The Amazon hangover

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It’s the morning after in New York City after a hard-fought victory to get a piece of Amazon’s H2Q project.

The Long Island City area of Queens will share the headquarters operations with Crystal City, VA, an area near the Pentagon and Arlington, VA.

New Yorkers, always a cranky bunch,  woke up to find out that the city handed out some big incentives to lure Amazon,  $1.7 billion to be exact. By contrast, the package for Crystal City is said to have come in under  $600 million.

Already, New York U.S. Senator and possible presidential candidate Kristen Gillibrand objected to the deal engineered by fellow Democrats. She made her statement as anger grew in Long Island City.

Like most of New York, Long Island City is facing rising housing prices that will grow only worse if Amazon follows through on plans to hire 20,000 or more employees.

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Crystal City is a better fit. A few years ago, I  spent part of one evening in an area that according  to Slate never lived up to its potential. Our visit included a pop-up art exhibit in a largely empty high rise that may soon be occupied by Amazon staffers.

Delaware was out of the running early on, although it was hoped that a successful bid by Philadelphia would lead to some spillover effects.

In the end, losing out might have been a good thing for Delaware. Still, a  back of the envelope look at a split HQ2  shows that northern Delaware might have been able to accommodate a smaller headquarters complex.

And there was no way the state could offer even the more modest incentives offered by Virginia.

HQ2 might mark the end of an era of lavish government incentives.

An estimated $3 billion in tax incentives for Taiwan electronics company Foxconn turned into a campaign issue in Wisconsin, with Gov. Scott Walker going down to defeat. The timing was bad for such a deal, given the Badger State’s three percent unemployment rate and concerns over a decline in the state’s roads and a  once top-notch public education system.

In the end, Amazon did not make its decision based entirely on incentives. Neighboring New Jersey reportedly offered  $7 billion, topped by Maryland, which would have coughed up  $8 billion.

It is worth noting that these figures are based on a number of factors including tax exemptions that were based on Amazon coming to the area, not direct payments out of government coffers.

Stay out of the bad weather. This newsletter will be back tomorrow. – Doug Rainey, publisher.

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