Skip to main content

How Amazon landed up to $2 billion in subsidies for its new headquarters

How Amazon landed up to $2 billion in subsidies for its new headquarters


Secret bids led to massive tax breaks for the company

Share this story

Illustration by Alex Castro / The Verge

Amazon has just announced the sites for its HQ2. Soon, the company will be expanding into Long Island City, Queens, and Crystal City, in Arlington, Virginia. The expansion, the retail giant says, will bring 25,000 employees to each of the areas, and the company said it would invest $5 billion in the offices. Already, the announcement is raising questions about what the deal will mean for the cities, the scope of the agreement, and how Amazon conducted the search in the first place. With more than $2 billion in potential subsidies available across the three sites, the secretive and dramatic search seems to have paid off.

The incentives the company will receive as part of the deals are already eye-popping: Amazon announced that, in New York, it will receive up to $1.2 billion in a refundable tax credit, tied to the creation of jobs, and a $325 million cash development grant. Amazon said it will also apply for existing tax incentives, likely raising that total even higher. The company will meanwhile earn up to $573 million in cash grants for the Arlington investment if it creates the promised jobs. Amazon said it will also build an operations hub in Nashville, and it plans to bring 5,000 corporate jobs to the city.

In New York, Amazon will receive about $48,000 in subsidies per job

According to the New York agreement, Amazon will be responsible for some infrastructure improvements, including creating nearby public space and a waterfront esplanade. The company will also offer programs like job fairs and technology training in the neighborhood, including in the nearby Queensbridge housing projects. But the investments still come at a substantial cost: the company could receive about $48,000 in subsidies per job.

In the Virginia agreement, the state agrees to pay for a number of transportation projects, including a pedestrian crossing for Route 1 and a connector bridge to Reagan National Airport.

While the Nashville announcement was unexpected, the choice of the two headquarter cities isn’t a surprise. The two have been reported as likely contenders for the past few days. What’s more surprising is just how little the public has learned about the bidding process before now.

When Amazon first announced its search for a second headquarters last year, the company kicked off an unusually open public bidding process. Cities large and small made their offers, as 238 placed their bids. But as the bidding moved to a narrower list of 20 finalists in January, the company insisted on secrecy. Cities were required to sign nondisclosure agreements and often declined to even acknowledge those agreements existed.

“What have I been told? Absolutely nothing.”

The subsidies reform group Good Jobs First, which tracks similar deals around the country, described the move as a “veer to secrecy,” one that placed a veil over negotiations for the rest of the year, as concerned citizens questioned what their leaders might be giving away.

The secrecy sometimes proved almost comical. “What have I been told?” one member of the Indianapolis City-County Council told The New York Times in August. “Absolutely nothing.” The member told the Times that the public might only find out what the city bid if it won and needs to pass the promised incentives.

The incentive for a company like Amazon to keep its dealings private is clear: if cities don’t know what others are bidding, they’ll be unable to effectively coordinate. The prisoner’s dilemma-like situation gives Amazon an enormous negotiating edge, says Greg Leroy, executive director of Good Jobs First.

Amazon is hardly alone in using the strategy. Any time a company promises to bring jobs to a new spot, the search is predictably hushed. “When companies conduct site location searches, it’s almost always a secret affair,” Leroy says. Still, Amazon conducted a nationwide search with a massive amount of press attention, and critics have wondered whether the smaller cities had any chance at all. By contrast, a much quieter Google expansion in New York could add as many as 12,000 jobs on a similar timescale.

“We are witness to a cynical game.”

Ultimately, Amazon chose two major centers of national power for its headquarters, saying that it needed a broader pool of tech talent. The decision has led some critics of the company to wonder what the point of the massive search was in the first place. “Washington and New York were probably foregone conclusions when this started,” says Stacy Mitchell, co-director of the Institute for Local Self-Reliance.

The broad, secret search, she and other critics have argued, gave Amazon leverage to extract further benefits from areas it may have already settled on. “Citizens were in the dark about what was being offered to Amazon and certainly had no say over how their dollars were potentially going to be spent,” she says.

While some politicians have praised the deal — New York Gov. Andrew Cuomo questioned whether he needed to change his name to Amazon Cuomo to entice the online retail giant — there are already signs of resistance, showing how a now-publicized offer is leading to pushback.

