GR’s Amazon pitch included up to $2B in tax incentives

Kent County

GRAND RAPIDS, Mich. (WOOD) — The Grand Rapids area didn’t make the shortlist for Amazon’s highly sought-after second headquarters, but it wasn’t for a lack of trying.

On Thursday, regional economic development group The Right Place, Inc. released details of the tax incentives that were offered to the online retail giant to try to lure “HQ2” to West Michigan. The proposal included three different sites with varying tax savings over 30 years.

The largest tax break topped $2 billion for the now-vacant space where General Motors’ former stamping plant used to sit off 36th Street in Wyoming.

“The Amazon HQ2 opportunity was a huge transformational project,” Assistant Wyoming City Manager Megan Sall told 24 Hour News 8 Thursday.

The tax breaks would have reached nearly $1.7 billion had Amazon set up on empty land near the Gerald R. Ford International Airport, and the company could’ve saved nearly $800 million in taxes at a downtown Grand Rapids location.

But site options were not what killed the deal for the Grand Rapids area’s offerings. It was a lack of public transportation and skilled workers.

“I really think that talent search is one of the key issues that we really need to be thinking about as a region,” Sall said.

Amazon promises a major economic boost with HQ2: a $5 billion investment and 50,000 jobs over the next 15 years. That’s three times bigger than Grand Rapids biggest employer, Spectrum Health.

In January, the final 20 cities were named. Neither Grand Rapids nor Detroit made the cut. It’s unknown exactly what Detroit was offering.

Right Place officials say the tax breaks would have come from existing incentives available to other qualifying businesses. They are performance-based: If the 50,000 jobs promised did not come, the incentives would have gone away.

The breaks would have come in the form of abatements or rebates, essentially giving up some of the taxes that would normally be generated by such a project as opposed to an upfront cash handout to Amazon.

Economic development, especially for a large scale project like Amazon is extremely competitive business, so information on incentives like these aren’t always readily available from the public bodies offering them. In fact, the release of the West Michigan information was the result of a Freedom of Information Act request by Detroit-area media outlet.

Sall believes details on the 2 billion package put together for Amazon could help with future deals for the 36th Street site.

“Letting people know that we’re development ready, that we’re here to assist, that we want to work hand-in-hand with people, that we’re willing to think outside the box,” he said, “I really think that’s a benefit to us as we move forward.”

The Right Place released this statement on its proposal Thursday:

“Since Amazon announced the top 20 cities it is pursuing for its HQ2 project, The Right Place and its bid partners have received numerous inquiries regarding the Grand Rapids proposal. Although we ultimately were not selected as one of Amazon’s top 20 cities, in the spirit of transparency, and to bring closure to this topic, we are sharing some details of our proposal.

“The process of building a proposal of such a magnitude highlighted our major assets and revealed some of our gaps, so we are better prepared for future opportunities. Additionally, we have all gained deeper knowledge about key parcels and buildings and how they can be used for a variety of purposes.

“This project promises big rewards for the community Amazon chooses, so we knew the offers had to be competitive. The figures we presented are indeed large, but they had to be if we were to land an estimated $5 billion investment and 50,000 jobs for the region.

“It should be noted that the incentives we offered were not exclusive to Amazon; these economic incentive programs are regularly used to attract and retain other companies, albeit not at the scale of this project. These were performance-based incentives, meaning Amazon would’ve needed to meet program requirements before the incentives would be approved. As well, none of the incentives were ‘cash-based.’ The State of Michigan nor local municipalities would have provided up-front cash to Amazon. The incentives were essentially abatement and rebates on various taxes.

“Overall, we are proud of the Grand Rapids proposal and the effort we put forth as a community to attract the HQ2 project. Now on to the next opportunity!”

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