Hogan Details Amazon Incentive Package Proposal

Maryland governor is proposing legislation to create $ 5 billion-plus offer to attract company to Montgomery County


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Maryland Gov. Larry Hogan, right, and Transportation Secretary Pete Rahn, left, in Montgomery County in 2016

Andrew Metcalf

Gov. Larry Hogan is moving forward with a $5 billion-plus plan to encourage Amazon to select Montgomery County for its second headquarters site.

Last week the company announced Montgomery County was among the 20 finalists that it is vetting for the location of its second headquarters. Amazon is planning to invest $5 billion to build and maintain the complex where it plans to employ up to 50,000 workers.

Since the announcement, Hogan and other top state officials have said the state will do everything possible to land the headquarters.

“Amazon sent a clear signal that Maryland truly is open for business by selecting Montgomery County as one of the contenders for this transformative project,” Hogan said in a statement Monday. “HQ2 is the single greatest economic development opportunity in a generation and we’re committing all of the resources we have to bring it home to Maryland.”

Montgomery County has not formally revealed the site that the county pitched to Amazon, but multiple government officials have told Bethesda Beat it is the White Flint area. A key portion of the area is the undeveloped site of the former White Flint mall, which contains only a Lord & Taylor store after the mall was demolished about two years ago.

The former White Flint mall site along Rockville Pike in Montgomery County. Credit: Andrew Metcalf

The legislation pitched by Hogan will have to be approved by the state’s General Assembly. The governor dubbed the Amazon bill the “Promoting ext-Raordinary Innovation in Maryland’s Economy Act of 2018”—or the PRIME Act—in a nod to Amazon’s Prime service.

The bill would provide a state income tax credit equivalent to 5.75 percent of wages for each new qualifying headquarters job for 10 years. Jobs that qualify are those created within the first 17 years of the project that pay between $60,000 and $500,000 in annual salary. Other incentives include a state and local property tax credit, with the state offering to reimburse the county for half of the property tax that would have been collected from the company, and an exemption from the sales and use tax for construction materials used to build the project.

Other companies could qualify for the incentives, but the legislation was written for a project of Amazon’s size. For example, to qualify for all of the incentives, a company must hire 40,000 employees over 17 years and compensate them at least $100,000 in annual salary on average.

The bill also has a “clawback” mechanism that enables the state to recoup the tax incentives if the company doesn’t meet the requirements. If approved, the bill would go into effect in June.

The governor’s office also said the package contains "billions of dollars" in proposed transportation improvements—including road, transit and other infrastructure upgrades. The exact transportation improvements were not detailed in the information released Monday.

Last week, Transportation Secretary Pete Rahn said at an event in Silver Spring that the state government was prepared to do “whatever it takes” to attract Amazon. He said that would include upgrading roads and transit in the area.

Del. Shane Robinson (D-Montgomery Village), who chairs the county’s House delegation, said in an interview Monday that legislators from the county are just beginning to discuss the legislation.

“It’s happening pretty fast,” Robinson said. “We’re going to try to schedule a meeting very soon to discuss this issue and see if we can come up with a delegation position. We don’t have one now, but we’d like to get one.

“I imagine we’ll be supportive,” Robinson added. “Most people want to do what they can within reason to attract Amazon’s second headquarters to Montgomery.”

Robinson plans to try to schedule a closed meeting with the delegation Monday to discuss the legislation before the General Assembly goes into session at 8 p.m. Monday evening.

Other regional governments named to Amazon’s shortlist—Washington, D.C., and Northern Virginia—have not publicly detailed what incentives they plan to offer the company.

Robinson said that’s why the delegation plans to hold a closed, rather than an open, session to discuss Hogan’s proposal. He said he wants legislators to be able to frankly discuss their concerns about the proposal without those concerns being potentially misconstrued and adversely affecting the county’s chances to land the headquarters.

Robinson said he wants to make sure Amazon’s positive impact on the area would outweigh the cost of luring the company to the state.

Former New Jersey Gov. Chris Christie has pitched $7 billion in potential tax incentives to Amazon to entice the company to locate in Newark, which made the short list.

Maryland Commerce Secretary Mike Gill said the state’s incentive package “makes Maryland competitive with any state or city in the country.”

The other locations named to Amazon’s shortlist include Atlanta, Austin, Boston, Chicago, Columbus, Dallas, Denver, Indianapolis, Los Angeles, Miami, Nashville, New York City, Philadelphia, Pittsburgh, Raleigh and Toronto.

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