Amazon unveils 20-city short list for $5 billion second headquarters

Amazon, with its Spheres under construction at the Amazon Urban Campus in Seattle, on Thursday unveiled its 20 finalist cities in which to build its second headquarters.

Paul Christian Gordon

Louisiana offered Amazon an incentive package worth potentially $6.56 billion over two decades in the state's underdog bid to become home to the online retail giant's 50,000-job second North American headquarters.

The figure, which Louisiana Economic Development revealed publicly for the first time Tuesday in response to a records request from The Advocate, consisted almost entirely of off-the-shelf benefits the state regularly offers to qualifying businesses, though not typically of that magnitude.

In its proposal, dubbed "Project Pearl" by LED officials, the state pitched Amazon on five locations — three in New Orleans and two in the New Orleans area, although officials were willing to look farther afield.

In a statement Tuesday, LED Secretary Don Pierson said the agency "made a powerful case for Louisiana, but the reality is fewer than one in 10 proposers made the short list, with the finalist cities tending to be the nation's most populous urban areas."

Louisiana pitched the retailer on the Churchill Technology and Business Park in Avondale, which is owned by the Jefferson Parish Economic Development Commission; Brechtel Park in Algiers, owned by the city of New Orleans; the Central Business District, which offered the potential of building in a mix of publicly and privately owned buildings in the heart of New Orleans; the University of New Orleans' Lakefront campus; and Lakeshore Estates in St. Tammany Parish.

State economic development officials stressed that the offer was performance-based, meaning that Amazon would have had to hit certain benchmarks in order to earn the high-value figure over a 20-year period.

Jefferson and St. Tammany parishes, as well as New Orleans, also offered local incentives should Amazon choose their proposal, although their size was dwarfed by the state's offerings.

In addition to tax breaks, the state's 107-page proposal also stressed the metro area's inherent strengths, including close proximity to an international airport, direct access to major highways, a major port with deepwater draft and access to six major railroad lines.

Additionally, the state cited research showing that New Orleans has lower labor costs than the U.S. average and that lease costs there are "significantly lower" than in most other major cities in the South, resulting in tens of millions of dollars in potential annual savings.

Another claimed plus in the region's favor: a large influx of millennials, that prized 20-to-34 demographic — many of them drawn by the city's well-known cultural advantages — that could be an attractive hiring pool for a company like Amazon.

"New Orleans is a city that is rich in heritage and culture, making it a remarkable and one-of-a-kind place to live, work and play," the proposal said, adding that the city's countless festivals and events "bring people together and remind each other to 'Laissez les bons temps rouler.' "

Still, economic development experts long said that the odds of Louisiana — specifically New Orleans — landing the transformative deal were extremely small. Hundreds of cities and states submitted proposals to the Seattle-based online retailer in October.

Last week, Amazon disclosed that it was focusing on 20 finalists culled from the 238 proposals it received from cities and regions across North America, including all but seven U.S. states.

Amazon's public search has drawn plenty of attention — as well as scrutiny — since the retailer announced last fall that it planned to spend more than $5 billion on an 8 million-square-foot complex that could eventually create 50,000 high-paying jobs and billions of dollars in additional spending.

Amazon's splashy search announcement — and the lucrative deals some locales put together — reignited debate nationally about whether offering such corporate subsidies actually drives boardroom decisions or simply gives big, sought-after companies the leverage to pit one state against another.

Louisiana's proposal relied primarily on a mix of popular incentive programs that the state regularly offers to qualifying businesses, though on a smaller scale.

Out of the potential $6.56 billion package, an estimated $5 billion was to be allocated through the state's Digital Interactive Media and Software Development Incentive. The program offers a 25 percent refundable tax credit on payroll of Louisiana residents developing an interactive software product.

Another $600 million was allocated through the Quality Jobs Program, which provides a cash rebate of up to 6 percent of a company's annual payroll for as long as a decade for new positions that pay at least $18 per hour.

The state's Competitive Projects Payroll Incentive Program, which offers an 11 percent payroll rebate for qualifying new jobs over a decade, was also included, valued at about $500 million.

The proposal further included $400 million for LED FastStart workforce training program and a $60 million performance-based grant to pay for building and training facility costs.

Despite Louisiana's slim chances, experts said its proposal was more about making a strong case for the state's advantages so as to get on Amazon's radar for possible future opportunities, such as a new warehouse or logistics facility.

State economic development leaders acknowledged their strategy Tuesday.

"LED sought to strengthen our relationship with Amazon through this site selection process, and we believe we're accomplishing that goal," Pierson said in a statement. "Only one city will win HQ2, but Amazon likely will announce many other economic development projects over time, and Louisiana will be recognized as a stronger candidate for fulfillment centers and other facilities because of the HQ2 effort we mounted."

Those smaller projects might be more suited to the state's strengths and would have the potential to create hundreds of new jobs. In recent years, Amazon has spent billions on such projects.

The greater New Orleans area meets some, but not all, of Amazon's prerequisites for a new headquarters, experts said. But perhaps the biggest challenge for any city, New Orleans especially, is having a ready stable of qualified workers.

Amazon was seeking an area with at least 1 million people, with thousands of them able to qualify for jobs in management, software development, legal, accounting and administrative positions. It also wanted a stable and business-friendly environment, plus tax breaks and other incentives to help drive down its initial expenditure and the ongoing costs of doing business.

Some states didn't shy away from loosening their purse strings. New Jersey offered as much as $7 billion in state and city tax incentives to try to woo Amazon to Newark.

Follow Richard Thompson on Twitter, @rthompsonMSY.