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Amazon scraps Pittsburgh, picks New York, Northern Virginia for HQ2

Aaron Aupperlee
| Tuesday, Nov. 13, 2018, 10:18 a.m.

New York City and Northern Virginia will split the 50,000-job, $5 billion Amazon HQ2 sweepstakes, the company announced Tuesday.

Each location will become home to 25,000 jobs, Amazon announced.

Nashville, Tenn., won the consolation prize of a new Operations Center of Excellence that will create more than 5,000 jobs.

The locations beat out Pittsburgh and 16 other finalists as the prime location for Amazon's massive second headquarters.

The announcement ended more than a year of speculation over where Amazon would place its HQ2 and which city the company would knight as the next major tech hub in the country.

Amazon has said its HQ2 will bring as many as 50,000 jobs and $5 billion in investment. The second headquarters also could bring increased rents and housing prices, more traffic and an influx of tech workers that could strengthen the economy while possibly upending it.

Landing Amazon's second headquarters would have transformed Pittsburgh. It would have cemented the city as a tech hub and likely built its tech ecosystem into one that could compete with the traditional East Coast power centers of Boston and New York.

"This is a transformational opportunity unlike any that we've ever seen," Pittsburgh Mayor Bill Peduto said in a statement on on Sept. 7, 2017, the day Amazon announced its search for HQ2.

Allegheny County Executive Rich Fitzgerald, touting the already flourishing tech scene in Pittsburgh, said the proposal was right in the region's "sweet spot."

Amazon's Washington headquarters will be in Arlington, Va., in National Landing, the company said. It's New York headquarters will be in Long Island City.

"We are excited to build new headquarters in New York City and Northern Virginia," Jeff Bezos, founder and CEO of Amazon, said in a statement. "These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come. The team did a great job selecting these sites, and we look forward to becoming an even bigger part of these communities."

The company is planning an initial 4 million square feet of office space in New York and Arlington with the possibility of doubling their size in both cities.

Pittsburgh quickly made several shortlists of cities Amazon should seriously consider.

But with the jobs, money and boost to Pittsburgh's tech economy, Amazon's HQ2 would also have brought a series of headaches, questions and concerns.

Would Amazon make the morning commute even worse as tens of thousands of new employees stream into the city or wherever the company built its headquarters?

Would Amazon breath new life into Hazelwood, home to a closed, gigantic steel mill that developers hope will turn into a tech community?

Would Amazon destroy the character of the Strip District, a spot the company apparently liked when it visited Pittsburgh?

Housing and rent prices were predicted to jump sharply in Pittsburgh. Rents could have jumped between $9 and $14 dollars a month, according to studies by Zillow and Apartment List. Home prices in Seattle have risen nearly 70 percent since 2010, when Amazon put its headquarters there.

There were protests in Downtown Pittsburgh against the city vying for HQ2. Protesters worried that Amazon's second headquarters could send housing costs skyrocketing across the city, leaving many in crisis.

"We've seen what Amazon has done to housing prices in Seattle," Gabriel McMoreland, executive director of the Thomas Merton Center, said in a statement in April. "We want to make sure that they don't do that here."

A sea of tech workers flooding the city brought on fears of increased traffic and stresses on an infrastructure that already has trouble handling a storm now and then.

Protesters have also worried what incentives Pittsburgh, Allegheny County and Pennsylvania offered to lure Amazon. The city, county and state have refused to release any details about the bid or the incentives offered in it. They fought in court open records requests for the bid filed under Pennsylvania's Right to Know Law.

Peduto and Fitzgerald have said the incentives would become public after Amazon announced where HQ2 would go. Both have said it would be a public process after the announcement.

Other locations had offered billions to Amazon in incentives. Newark and Jersey included tax incentives totaling $7 billion in its bid. Chicago and Illinois offered incentives totaling $2 billion.

Amazon said Tuesday it will receive incentives totaling $1.525 billion in New York based on creating 25,000 jobs. The state offered a $325 million grant and a tax credit of up to $1.2 billion based on a percentage of salaries Amazon expects to pay employees in New York over the next 10 years.

New York will also use a portion of Amazon's portion of the company's property taxes to fund community infrastructure improvements. Amazon has also agreed to donate space on its new campus for a tech startup incubator and for use by artists and industrial businesses. The company will donate a site for new school and invest in infrastructure and new green spaces, the press release said.

"This is a giant step on our path to building an economy in New York City that leaves no one behind. We are thrilled that Amazon has selected New York City for its new headquarters," New York Mayor Bill de Blasio said in a statement. "New Yorkers will get tens of thousands of new, good-paying jobs, and Amazon will get the best talent anywhere in the world. We're going to use this opportunity to open up good careers in tech to thousands of people looking for their foothold in the new economy, including those in City colleges and public housing."

In Arlington, Amazon will receive incentives totaling $573 million based on it creating 25,000 new jobs. The state gave Amazon a $550 million grant, and Arlington gave the company a $23 million grant based on the expected growth of a hotel tax in the city.

Virginia will invest $195 million in infrastructure in the area including Crystal City and the Potomac Yards Metro stations. A pedestrian bridge connecting National Landing and Reagan National Airport will be built. Arlington established a $28 million Tax Increment Financing district for National Landing.

"We are proud that Amazon has selected National Landing for a major new headquarters. This is, above all, a validation of our community's commitment to sustainability, transit-oriented development, affordable housing, and diversity," Arlington County Board Chair Katie Cristol said in a statement. "The strength of our workforce coupled with our proximity to the nation's capital makes us an attractive business location."

Amazon will build its new Operations Center of Excellence in Nashville's downtown along the Cumberland River. The campus will have 5,000 jobs and created more than $230 million in investment in a 1-million-square-foot office.

Amazon received incentives totaling $102 million based on it creating 5,000 jobs.

"Amazon's decision to expand its presence in Nashville is a direct result of the talented workforce and strong community we've built here," Nashville Mayor David Briley said in a statement. "These are quality, high-paying jobs that will boost our economy, provide our workers with new opportunities, and show the rest of the world that Nashville is a premiere location for business investment. We thank Amazon for investing in Nashville, and we look forward to welcoming them to this community."

The great courtship of Amazon began immediately after the company announced it was on the hunt for a new location.

"On it," Peduto tweeted the morning the search for HQ2 was announced.

Amazon received 238 bids. It whittled the interested cities down to 20 and announced its short list Jan. 18.

Fitzgerald called Pittsburgh's inclusion a "tremendous honor."

Amazon visited Pittsburgh at the beginning of 2018. Fitzgerald told the Tribune-Review that representatives from the company did not ask a lot about incentives during their visit.

"Their questions are more about how much does it cost to buy a house here? How long is your commute if you live in Mt. Lebanon or Lawrenceville? What type of access and transit do you have here? How many engineers does CMU graduate every year or Pitt or Penn State? What is the talent pipeline here? What do we have to pay in salaries to compete with Google and Facebook and Apple? What's the restaurant scene like for young people? How many coffee shops?" Fitzgerald said. "Bike lanes were big."

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