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The city of Boston has approved a $5 million tax break for Amazon Services Inc. linked to 2,000 jobs the online retail giant promises to bring to a new waterfront office tower.
Another $5 million tax break would kick in if Amazon brings a total of 4,000 new jobs to Massachusetts.
An Amazon spokeswoman told Bloomberg Tax that these tax breaks are “independent of the company’s search for HQ2, a second headquarters in North America.”
On March 15, the Boston Planning & Development Agency (BPDA) board unanimously approved a payment-in-lieu-of-taxes agreement with WS Asset Management Inc., the Boston-based developer that’s building the office tower. The agreement gives WS Asset Management $5 million in city property tax savings on the new office tower, spread out over 15 years.
In exchange, Amazon promises to bring 2,000 new jobs into the office tower by Jan. 1, 2025. An additional $5 million tax break would be enacted if Amazon brought in 2,000 additional employees to offices located within 25 miles of the city, all within Massachusetts. WS Asset Management may house some of these new jobs in a separate office tower at the site.
BPDA staff recommended approval in a memo to the board, noting that the project will create much more tax revenue than the current parking lot, and that it’s part of a $20 million redevelopment plan for the Seaport Square area.
According to the developer’s application, WS Asset Management is negotiating a lease with Amazon to occupy 430,000 square feet—floors 3 through 17—in an 18-story office tower planned for Seaport Square. The site of the development is a parking lot, formerly a rail yard that served the port of Boston. Construction of the office tower is planned to begin later this year, and the building is scheduled to open in 2021.
The company currently employs about 1,200 employees in the Boston area, “from cloud computing experts to robotics engineers,” according to a company spokeswoman. Amazon has a cloud computing division in Cambridge, a robotics facility in North Reading, a large warehouse in Freetown/Fall River, and several other warehouses around the state.
“Last summer, Amazon announced plans to grow its tech hub in greater Boston with additional space for 900 employees, and we expect to open our new location in the Fort Point neighborhood later this year. Amazon is considering additional options for expansion in the Boston area to meet the demand of our growing employee base and as part of our ongoing hiring efforts,” the Amazon spokeswoman told Bloomberg Tax in an email.
A spokeswoman for the BPDA said negotiations for the tax break package began long before the HQ2 search was announced.
Amazon launched its public search for a new second headquarters in 2017 and has narrowed the field to 20 finalists, including Boston.
The company estimates it will invest $5 billion to create its second headquarters, where it projects workers will make an average of $100,000. The project set off a firestorm of bids and media attention, and experts have called it the largest deal linked to a corporate headquarters in U.S. history.
Amazon representatives have been visiting the 20 site finalists for HQ2. Boston’s bid includes sites in nearby Cambridge and Somerville.
Boston Mayor Marty Walsh (D) declined comment on the tax break package. Representatives of WS Asset Management didn’t immediately respond to requests for comment.
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Text of the BPDA memo is at http://src.bna.com/w8n.
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