Amazon's HQ2 winner may have some regrets

Winning the much-hyped contest for Amazon's (AMZNsecond headquarters (HQ2) may not be the bonanza that it's cracked up to be. The competition is now down to 20 metropolitan areas that made the cut on Thursday for final consideration for the e-commerce giant's $5 billion project, which it says will generate 5,000 jobs.

According to Good Jobs First, a nonprofit that's critical of governments that offer tax incentives to corporations, business and individuals in the same region as HQ2 may pay the price for Amazon's deal in the form of higher taxes. 

The group also noted that state and local governments will be faced with additional expenses for services such as police, schools and infrastructure like roads and bridges to accommodate the additional Amazon employees.  

In addition, other local employers likely will demand to be treated like the Seattle-based company, which Good Jobs First estimates has received more than $241 million in tax breaks since 2015 to build its network of fulfillment centers.

"The cost-benefit conversation has been completely swamped by the earned media bath that Amazon has gotten from this competition," said Greg LeRoy, the organization's executive director. "The risks are that governments will overspend for this deal and actually perhaps create a negative income tax rate for Amazon and a zero sales tax rate and a zero property tax rate, even though that much growth will be expensive for wherever Amazon goes."

Officials from Amazon, also the leading provider of cloud computing services and a burgeoning force in the entertainment business, didn't respond to a request for comment for this story. 

The company, which announced the HQ2 competition last year, trimmed down the potential locations from 238 to 20. The contenders now include Boston, New York, Los Angeles, Philadelphia, Denver and Nashville, Tennessee. It expects to make a final selection sometime this year after taking a closer look at all the proposed locations -- and the incentives local and state governments dangle to make their candidate's location look as appealing as possible.

"Getting from 238 to 20 was very tough -- all the proposals showed tremendous enthusiasm and creativity," Holly Sullivan of Amazon Public Policy said in a statement

Sullivan tried to throw a bone to the 218 localities that didn't make this first cut. "Through this process we learned about many new communities across North America that we will consider as locations for future infrastructure investment and job creation," she said.

Pennsylvania Governor Tom Wolf, a Democrat, noted that the state's two largest cities -- Philadelphia and Pittsburgh -- are still in the running for HQ2, thanks to their nearness to the heart of the East Coast, nationally ranked colleges and universities, and workforces "equipped to support future growth."

Of course, officials in some metro area that weren't named finalists were disappointed.

"New Hampshire's groundbreaking proposal to recruit Amazon was the most comprehensive business marketing plan our state has ever produced," Republican Governor Chris Sununu said in a statement.

Sununu and the other losers, however, might have another similar opportunity in short order. Next up for job-hungry states is Apple (AAPL), which said this week it will also build a second corporate campus and hire 20,000 workers in a $350 billion, five-year commitment to the U.S. economy. 

The Cupertino, California-based company didn't announce a location, but chances are excellent another frenzy of promotional marketing and generous financial incentives will soon be aimed at Apple.

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    Jonathan Berr is an award-winning journalist and podcaster based in New Jersey whose main focus is on business and economic issues.