News: CJ Exclusives

Charlotte, RTP going all in to land Amazon’s second headquarters

Charlotte and the Research Triangle Park are joining the growing number of candidates submitting proposals for Amazon’s second headquarters.

The tech giant plans to invest $5 billion for construction and hire up to 50,000 new employees. Proposals are due by Oct. 19, but the company won’t announce its choice until next year.

Amazon is the world’s largest internet-retailer and continues to see rapid growth. It recently acquired game-streaming service Twitch and popular upscale grocer Whole Foods. The company’s revenue averages in the billions, so it’s not surprising dozens of local governments are eager to attract the company.

Amazon is looking to join the likes of Facebook and Google, which got hefty tax incentives and local subsidies to move to North Carolina. Google opened a data center in Lenoir in 2006 and has received upward of $262 million in incentives from the General Assembly. Facebook got $17 million in tax breaks over 10 years as part of a deal to move to Rutherford County, according to the New York Times. Both companies benefited from sales and use tax exemptions for data centers, allowing them to buy electricity and equipment without sales tax.

The Charlotte Observer is reporting on that city’s entry into the Amazon sweepstakes. Amazon already has a receiving center inside the city limits, and Charlotte-Douglas International Airport acts as a hub for Amazon’s Prime Air cargo planes.

Michael Pittman, vice president of marketing and communications for the Research Triangle Park, explained how the Amazon deal would transform this part of the state.

“It is not just an average, ordinary prospect. This is a total game changer and would change the economy and culture, and the whole face of the Triangle region,” Pittman said. “It would probably be the most significant event in RTP history since IBM moved here.”

But, given the tax breaks and incentives, the deal may make little sense.

“Amazon’s success owes to many things, but it also is tremendously helped by one strategy in particular: getting governments to pay Amazon dearly for the privilege of saying, ‘Look at us,’” said Jon Sanders, director of regulatory studies at the John Locke Foundation. “In other words, Amazon has a major competitive advantage in rent-seeking.”

Sanders describes rent-seeking as “spending some of your resources to capture others’ resources without producing anything of value to them.”

In its announcement, Amazon says tax credits, relocation grants, and other incentives would help the company decide where to move. Essentially, it outlines what goodies local governments should roll out to attract the tech giant.

Sanders advises against bidding for a specific business but instead suggests creating an environment in which a variety of businesses can flourish.

“The bidding is sure to get out of hand quickly. It’s inevitable that whoever ‘wins’ will overpay,” Sanders said. “Removing unnecessary government impediments to small businesses may seem less ‘splashy,’ but it’s more helpful to the overall domestic economy and local jobs.”