City Won’t Get Amazon Headquarters
Amazon eliminates Milwaukee, 207 other applicants bidding for its second headquarters.
Amazon has eliminated Milwaukee and 207 other applicants from the bidding for its second headquarters, leaving only 20 cities in the running. The Seattle-based company issued a request for proposals in late 2017 asking for bids for a $5 billion corporate campus that could some day employ up to 50,000 people and cities and states rushed to offer massive incentive packages.
Milwaukee submitted a joint bid with neighboring communities through the regional Milwaukee 7 consortium. Multiple undisclosed sites were suggested in the bid.
Milwaukee’s elimination from the bidding war isn’t a surprise. The state recently secured a deal with electronics manufacturer Foxconn that could cost as much as $4.5 billion in state and local incentives, severely straining the ability of Wisconsin to offer a large incentive package. The city’s direct financing options are fairly limited beyond creating a tax-incremental financing district.
Amazon’s RFP indicated they were looking for a number of things Milwaukee’s bid presumably lacked. Chief among them was access to mass transit with the RFP stating “direct access to rail, train, subway/metro, bus routes.” The high-frequency mass transit access that Amazon has at its urban Seattle campus can only be found in downtown Milwaukee where site options are more limited.
This dovetails with the issue of international airport access. Yes, General Mitchell International Airport technically fits the bill, but it offers substantially fewer international flights than airports in larger cities. Amazon cites international airport access alongside transit as one of four site requirements.
Interestingly, a number of cities did make the list that would seem to have similar issues to Milwaukee: Columbus, Pittsburgh and Indianapolis. Details on the incentive packages offered by those cities are scant, but Columbus would offer a $400 million income tax refund, $75 million site reimbursement and 100 percent property tax abatement. Both the refund and abatement are moves Milwaukee itself could not offer. Columbus also promised to used Amazon’s income tax dollars to fund “transit solutions.”
Columbus and Indianapolis were two of the top 25 cities according to a New York Times analysis in September based on job growth and their existing labor pool. The New York Times projection closely mirrors Amazon’s list of finalists.
The other city from the Midwest in the final 20 is far more predictable: Chicago, which is offering over $2 billion in incentives, in addition to other tax breaks.
Similar to Milwaukee, many of the cities are not publicly disclosing their bid package. Newark, NJ, a finalist, did disclose that their package includes up to $7 billion in incentives.
The site does not mention proximity to an Amazon distribution center as a preference. Amazon currently has a 1.5 million-square-foot logistics facility along Interstate 94 in Kenosha.
Milwaukee might have dodged a bullet by missing out on Amazon. The company’s claim of 50,000 jobs seems like a stretch. The company reports they currently have approximately 40,000 employees spread over 33 buildings (8.1 million square feet) in their downtown Seattle campus. They project the 15-to-17-year HQ2 project would maintain that campus and add an additional campus with 50,000 employees. They initially project to build only a 500,000 square-foot building, roughly half the size of the new Northwestern Mutual Tower and Commons.
One of the finalists could still have positive effects on Milwaukee without the hefty price tag. Chicago is pitching a number of sites near The Loop and Union Station, which would allow Milwaukee residents to work at Amazon in Chicago, live in Milwaukee and commute via Amtrak’s Hiawatha Service. The reverse is expected to happen for Foxconn, with Illinois residents commuting to jobs in Racine County subsidized by Wisconsin taxpayers.
Since the bidding began, Amazon founder and CEO Jeff Bezos has claimed the mantle as the world’s richest person, with a net worth of more than $100 billion. He owns 78.9 million shares of Amazon stock, which opened today’s trading session at $1,293.58. Three months ago the stock was trading at just under $1,000 per-share, meaning Bezos has added $23 billion to his net worth since October.
The company has a market cap of $623 billion.
- Austin, Tex.
- Columbus, Ohio
- Los Angeles
- Montgomery County, Md.
- New York
- Northern Virginia
- Raleigh, N.C.
- Toronto, Canada
- Washington, D.C.
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