To Lure Amazon, Columbus Promises Tax Breaks And Transit Investment

Oct 20, 2017

With a package full of property-tax incentives, income tax refunds and transportation plans, Columbus threw its proverbial hat in the ring to become the site of Amazon's second corporate headquarters.

For the project, nicknamed “HQ2,” Amazon promises to hire 50,000 full-time workers with an annual salary of more than $100,000 over the next ten to 15 years. In addition, the company expects to invest $5 billion in capital expenditures in the first 15 to 17 years.

To lure the company, Columbus city leaders put together an incentives package where Amazon would receive a 15-year, 100 percent property-tax abatement at every site included in the new headquarters. That’s a savings of $456,750 per $1 million of investment in property for the life of the abatement.

Amazon would also receive a refund of 35 percent on income-tax withholdings from new full-time employees at their new headquarters. That’s up to $50 million annually, or as much as $400 million over 15 years.

Calculations by WOSU estimate these abatements and refunds would generate nearly $2.3 billion in savings for Amazon over a 15-year period. Officials with the Columbus Economic Development Department did not return a request for comment.

Amazon announced they’re looking for a mid-sized city with a population of more than 1 million, where they can build an urban or suburban campus with access to mass transit.

While Columbus was selected as the winner of the U.S. Department of Transportation’s Smart City Challenge, a robust transit system has yet to be realized. That might make the city less appealing, but officials hope to counter that by proposing a robust public transit investment.

Up to 60 percent of new income tax withheld on payroll for new Amazon workers would be used to grow a new Transit & Mobility Fund. Columbus economic development director Steve Schoeny outlined the city's plan in a five-page letter to Amazon.

“The city envisions improved state and municipal road access to the proposed project sites, which will require significant capital investments," Schoeny writes. "The city hereby commits to take the lead on creating a Transit & Mobility fund to support both transit and infrastructure investments to better connect the project sites in and around the Franklinton neighborhood, Easton, The Ohio State University, and elsewhere."

The proposal suggests a network of autonomous vehicles and “smart mobility hubs” that would offer bus, bike and car access. There’s no mention for the possibility of a light rail system.  

In addition, Columbus has offered to reimburse Amazon up to $75 million dollars over a 15-year period for the cost of land acquisition, demolition of existing structures and site preparation. However, this incentive would not begin until the 16th year of operation, around 2034.

Aaron Renn, a senior fellow at The Manhattan Institute think tank, says Columbus' pitch is a long shot compared to cities like Chicago and Dallas.

“I wouldn’t say Columbus is one of the top prospects, and probably hasn’t made a lot of people’s top prospects," Renn says. "But it’s not one that I would rule out, either.”

In a separate letter, Mayor Andrew Ginther wrote that this was merely the first version what could be many more proposals. Moving forward, Ginther says, would require “linking Amazon with Columbus business leaders, university leaders, community leaders, schools and the best planners and architects in the world to develop the shared vision of our future.”

Around Ohio, Cleveland and Cincinnati also submitted bids for Amazon, as did the small city of Niles.  

Amazon is expected to select the final location for their new headquarters in 2018.

Columbus Incentives Letter To Amazon by WOSU on Scribd