Reports of Amazon's HQ2 Split Raise Questions about Financial Incentives

November 6, 2018

By Amanda Weston

Reports that Amazon may split its new headquarters between two locations is raising questions about the financial incentives offered by those cities bidding to become the new hub.

“One of the questions that I’m left with following this reporting that there might be two cities instead of just one ... is whether this will change the incentives that some of the cities are offering in their draft plan,” Axios reporter Shannon Vavra told Cheddar Tuesday.

The New York Times reported Monday that Amazon ($AMZN) plans to split the much-anticipated HQ2 between the Long Island City neighborhood of Queens, N.Y. and Washington, D.C. suburb Crystal City, Va.

“For instance, does it make it like less of an incentive for Amazon to go to New York because instead of offering 50,000 jobs, they’ll only be able to offer about 25,000 jobs? Does that change the incentive exchange there?”

The Times also reported New York offered Amazon potentially hundreds of millions of dollars in subsidies. Governor Andrew Cuomo said he is doing everything he can to encourage the deal and called the incentive package “great.”

Maryland has offered incentives added up to about $8.5 billion, according to The Washington Post.

The Wall Street Journal wrote Monday the decision to split HQ2 is to give Amazon the opportunity to hire more top tech talent in both areas. It also reduces impacts on housing and transit with only 25,000 employees in each city versus 50,000 in one.

“The reason they’re looking for a second headquarters is because they weren’t able to keep up with the capacity that local talent was able to offer at the time,” Vavra said of Amazon’s main Seattle location.

Amazon already has a presence in both alleged HQ2 cities. Vavra said there are currently about 1,000 employees in New York and 2,000 in the Arlington and D.C. area.

“There’s also a lot of folks online who are giving Amazon flack for not necessarily considering cities and locations that are more rural and considered mid-America where a job injection could be particularly helpful,” Vavra said.

Amazon has not confirmed any of the reports. The Journal reported Amazon could announce its choice ー or choices ー as early as this week.

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