For some of the 200-plus cities knocked out of the running for Amazon’s second headquarters, the effort may turn out to be a trial run for other opportunities. But they’re advised to not make the same kind of promises to just anyone.
Cities such as Detroit, Memphis, Tennessee; and Gary, Indiana, failed to make Amazon’s first cut as the online giant narrowed its list to 20 prospective sites for the $5 billion project that could employ up to 50,000 people. Looking on the bright side, several leaders whose proposals didn’t make it say the time spent putting together juicy tax incentives, massive chunks of land and infrastructure studies was not wasted.
“We used this opportunity to showcase all the options in Delaware not just for Amazon, but for any business looking for a location to set down roots and grow,” the state’s governor, John Carney, said.
“This exercise showed us new ways to showcase our city that we are already using to attract other businesses,” Memphis Mayor Jim Strickland said.
Seattle-based Amazon made clear that tax breaks and grants would be a big factor in its decision.
Maryland Gov. Larry Hogan floated an incentive package of more than $5 billion to lure the second headquarters to Montgomery County. New Jersey’s pitch contains $7 billion in tax breaks and Boston’s offer includes $75 million for affordable housing for Amazon employees and others.
Generous tax breaks and other incentives can erode a city’s tax base. Economists have said the Amazon headquarters is a rare case in which some enticements could repay a city over the long run.
But the pursuit of Amazon could re-ignite an incentive war between cities, regions and states to lure companies and jobs, says Tim Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan.
Just because they offered certain things…