State, City Offer $7B Tax Incentives in Bid to Lure Amazon HQ2 to Newark

Christie, Booker, Baraka back campaign for Internet retail giant to put its new corporate headquarters in New Jersey, but skeptics worry about ‘out-of-control’ corporate tax breaks

Credit: Governor's Office/Tim Larsen
L to R: Mayor Ras Baraka, Gov. Chris Christie, and U.S. Senator Cory Booker promote Newark as the ideal location for Amazon’s second headquarters.
In the nationwide competition among cities hoping to attract Amazon’s new corporate headquarters, New Jersey’s largest city of Newark would seem to be an underdog compared to glamorous places like Boston and New York. But Gov. Chris Christie and other state officials are hoping a blend of prime location and top-notch Internet infrastructure — along with some $7 billion in tax incentives — will be enticements that Amazon will find too good to pass up.

Christie announced yesterday during a news conference with Newark Mayor Ras Baraka and U.S. Sen. Cory Booker that the state was officially endorsing an application that Newark is submitting to Amazon executives in response to last month’s nationwide call for proposals from places interested in hosting the company’s second corporate headquarters.

After holding a statewide competition over the last several weeks, the Republican governor said Newark’s offering will give New Jersey the best shot at landing what Amazon is calling its HQ2, which is expected to bring with it up to 50,000 new jobs and $5 billion in investment.

“Amazon just flat out works and makes sense in New Jersey,” Christie said during the announcement at the Rutgers Business School campus in Newark.

Baraka, a Democrat, welcomed the news, saying city officials have worked hard and cherish the opportunity to lead the way for the state in the competition. Booker, the city’s former Democratic mayor, also said what’s now dangling before Amazon is more than an opportunity to make a strong business decision.

State officials getting carried away?

“They will demonstrate to this nation that our inner cities are not places to be avoided, they are the undiscovered treasure,” Booker said. “You do not need to go across the globe for developing markets of opportunity (because) they exist right here in America, in our neighborhoods and our streets.”

But others offered words of caution yesterday, suggesting state officials should not get too carried away with offering tax incentives to Amazon as the state continues to struggle to find the funding to fully support other priorities like higher education and mass transit.

Founded in 1994, Amazon was set up as an online book seller, but since then it has become one of the world’s largest companies, maybe its largest retailer, with more than 380,000 employees. Its current corporate headquarters is in Seattle, where the company started, covering eight million square feet. And Amazon estimates the Seattle campus generates as much as $1.4 billion annually in direct and indirect economic activity for the city.

The company announced the launch of its nationwide search for a second corporate headquarters early last month, setting off a sweepstakes among cities, states, and even provinces in Canada.

The public nature of the HQ2 search has effectively pitted places that are interested in hosting the new headquarters directly against each other, a process that’s expected to drive up the value of tax credits and other incentives that will be offered to close the deal.

Christie: ‘Let any state … try to beat that package’

In New Jersey, the respective leaders from both parties and both houses of the Legislature have entered the sweepstakes in a big way, saying last month they are willing to rewrite the state’s economic-development tax-incentive programs to offer Amazon up to a staggering $5 billion in incentives. That proposal, which Christie has promised to sign into law, could be combined with up to another $2 billion in tax credits that the city of Newark is ready to offer, including a property tax abatement and a waiver of the city’s wage tax. With Amazon’s deadline for proposals coming later this week, the value of New Jersey’s offer is now up to $7 billion.

“Let any state go and try to beat that package along with what we have offered here in Newark,” Christie said.

In its call for proposals, Amazon highlighted a number of specific features that company executives are looking for as they conduct the search for HQ2, including proximity to major urban centers, high-level tech talent, and a community with a “think big” attitude.

In their proposal, Newark officials highlight the city’s location near New York City, Newark Liberty Airport, and institutions of higher education like Newark-based New Jersey Institute of Technology. The city’s pitch also stresses that Newark, even as its revitalization has picked up pace in the wake of the Great Recession, still remains a rare, affordable option in the New York City metro area, with miles of developable land still available. City officials also identified something that maybe no other place can offer, which is access to a 26-mile underground high-speed fiber network that runs right under Newark. “We actually sit right on top of dark fiber that makes this a city that has the fastest Internet on the planet Earth,” Booker said.

Amazon already has some ties to both Newark and the state itself. Amazon-affiliated Audible Inc. is located in Newark near the Broad Street train station, and the company also employs thousands of workers at fulfillment facilities that have opened up throughout the state as New Jersey’s warehouse and distribution industry has flourished in the wake of the Great Recession.

Baraka: It’s a ‘gamechanger’

In an interview after yesterday’s news conference, Baraka stressed that luring Amazon to Newark could be a “gamechanger” for the region, and not just his city. “I think it benefits the (gross-domestic product) of the state altogether, puts people to work at wages that are not just basic, entry-level wages, helping to put more money in our economy — it’s huge,” Baraka said. Three sites have been identified as possible locations for Amazon in Newark, Baraka said, but he declined to say where exactly they are within the city’s borders.

While Christie stressed that the Newark bid has strong, bipartisan support, Gordon MacInnes, the leader of New Jersey Policy Perspective, a liberal think tank, urged restraint as the enticement process moves forward. MacInnes suggested public investment in things like mass transit, higher education and smart-growth planning is what helps drive the state’s economic vitality. “Merely blowing the lid off already out-of-control corporate tax break policies won’t work — and is dangerous to New Jersey’s future to boot,” MacInnes said.

Nick Sifuentes, executive director of the Tri-State Transportation Campaign, also raised concerns about the state’s ability to put up to another 50,000 people on New Jersey Transit trains that have struggled to keep up with demand during Christie’s tenure, which will come to an end early next year under term limits established in the state constitution.

“If our next governor wants Amazon to take Newark’s — or any city in New Jersey’s — bid seriously, they’ll need to prioritize fixing NJ Transit, because the system isn’t meeting the needs of commuters now,” Sifuentes said.