Nashville won’t be getting Amazon’s new HQ2, but in a surprise announcement Tuesday the city will get Amazon’s new Operations Center of Excellence in exchange for $102 million in taxpayer-funded performance-based incentives.
A press conference held at the State Capital with outgoing Governor Bill Haslam, Economic Community Development (ECD) Commissioner Bob Rolfe, and Nashville Mayor David Briley appeared with Amazon’s Holly Sullivan to make the announcement.
While Nashville was considered to be in the hunt as one of the top 20 for Amazon’s HQ2, that distinction was awarded to New York and Virginia. Being a finalist “opened the opportunity for Nashville to be chosen for this significant operation,” according to Ralph Schulz, President and CEO of the Nashville Area Chamber of Commerce.
The new operation promises 5,000 new jobs with average salaries of $150,000 per year, Haslam said during the press conference.
While Amazon’s investment to establish the operation is sited as $230 million, the announcement didn’t address the $102 million in incentives as the trade-off. Incentives from the State include a $65 million grant for capital expenses and allows Amazon seven years to create the 5,000 jobs.
A tax credit from the State of Tennessee worth $21.7 million is intended to offset franchise and excise taxes, reported Yahoo Finance. This is a particularly interesting incentive, in that Governor Haslam’s IMPROVE (Improving Manufacturing Public Roads and Opportunities for a Vibrant Economy) Act passed in 2017 lowered the franchise and excise tax for certain businesses.
Additionally, the “broke” city of Nashville will provide a cash grant up to $15 million. Meanwhile, Metro hasn’t been able to fully fund schools or provide promised pay raises to employees, as previously reported.
According to the State’s Open ECD webpage, Amazon has received about $15 million in FastTrack grants alone. There may have been other tax incentives provided Amazon, but not available on the Open ECD website due to statutory taxpayer confidentiality provisions.
Amazon’s Eastern Hub will be located in Nashville Yards, an under-development mixed-use site that boasts over 1.5 million square feet of office space, a thousand residential units, 600,000 square feet of retail and entertainment space and 1,100 hotel rooms. It was not revealed how the Amazon operation will fit into the plan.
Also not clear is how Nashville intends to deal with the traffic woes that will most assuredly come along with an additional 5,000 commuters in an already congested area.
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