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Amazon picks New York, Virginia for new HQ2 — Toronto is officially out

Amazon HQ2 putting New York ‘ahead of the curve’
WATCH: New York Governor Andrew Cuomo said Tuesday that the state and city made a push to attract Amazon HQ2 in an effort to stay "ahead of the curve" and build an "economy of tomorrow."

Amazon has named New York City and Arlington, Virginia as the two sites for its second headquarters

READ MORE: What happens to cities when companies like Amazon move in, and how to prepare

Toronto was on the list as one of the candidates for Amazon’s second North American headquarters but now is officially out.

Amazon’s plan to split its second headquarters, dubbed “HQ2,” evenly between two cities will boost its presence around New York and the nation’s capital as it seeks to gain a recruiting edge over Silicon Valley tech firms.

The company had originally said, in September 2017, that it would spend more than $5 billion and add up to 50,000 workers at a single location for its second headquarter.

It has got more than 200 proposals since then from cities and states promising billions of dollars of tax breaks and other inducements in exchange for Amazon’s “HQ2.” The bidding locales also handed over infrastructure, labour and other data that could prove useful in other ways to the world’s top online retailer.

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WATCH: New York officials speak about Amazon choosing state for HQ2 location

Pros and cons

The headquarter split will give Amazon more diversity for recruiting and could also help lessen congestion and cost-of-living increases that would have accompanied one bigger office.

The company has already had to navigate similar issues at its more than 45,000-person urban campus in Seattle. An affordable housing crisis there prompted the city council to adopt a head tax on businesses in May, which Amazon helped overturn in a subsequent city council vote.

The particular neighbourhoods chosen by Amazon for its “HQ2” offer lower rents and more attractive zoning than central business districts nearby, a Brookings Institution report said.

READ MORE: Toronto remains confident about Amazon HQ2 bid a year into company’s search process

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However, the split could also mean economic benefits for the hosts will be muted relative to expectations, especially given the selected cities’ size versus some of the other contenders.

The two areas already have relatively low unemployment rates, and Fitch Ratings has noted that even a full HQ2 represented only 1.5 per cent of the Washington area and 0.5 per cent of the New York area’s labour force.

Some critics had pushed for more transparency from cities and states in the bidding process, warning that the benefits of hosting a massive Amazon office may not offset the tax-payer funded incentives and other costs.

WATCH: Amazon announces new HQ2 office in Virginia

Scepticism

New York Representative elect Alexandria Ocasio-Cortez questioned the planned investment by Amazon late Monday in a series of tweets.

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“Amazon is a billion-dollar company. The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here,” she wrote.

“When we talk about bringing jobs to the community, we need to dig deep: – Has the company promised to hire in the existing community? – What’s the quality of jobs + how many are promised? Are these jobs low-wage or high wage? Are there benefits? Can people collectively bargain?”

READ MORE: The downsides of Amazon choosing a Canadian city for its second headquarters

Amazon says it has helped boost Seattle’s economy indirectly by $38 billion between 2010 and 2016. Construction and service work increased there, catering to the retailer, and the company says it helped attract other Fortune 500 businesses to Seattle.

Amazon has already been awarded more than $1.6 billion of state and local public subsidies across the United States since 2000, with most of that after 2012, according to a database from the Washington-based government watchdog Good Jobs First.

WATCH: The downside of winning Amazon HQ2 — start-ups fear the giant’s crush

The downside of winning Amazon HQ2: Start-ups fear the giant’s crush
The downside of winning Amazon HQ2: Start-ups fear the giant’s crush

Some of the awards may not yet be in effect, and the awards can take many forms, from tax rebates and abatements to grants, loans, infrastructure assistance and training reimbursements.

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— With a file from the Associated Press