Big question for Amazon’s 2 chosen cities: Will it pay off?

Jeff Bezos CEO and founder of Amazon at the introduction of the new Amazon Kindle Fire HD and Kindle Paperwhite personal devices in Santa Monica Calif. Thursday Sept. 6 2012

The housing market will be one aspect to watch as Amazon employees and executives start exercising the option to move to NY or Virginia, Bishop recently told KIRO Radio.

Indeed, Jay Carney, an Amazon senior vice president, acknowledged in an interview on CNN that the company had chosen two locations that offered less in subsidies than others had.

The company said it will receive "performance-based direct incentives" of $1.525 billion based on its promise to create 25,000 high-paying jobs in the NY area.

Long Island City and Crystal City would meet Amazon's other requirements: be near a metropolitan area with more than a million people; be within 45 minutes of an worldwide airport; have direct access to mass transit; and have room to expand. The state's Excelsior Jobs Program, which provides benefits to companies that meet prearranged employment and investment targets, will provide credits and reimbursements worth $1.2 billion.

"New Yorkers have real unmet needs from their government", New York State Sen.

Amazon already has more than 8,500 employees in Virginia and more than 2,000 in the D.C. metro region.

The funds, which have to be appropriated by the Virginia General Assembly, are created to decrease slightly in value if more than 10% of the new hires are focused on federal government contracts.

Amazon is placing one headquarters in Long Island City (in the borough of Queens in New York City) and another in Crystal City, Virginia (in Arlington County).

The support - from the cities themselves, states and urban development organisations - includes a cash grant of up to $978m, over $1.2bn in tax credits and more than $200m in infrastructure investment to support thousands of new workers.

The agreement with Arlington County also pledges assistance in securing the necessary approval for a helipad on Amazon's new campus.

Virginia pledged a few other goodies, such as a commitment to "regulatory flexibility" in order to allow new technologies to operate in the area, as well as confidentiality for "all materials, communications, data, and information related to this Memorandum".

With more than 610,000 workers worldwide, Amazon is already one of the biggest employers in the United States and the world's third-most valuable company, behind Apple Inc. and Microsoft Corp.

"As we've seen in Seattle, the Bay Area, and in other cities where unfettered tech development has been allowed to spread, without good jobs specifically set aside for local residents and without strong protections for both tenants and middle-income homeowners, displacement is guaranteed", said the Association for Neighborhood and Housing Development.

In New York, a similar storyline was playing out in a section of the city in the midst of transformation from its industrial past.

The headquarters in Arlington is comparable in size with the same 25,000 estimated jobs and 4 million square feet of office space with the option to expand another 4 million square feet in the future.

Analysts said Amazon's selection of NY and Washington, thriving regions where many major U.S. companies, including Amazon, already have a presence, shows that subsidies sweeten- but do not necessarily drive - corporate decisions.

The chosen location in NY is Long Island City, Queens, which is just across the East River from Midtown Manhattan.

The prospect of a rise in housing costs in two cities known for scarce affordable housing is a chief concern for many. "So I don't have an idea about how they put together their transaction".

Toronto continually stood out as a top contender for the bid, beating out the likes of other Canadian cities and was in the final running alongside Denver, Virginia, Atlanta, Nashville, and New York City.

Beyond that initial carrot, Amazon will also enjoy these cities investing heavily in making the tech giant as comfortable as possible.

The Nashville office is expected to be smaller and the company said it would start hiring in New York, Virginia and Tennessee in 2019.

Amazon's emphasis on new, high-paying jobs earned publicity as it faced criticism for low wages in its sprawling warehouses.

Both the city and the state components of the incentive package will have to be approved by various legislative bodies.



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