In a statement issued after the announcement, a New York state senator, Michael Gianaris, and city council member, Jimmy Van Bramer, said the deal was “unfathomable.”

“We are witness to a cynical game in which Amazon duped New York into offering unprecedented amounts of tax dollars to one of the wealthiest companies on Earth for a promise of jobs that would represent less than 3% of the jobs typically created in our city over a 10 year period,” they said in a statement.

Newly elected congressional representative Alexandria Ocasio-Cortez said on Twitter ahead of the announcement that her office had “been getting calls and outreach from Queens residents all day about this.”

“The community’s response?” she wrote. “Outrage.”

Today’s Storystream

Feed refreshed Sep 24 Not just you

External Link
Emma RothSep 24
California Governor Gavin Newsom vetoes the state’s “BitLicense” law.

The bill, called the Digital Financial Assets Law, would establish a regulatory framework for companies that transact with cryptocurrency in the state, similar to New York’s BitLicense system. In a statement, Newsom says it’s “premature to lock a licensing structure” and that implementing such a program is a “costly undertaking:”

A more flexible approach is needed to ensure regulatory oversight can keep up with rapidly evolving technology and use cases, and is tailored with the proper tools to address trends and mitigate consumer harm.

Andrew WebsterSep 24
Look at this Thing.

At its Tudum event today, Netflix showed off a new clip from the Tim Burton series Wednesday, which focused on a very important character: the sentient hand known as Thing. The full series starts streaming on November 23rd.

Welcome to the new Verge

Revolutionizing the media with blog posts

Nilay PatelSep 13
The Verge
Andrew WebsterSep 24
Get ready for some Netflix news.

At 1PM ET today Netflix is streaming its second annual Tudum event, where you can expect to hear news about and see trailers from its biggest franchises, including The Witcher and Bridgerton. I’ll be covering the event live alongside my colleague Charles Pulliam-Moore, and you can also watch along at the link below. There will be lots of expected names during the stream, but I have my fingers crossed for a new season of Hemlock Grove.

Andrew WebsterSep 24
Looking for something to do this weekend?

Why not hang out on the couch playing video games and watching TV. It’s a good time for it, with intriguing recent releases like Return to Monkey Island, Session: Skate Sim, and the Star Wars spinoff Andor. Or you could check out some of the new anime on Netflix, including Thermae Romae Novae (pictured below), which is my personal favorite time-traveling story about bathing.

A screenshot from the Netflix anime Thermae Romae Novae.
Thermae Romae Novae.
Image: Netflix
Tom WarrenSep 23
Has the Windows 11 2022 Update made your gaming PC stutter?

Nvidia GPU owners have been complaining of stuttering and poor frame rates with the latest Windows 11 update, but thankfully there’s a fix. Nvidia has identified an issue with its GeForce Experience overlay and the Windows 11 2022 Update (22H2). A fix is available in beta from Nvidia’s website.

External Link
If you’re using crash detection on the iPhone 14, invest in a really good phone mount.

Motorcycle owner Douglas Sonders has a cautionary tale in Jalopnik today about the iPhone 14’s new crash detection feature. He was riding his LiveWire One motorcycle down the West Side Highway at about 60 mph when he hit a bump, causing his iPhone 14 Pro Max to fly off its handlebar mount. Soon after, his girlfriend and parents received text messages that he had been in a horrible accident, causing several hours of panic. The phone even called the police, all because it fell off the handlebars. All thanks to crash detection.

Riding a motorcycle is very dangerous, and the last thing anyone needs is to think their loved one was in a horrible crash when they weren’t. This is obviously an edge case, but it makes me wonder what other sort of false positives we see as more phones adopt this technology.

External Link
Ford is running out of its own Blue Oval badges.

Running out of semiconductors is one thing, but running out of your own iconic nameplates is just downright brutal. The Wall Street Journal reports badge and nameplate shortages are impacting the automaker's popular F-series pickup lineup, delaying deliveries and causing general chaos.

Some executives are even proposing a 3D printing workaround, but they didn’t feel like the substitutes would clear the bar. All in all, it's been a dreadful summer of supply chain setbacks for Ford, leading the company to reorganize its org chart to bring some sort of relief.