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VOL. 132 | NO. 197 | Wednesday, October 4, 2017

Memphis Officials Lay Out Initial Pitch for Amazon HQ

By Patrick Lantrip

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With 50,000 jobs and $5 billion in capital expenditures at stake, it stands to reason that cities hoping to land Amazon.com’s second U.S. headquarters will do whatever it takes to close the “once-in-a-lifetime” deal.

The city of Memphis is prepared to offer Amazon up to a 30-year payment-in-lieu-of-taxes (PILOT) abatement, $50 million in labor reimbursement and a $10 million investment to immediately upgrade the city’s transit and workforce infrastructure.

The incentive package was drafted during the Memphis City Council executive session on Tuesday, Oct. 3, and later passed unanimously by the full council.

“Around 1995, Nashville went after the New Jersey Devils hockey team,” council member Martavius Jones said. “They put everything on the table and came up short. But you know what? The Houston Oilers said these people are really ready to play ball. We have to do the same thing.”

Since local officials can’t legally offer more than a 20-year PILOT on an individual project, the city of Memphis will have to petition the Tennessee comptroller and Economic and Community Development commissioner for a 10-year extension.

“This is very unusual,” Reid Dulberger, president and CEO of the Economic and Development Growth Engine for Memphis and Shelby County told the city council of Amazon’s search for a second headquarters. “The vast, overwhelming majority of the opportunities that we deal with for companies that are not already in Memphis are done on a confidential basis – the companies prefer it that way. Amazon made this extraordinarily public.”

As for the $50 million, the city is willing to pay Amazon $5,000 per net new job for direct costs incurred from the HQ2 project. However, for Amazon to receive these benefits, the online retailer must add a minimum of 2,500 net new jobs averaging $60,000 per year, excluding benefits.

“They are talking about management positions, engineering with a preference for software engineering, legal, accounting and administrative jobs,” Dulberger said of the up to 50,000 jobs Amazon’s HQ2 could bring to the area.

Meanwhile, city leaders said the $10 million investment would enhance the workforce pool through the Workforce Investment Network; improve public transit through the Memphis Area Transit Authority; and to help the Memphis-Shelby County Airport Authority add new direct flights to Seattle, Washington; San Francisco, California; New York City; and Washington, D.C.

“This will be a $10 million local investment into our institutions to help produce the product they want in a sustained fashion, in addition to a cash incentive and in addition to the PILOT,” city of Memphis Chief Operating Officer Doug McGowen said.

As for where the money will come from, council chairman Berlin Boyd said Memphis is in a good place to make this offer and that the most important thing is for the city to act quickly.

“If you’re worried about where the money is going to come from, we’re in a good financial position now,” Boyd said. “Previous bodies prior to me serving made some tough choices that put the city of Memphis in very decent financial state with a great credit rating and great bond rating, so we’re in a good position where we can handle taking on something like this.”

While no specific sites were mentioned during the session, Dulberger and McGowan said the city’s is working to explore all possibilities and will have several sites listed when it submits its final proposal for the headquarters to by Oct. 19. 

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