Newark Mayor Ras Baraka speaks during a recent press event in the city, with Gov. Phil Murphy standing to his right. — Courtesy: City of Newark
By Joshua Burd
Newark city officials have formalized a $2 billion incentive package meant to attract Amazon’s second headquarters project, one that could also be used to lure other companies that would deliver a similar economic impact.
The city council on Wednesday passed three pieces of enabling legislation to support Newark’s previously announced commitment, which would augment roughly $5 billion in incentives that were pledged by the state late last year. Under the terms of the city legislation, Amazon must commit to creating at least 30,000 new jobs and invest at least $3 billion over a 20-year period to qualify for the incentives.
One ordinance authorizes the creation of an accelerated process of land use and permit approvals, while a second qualifies Amazon for a 100 percent payroll tax exemption for employees living in Newark and a 50 percent exemption for all other employees, according to a news release. The total payroll tax exemptions are capped at $1 billion over the life of the project.
A third ordinance creates an additional category of transformative headquarters within the city’s long-term tax exemption ordinance. City and state officials have previously said that Newark plans to offer a property tax abatement worth as much as $1 billion, although additional details about that piece of the package were not immediately available Wednesday.
“The City Council has brought Newark a giant step closer to being Amazon’s choice for HQ2,” Mayor Ras Baraka said. “The creation of 12,500 jobs for Newark residents, the added revenue to Newark families plus the added revenue to the City of Newark, Newark Public Schools and Newark Public Library make HQ2 a game changer in the transformation of our city.”
Newark has the state’s official endorsement in its bid for HQ2, which comes with a space requirement of some 8 million square feet and the promise of 50,000 new jobs. The city submitted a 250-page proposal to Amazon late last year and was named in January as one of 20 finalists for the project, a group selected from more than 200 cities across the country.
The job creation and capital investment requirements in the city legislation are the same as a bill passed by the state Legislature and signed into law early this year by former Gov. Chris Christie. Gov. Phil Murphy, who was sworn in just days later, also supports the incentive package.
“I am proud to stand by the strong leadership of Mayor Baraka and all who are speaking in a clear and unified voice that Newark is ready to lead and win the Amazon bid,” Murphy said. “Let there be no doubt: we are all in this together and Newark will continue to rise as one.”
In announcing the legislation, Newark cited a third-party independent analysis conducted by the Anderson Economic Group of Chicago, which concludes that the financial and job benefits of Amazon choosing Newark far exceed the dollar amount of the incentives. According to the city, the report’s findings include:
- Upon completion, HQ2 would create at least 12,500 direct and indirect jobs for residents, in a city that averaged about 8,751 unemployed residents in 2017. The project would also increase Newark household earnings by $1.2 billion annually starting in 2035.
- Amazon HQ2 locating in Newark would result in more than 135,000 net new direct and indirect jobs in New Jersey. The jobs would increase New Jersey household earnings by $11.4 billion.
- By 2035, Amazon HQ2 would have an annual net fiscal impact of $113 million on the state of New Jersey. This includes a $599 million net increase in tax revenues and a $487 million increase in service costs.
- By 2035, Amazon HQ2 would have a combined net fiscal impact of $41 million on the city of Newark, Newark Public Schools and Newark Public Library, collectively. This includes an $80 million increase in tax revenues and a $40 million increase in service costs.
- Amazon HQ2 would also have a positive net fiscal benefit on Essex County. By 2035, the annual impact would reach $41.3 million, due to increased PILOT and property tax revenues.