Amazon Headquarters Bid Arrives From Chicago

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By Michael J. Bologna

Chicago has submitted its proposal for the massive Amazon HQ2 project, but the Windy City withheld details of the offer “to ensure the competitiveness” of its bid.

Chicago Mayor Rahm Emanuel (D) and Illinois Gov. Bruce Rauner (R) Oct. 16 jointly announced a proposal had been submitted to Amazon.com Inc., “that makes clear Chicago is the ideal place” for a $5 billion investment bonanza that could generate as many as 50,000 jobs. Communities across the country will be submitting similar tax credit and business incentive proposals to the Seattle-based e-commerce giant through Oct. 19.

“This bid will demonstrate to Amazon that Chicago has the talent, transportation and technology to help the company as it reaches new heights and continues to thrive for generations to come,” Emanuel said in the statement.

Rauner added, “our bid makes a powerful business case, linking our advantages in innovation, commerce, and R&D with Amazon’s aspirations for growth and talent recruitment.”

City officials said the bid meets all of Amazon’s original requirements, which include 500,000 square feet of initial space and expansion capacity for 8 million square feet of space over 10 years, direct access to mass transit systems, and swift access to O’Hare International Airport.

Emanuel and Rauner said the bid highlighted Chicago’s top-quality talent, diverse ecosystem, and proximity to major research institutions. The city also pointed to its capacities as a national transportation hub, offering “unparalleled global connectivity and more non-stop flights to Amazon’s key corporate destinations than any other city.”

Mum on Tax Credits

Emanuel and Rauner didn’t release details of the tax credits and business subsidies the city and state might provide to Amazon if Chicago is chosen. Just last month, however, Rauner signed H.B. 162 ( Public Act 100-0511), reauthorizing the Economic Development for a Growing Economy (EDGE) tax credit program.

EDGE provides special tax incentives to companies relocating to Illinois or expanding operations in the state when another state is actively competing. The tax credits equal the amount of state income taxes withheld from the salaries of employees in newly created jobs. Nonrefundable credits can be used against corporate income taxes.

Emanuel and Rauner also remained silent on the results of a site designation process convened in September by the city and the Illinois Department of Commerce and Economic Opportunity.

However, development organizations released details to local media about four proposed sites in Chicago’s city limits that meet all of Amazon’s critical demands. According to the Chicago Tribune, those sites include the former A. Finkl & Sons steel plant along the Chicago River in the Lincoln Park neighborhood, the old main post office building and surrounding property in downtown Chicago, 37 acres of property on the Chicago River owned by the broadcast company Tribune Media, and the shuttered Michael Reese Hospital in the Bronzeville neighborhood.

Handicapping the Race

Anderson Economic Group recently released a report seeking to handicap the horse race for Amazon’s second headquarters and gave Chicago high marks in a comparison with 34 other major metropolitan areas, ranking the Second City second overall.

Anderson discussed tax incentives as a factor in corporate location decisions, but noted other factors are much more important. In order of importance, Anderson said corporations consider:

  •  Talent pool (abundance and skills of local workers)
  •  Infrastructure (access to transportation options and global connectivity)
  •  Location (proximity to customers, suppliers, and production facilities)
  •  Cost of doing business (rents, wages, taxes, and utilities)
  •  Incentives

Using metrics relating to these qualities, Anderson developed its “AEG HQ2 Index,” comparing each city’s relative advantages in attracting Amazon’s HQ2. Chicago ranked second behind New York but ahead of Los Angeles, Boston, Atlanta, and Washington D.C.

Chicago was rated highly for labor, business services, and access to transportation, but the city was in the middle of the pack for cost of doing business.

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bna.com

To contact the editor responsible for this story: Jennifer McLoughlin at jmcloughlin@bna.com

For More Information

Text of the announcement is at http://src.bna.com/tr1.

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