Amazon will get up to $2.2 billion in incentives for bringing new offices and jobs to New York City, Northern Virginia and Nashville

Key Points
  • Amazon will receive up to $2.2 billion total in performance-based incentives from the three cities where it plans to build new offices, the company announced Tuesday.
  • Amazon ended its year-long search for a new headquarters Tuesday, splitting the headquarters between Long Island City in New York and National Landing in Arlington, Virginia.
  • It also announced a new Operations Center of Excellence in Nashville, Tennessee.
Amazon confirms New York City, North Virginia for HQ2 sites

Amazon is receiving up to $2.2 billion in performance-based incentives from New York City, Northern Virginia and Nashville, according to a release from the company.

The amount illustrates how local officials have tried to lure Amazon with copious incentives, but some critics have questioned whether taxpayers stand to benefit from the online retail giant's presence. In New York, local Democrats have raised concerns about cost of living increases and state tax incentives going to a large company rather than residents.

Jay Carney, Amazon's senior vice president for worldwide corporate affairs, downplayed the incentives the company will receive from the chosen cities in an interview on CNBC's Power Lunch. 

"If you look at some of the proposals that were put forward by the cities that released them publicly, you can find out very quickly that incentives did not drive this process for us," Carney said. "Our number one criterion for us was the availability of existing talent and the possibility of recruiting and luring new talent to come."

Amazon ended its year-long search for its "second headquarters" with an announcement Tuesday morning.

Amazon says it's investing $5 billion and will create more than 50,000 new high-paying jobs in two new main offices in Long Island City, a neighborhood in Queens, New York; and National Landing, a neighborhood in Arlington, Virginia. It also announced a new Operations Center of Excellence in Nashville, Tenn., which it claims will create 5,000 more jobs.

Long Island City, New York

Amazon to bring 25,000 jobs to Long Island City

Amazon will receive more than $1.5 billion in performance-based incentives over the next ten years for its investment in Long Island City, the company said in a blog post announcing the news.

This includes up to $1.2 billion worth of refundable tax credits through New York State's Excelsior Program based on a percentage of salaries Amazon expects to pay employees there for the next 10 years. Amazon estimates this will be an incentive of $48,000 per job out of the 25,000 jobs it plans to create there with average wages over $150,000.

Another part of the incentive comes from Empire State Development, which will award Amazon a cash grant of $325 million. This incentive is based on the square footage Amazon plans to operate over the next 10 years.

The company still plans to apply for additional as-of-right incentives from New York City's Industrial & Commercial Abatement Program and its Relocation and Employment Assistance Program, Amazon said in the blog post.

National Landing, Virginia

Virginia Gov. Ralph Northam on landing Amazon’s new headquarters

Amazon will receive $573 million in performance-based incentives for its investment in National Landing in Arlington, Virginia.

That number includes a workforce cash grant worth up to $550 million from the Commonwealth of Virginia based on the 25,000 jobs Amazon plans to create there. The company said average wages will also be $150,000 in the Arlington location, bringing the cash grant value to $22,000 per job created over the next 12 years. This incentive is contingent on Amazon creating the high-paying jobs it promises.

The incentive also includes a $23 million cash grant from Arlington over 15 years based on incremental growth of an existing local tax on hotel rooms.

Virginia Gov. Ralph Northam called the deal a "win-win for all of Virginia" in a TV interview on CNBC after the announcement.

"I think we put a modest and disciplined package on the table," Northam said. "Over 70 percent of [the] commitment is focused on education, workforce training for those 21st century jobs, and also infrastructure and transportation."

Nashville, Tennessee

Amazon to put operations center in Nashville

Amazon will receive up to $102 million in performance-based incentives for its investment in Nashville. While the Nashville location will be a new Operations Center of Excellence, rather than a headquarters, the company plans to bring 5,000 full-time jobs there with an average wage over $150,000.

The incentives include a $65 million cash grant for capital expenditures from the state of Tennessee. This incentive is based on Amazon building the 5,000 jobs over seven years, which comes to $13,000 per job.

It also includes a cash grant up to $15 million from the city of Nashville based on $500 for each new job Amazon creates over the next seven years.

Finally, the incentive includes a tax credit from the state of Tennessee worth $21.7 million based on $4,500 per new job over seven years. This credit is meant to offset franchise and excise taxes, Amazon wrote.