Dive Brief:
- The Maryland legislature approved a $6.5 billion bundle of tax and other incentives to make Montgomery County, Maryland, more attractive to Amazon as the company searches for a site to build its $5 billion second North American headquarters, The Baltimore Sun reported. When combined with a $2 billion offer to provide road and transportation improvements around the potential future headquarters, Maryland's total package is $8.5 billion, which is more than any of the other 19 finalists have offered publicly.
- With the name a nod to Amazon's signature membership program, the PRIME (Promoting ext-Raordinary Innovation in Maryland's Economy) Act, also known as Senate Bill 877, does not specifically name Amazon but provides a "Fortune 100 company" with income tax credits based on the number of jobs it creates; an income tax credit against state and local property taxes; and a sales and use tax exemption for certain purchases. Amazon will qualify for the credits only if it submits to the state's commerce department a plan for at least 17 years that involves a minimum of $4.5 billion in specified investments and the creation of at least 40,000 positions with an average salary of $100,000 each. These businesses are also qualified to receive a tax credit under the Businesses That Create New Jobs Tax Credit Program.
- According to an analysis by the Maryland Department of Legislative Services, the PRIME Act would result in a loss to the state and localities of almost $6.5 billion from 2019 to 2054. However, a study by the commerce department found that Amazon's HQ2 would contribute $17 billion annually to the state's economy, which does not include the near $8 billion in wages once the headquarters is fully operational. Critics have called the PRIME Act corporate welfare, but proponents say the state has nothing to lose because Amazon (or any other company) would not be eligible for tax breaks if it doesn't meet the qualifying requirements.
Dive Insight:
New Jersey has offered $7 billion in incentives if Amazon chooses Newark for its HQ2, and Philadelphia has promised between $2 billion and $3 billion. This shows how eager states, cities and regions are to bring home these mega corporate projects. Local commercial and residential contractors will see a boom during the construction phase, with housing and other services set to thrive once employees move to town and begin work.
The key to a success story for the HQ2 finalist, according to a CityLab report, is to make sure the deal benefits the community, not just Amazon. This could include requiring the company to launch apprenticeships, internships and other education and training programs; adding to transit funds; and creating community service funds that would pay for the improvements and upgrades necessary when tens of thousands of new workers relocate.
Manwhile, any action Amazon can take to develop a good relationship with local leaders and residents will surely ease its transition into the community.
