bottom.”

“New Jersey has one of the most educated workforces in the country,” Erica Jedynak of Americans for Prosperity-New Jersey agreed, warming up for a pun. “Our state is [already] a prime location for Amazon.”

Don’t forget to visit the Patch Newark Facebook page here. Learn more about posting announcements or events to your local Patch site here. Send local news tips and correction requests to eric.kiefer@patch.com

Main Photo: Ben Cawthra/Shutterstock (Amazon warehouse prepares for Cyber Monday, Peterborough, Britain – 28 Nov 2013)