ALBANY - New York state will provide Amazon up to $1.7 billion in grants and tax breaks to lure the major online retailer and cloud-computing giant to the Long Island City neighborhood of Queens, making it the the largest incentive package ever provided to a private company by the state.
Amazon officially announced Tuesday it would split its coveted HQ2 project between New York City and northern Virginia, pledging to establish new headquarters in both locations and bring 25,000 high-paying jobs to each location over the next 10 years.
All told, it took about $3 billion to attract one of the wealthiest companies in the world to Queens: New York City is set to provide $1.3 billion in tax breaks on top of the state's incentive package.
Amazon has pledged to invest up to $5 billion in the new New York City and Virginia headquarters.
Gov. Andrew Cuomo's office estimated it would provide a revenue boost of $27.5 billion total for the state and city over the next 25 years.
"I am here to confirm that New York will be home to one of Amazon's new headquarters and more than 25,000 new, high-paying jobs over the coming decade with room to grow," John Schoettler, Amazon's vice president of global real estate and facilities, said at a Tuesday news conference in Cuomo's Manhattan office.
Cuomo said the deal is "exciting for the state of New York."
"It is exactly putting us ahead of the curve," Cuomo said.
Details of tax breaks, grants
As part of the deal, New York state taxpayers will be on the hook for up to $1.525 billion should Amazon meet its 25,000-job pledge, pay an average salary of $150,000 and occupy at least 4 million square feet of space within the next 10 years, as promised.
That number would increase to $1.7 billion if Amazon exceeds its goal and gets to 40,000 jobs by 2032.
Up to $1.2 billion will be in the form of state tax breaks under the state's Excelsior Jobs Program, which are awarded to the company on a rolling basis only after jobs are created over 10 years. It works out to $48,000 per job.
The remaining $325 million to $505 million will be in the form of cash grants dispersed over 10 to 15 years, depending whether Amazon goes beyond its job goals.
Those grants, which are meant to cover some of Amazon's capital costs, will be distributed to the company when it hits certain job and investment benchmarks each year.
New York City, meanwhile, will provide business income-tax credits worth $897 million and a property-tax break worth $386 million over 25 years, according to a joint presentation by de Blasio and Gov. Andrew Cuomo.
The income-tax credits are "as-of-right" programs offered to companies that relocate to the city from elsewhere.
Cuomo defended the size of the incentive package during a news conference in his Manhattan office Tuesday afternoon, saying the economic benefits of bringing 25,000 jobs to Queens will far outweigh the cost of the grants and tax breaks.
The bulk of the state's incentives are tax breaks for employee wages that wouldn't have been in New York otherwise, Cuomo said.
"This is a big moneymaker for us — it costs us nothing, nada, niente, goose egg," Cuomo said. "We make money doing this. And to get Amazon here, did we have to win the competition? Yes, we had to win the competition.”
Amount finally public
New York had long been offering major taxpayer-funded incentives to land the HQ2 project, which more than 230 cities competed for in hopes of landing the promised jobs.
But the amount of its offer wasn't made public until the deal was finalized Monday and released Tuesday, with the state previously withholding its offer from the public by claiming it would have impaired contract negotiations with the company.
The company will also get below-market leases to the buildings and space in the Long Island City neighborhood, which is just across the river from Manhattan.
The state, New York City and Amazon will also put up $5 million each for job-training programs, while Amazon will be required to provide space on its campus for a technology incubator and for artists, as well as a site for a city school.
The state and city, meanwhile, will have to provide a helicopter pad for Amazon.
Mayor Bill de Blasio praised the Amazon deal, calling it a "great day for New York City."
"It’s an extraordinary day for Queens," de Blasio said. "It’s something that everyone should be very proud of."
Criticism from officials
News that Amazon would be inhabiting an already growing section of Queens drew skepticism or outright opposition from several federal, state and local officials representing the borough.
That includes Congresswoman-elect Alexandria Ocasio-Cortez, who questioned whether the state should be providing incentives to such a wealthy company.
Amazon is one of the wealthiest companies in the world, having hit a valuation of $1 trillion in September.
"The idea that (Amazon) will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here," Ocasio-Cortez, a Democrat, wrote on Twitter.
State Sen. Michael Gianaris and New York City Councilman Jimmy Van Bramer, both Queens Democrats, vowed to fight the incentive package, issuing a joint statement calling it "unfathomable."
“We are witness to a cynical game in which Amazon duped New York into offering unprecedented amounts of tax dollars to one of the wealthiest companies on Earth for a promise of jobs that would represent less than 3 percent of the jobs typically created in our city over a 10 year period," the lawmakers wrote.
Rep. Carolyn Maloney and Assemblywoman Catherine Nolan, Queens Democrats whose districts include Amazon's new site, both appeared in support of the Amazon deal at Cuomo's news conference Tuesday.
Virginia, meanwhile, will pay less in taxpayer-funded incentives to attract the same number of jobs, according to the company.
There, the company will locate its new headquarters in the Crystal City section of Arlington County.
The commonwealth of Virginia is providing incentives worth $550 million for the first 25,000 jobs at the facility, with the city of Arlington chipping in $23 million.
The commonwealth would chip in another $200 million beginning in 2030 if the company creates an additional 12,850 jobs.
The commonwealth will also put another $195 million into boosting the area's infrastructure, including improvements at a pair of Metro stations and building a pedestrian bridge from National Landing to Reagan International Airport, according to Amazon.
Cuomo noted that the tax environment in Virginia and New York are not an apples-to-apples comparison, with Virginia's income tax lower than New York's.
You have to take the difference into account when assessing the different incentive packages, Cuomo said.
Someone making $150,000 in New York City would pay a state income tax of 6.65 percent and city income tax of 3.876. The top income-tax rate in Virginia is 5.75 percent.
"We don't start in the same place as Virginia," Cuomo said. "Their income-tax rate is just about half of what our income-tax rate is, so you have to factor in all the elements."
New York state submitted four separate bids to Amazon for the HQ2 application process, which the company launched last year.
Three of the bids — Buffalo/Rochester, Syracuse/Utica and the Albany area — were eliminated when the company cut the field down to 20 finalists in January.
Westchester and Rockland counties were included along with New York City's bid, but Amazon ultimately honed in on the Long Island City and northern Virginia sites, choosing to split its second headquarters among the two.
Jon Campbell is a correspondent for the USA TODAY Network's Albany Bureau.