Please reload

Recent Posts

Coronavirus (COVID-19) and #CommercialRealEstate: Government #Finance Interventions from CCIM Institute's Chief Economist

March 28, 2020

1/10
Please reload

Featured Posts

Officials confident Dallas can compete in Amazon incentives arms race

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 * Figures account for the dollar value of local and state tax abatements and subsidies awarded directly to Amazon or in support of its facilities.

 

Amazon is chasing a huge, taxpayer-funded incentive package for its proposed second headquarters, or “HQ2,” but Dallas-Fort Worth officials are confident the region can compete in the high-stakes giveaway game.

 

Specifics of the Dallas-Fort Worth bid for HQ2 have not been released, but economic development officials say North Texas’ won’t be blown out of the water by financial incentives of as much as $7 billion from New Jersey or $5 billion from Maryland. Show Full Story

 

DFW has advantages such as low costs of doing business, no state income tax and a relatively low cost of living, so it doesn’t have to offer as much in other incentives, said Mike Rosa, senior vice president of the Dallas Regional Chamber's economic development program.

 

“We compete very effectively, I believe,” Rosa said. “Incentives are offered off of a base business case. So in Texas, and in Dallas-Fort Worth, we’ve got a very low-cost business case upon which to add incentives and other inducements as we see fit to encourage the location here.”

 

The regional chamber hasn’t released its proposal or details about incentives that various cities have offered Seattle-based Amazon (Nasdaq: AMZN), but Rosa said that an incentive package for each community was included in the regional response. More than 30 locations in over a dozen North Texas cities are packaged together in the regional chamber’s pitch.

 

The goal of the unified pitch is to win the Amazon project for North Texas, then let the individual cities and developers make their best case for specific sites.

 

The Dallas Regional Chamber’s bid also presumably contains an incentive offer from the state through the Texas Enterprise Fund. The number could be a big one, although it almost certainly would top out in the hundreds of millions and not the billions of dollars being offered by some other states and cities.

 

The most the TEF has ever doled out to land a project is $50 million. The relocation of Toyota's North American headquarters to Plano, for instance, is the third largest Texas Enterprise Fund grant ever, at $40 million. The city of Plano also kicked in a $6.75 million incentive package to entice the automaker into relocating out of Torrance, California.

 

While the Toyota incentive was big, a TEF offer to Amazon would likely be bigger, based on the jobs and investment promised in the deal. Toyota promised 3,650 jobs (later raised to over 4,000 jobs) and $40 million in facilities investment. Amazon says HQ2 will bring a whopping 50,000 jobs with six-figure salaries and $5 billion in investment.

 

Amazon late last year launched an open call for proposals detailing why the e-commerce giant should bring its business to town. The Seattle-based online retail giant received 238 bids. Last week, Amazon narrowed the list to 20, including Dallas and Austin in Texas.

 

New Jersey’s offer of $7 billion, primarily in tax credits, appears to be the most generous set of inducements among the 20 locations on Amazon’s shortlist. Newark, N.J,. is one of the 20 still in the running for HQ2.

Unlike the case in Texas, some incentive offers have become public, either through government or local media accounts.

 

Another HQ2 contender, Montgomery County, Md., is offering a package totaling $5 billion — more than $3 billion in incentives and an additional $2 billion minimum for road, transit and other infrastructure improvements. Maryland Gov. Larry Hogan called HQ2 “the single greatest economic development opportunity in a generation.”

 

Critics, however, view Amazon’s unveiling of the shortlist as a way for the corporation to extract another round of incentive offers, essentially fanning the flames of the cities and states on the list.

 

Richard Florida, a University of Toronto professor who studies urban policy, has suggested that the rival cities pledge to compete on the merits of their cities and refuse to fork over incentives.

 

“The truly progressive thing to do is to forge a pact to not give Amazon a penny in tax incentives or other handouts, he wrote in a CNN column.

 

Incentives are just one in a long list of factors Amazon says it will consider in its decision for HQ2. Others include a strong labor force, strong university system, proximity to a major airport, a population of more than 1 million people, “stable and business-friendly” regulations and tax structure, and on-site access to mass transit — train, subway, or bus.

 

Incentives may be the icing on the cake, but business basics frame the foundation of companies’ relocation and expansion decisions — and that’s where North Texas shines, Rosa said.

 

A company like Amazon is going to look from the bottom up,” he said. “They’re going to look at everything for years and years to come.

 

"Our real sweet spot is for companies like Amazon that need scale, that need growth, that need sanctuary in terms of a business climate that is going to remain stable and productive and business friendly for years to come, and a place that can attract talent.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Please reload