Michigan’s Third Amazon Tax Break Primes State in HQ Race

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Alex Ebert

Amazon.com Inc. has scored its third in a hat trick of tax incentives to develop one of its fulfillment centers around Detroit, adding fuel to speculation that the city might be a contender for Amazon’s second headquarters.

The third incentive came Sept. 26 when the Michigan Economic Development Corporation voted to approve $3.5 million in cash if the company hires 800 workers for its recently announced Shelby township facility by the end of 2019. The company will get another $1 million if the facility reaches 1,025 workers by the end of 2020.

The presence of three fulfillment centers around Detroit—and current incentives up to $17 million from the state—have raised speculation that Detroit might be a contender in the competition for Amazon’s second headquarters. The large number of redevelopment opportunities downtown, recently passed incentives for large employers aimed at the new Foxconn megafactory in Wisconsin, and a possible partnership with Windsor, Canada, are also potential factors favoring the city in its bid for Amazon’s 50,000-job development.

Midwest Competition

Amazon told Bloomberg BNA in an email it isn’t commenting on which states or cities it’s considering for the $5 billion development. But Detroit is acting like a serious contender.

Detroit Mayor Mike Duggan (D) tapped Quicken Loans founder and developer Dan Gilbert to lead a “super bowl host committee” of about 100 people to get the city’s proposal together before the October 19 deadline.

Gilbert, who also owns the NBA’s Cleveland Cavaliers, told reporters last week at a press conference that the state’s $1 billion dollar brownfield redevelopment tax credit program could be a magnet. But incentives are only part of what Amazon says it’s seeking.

Amazon wants a large metro area, a “business-friendly” environment, technical talent, and real-estate opportunities, according to its request for proposals. And dozens of cities across the Midwest have publicly said they fit the bill.

To the south, Ohio cities Cleveland, Dayton, Columbus, and Cincinnati—all communities with at least one fulfillment center—are vying for the headquarters. Cleveland says it will bid as hard as it did for the 2016 Republican National Convention it held; Dayton brags about its unique spots at the crossroads of American highways.

Columbus boasts connections through its Amazon data processing center, and Cincinnati Mayor John Cranley (D) told CNBC that the city will be “very aggressive” with tax incentives, while also boasting the city is first in more Fortune 500 companies per-capita in the country.

At several events, Kentucky Gov. Matt Bevin (R) has said the Bluegrass state will also be bidding. The state already has 10,000 Amazon employees and a shipping hub for company airplanes.

Detroit will also face stiff competition from across Lake Michigan. Reports have surfaced that Chicago has put together a 600-person recruitment team for the headquarters, and Indiana Gov. Eric Holcomb (R) is mounting a regional effort to attract the online retail giant as well.

Also raising their hands in the race: Delaware and Rhode Island; Hartford, Conn.; Memphis, Tennessee; Philadelphia; St. Louis; and Tulsa, Okla..

The city of Detroit and Gilbert didn’t immediately respond to requests for comment.

To contact the reporter on this story: Alex Ebert in Columbus, Ohio at aebert@bna.com

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

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