Chicago makes first cut for second Amazon headquarters

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Chicago’s former main post office is among 10 sites pitched to host Amazon’s second North American corporate headquarters. | Sun-Times illustration

Amazon on Thursday released a list of 20 finalists in the competition for the company’s second North American headquarters — and as expected, Chicago is on the list.

The other metro areas making the cut are: Atlanta; Austin, Texas; Boston; Columbus, Ohio; Dallas; Denver; Indianapolis; Los Angeles; Miami; Montgomery County, Md.; Nashville; Newark, N.J.; New York City; Northern Virginia; Philadelphia; Pittsburgh; Raleigh, N.C.; Toronto; Washington D.C.

Emanuel responded to the good news later Thursday, when he held a press conference on an unrelated topic.

“To New York and all of the other cities competing — Chicago is coming after you,” the mayor said.

But even as the race intensifies for the economic prize, word comes this week that another huge company — Apple — also is headquarters-shopping.

Apple is planning to build another corporate campus and hire 20,000 workers during the next five years as part of a $350 billion commitment to the U.S. that will be partially financed by an upcoming windfall from the country’s new tax law.

Emanuel, already an enthusiastic suitor of Amazon, had responded with an unequivocal “Yes” when asked Wednesday if Chicago would pursue Apple, as well.

Thursday morning, Emanuel issued a statement that “today’s news makes clear that Amazon recognizes Chicago’s great strengths — access to talent, transportation, higher education, affordability and quality of life, which are the keys to growth and prosperity​. … As companies including GE Healthcare, ConAgra and McDonalds have concluded, Chicago offers unparalleled opportunities, and we are going to continue to work as a region to make the case to Amazon that Chicago is the ideal location for HQ2. We are prepared to compete at the next level and the next level after that. ”

Gov. Bruce Rauner was similarly enthusiastic.

“We are delighted to be among the competitors in the next stage of Amazon’s HQ2 search,” Rauner said in a statement issued by his office. “We are ready to show the company why we believe the Chicago area is their best option.”

Later, though, Rauner couldn’t resist injecting a little politics into the discussion.

In Country Club Hills, where Rauner was part of a roundtable discussion of property taxes, he said Illinois’ offer is “very attractive” — but there’s more work to be done.

“I think we will have a better case to make to Amazon if we show that we’re disciplined about our own taxes. That we work to keep our taxes low and help to bring our taxes down. If we make progress in this, this will send a great message to Amazon that Illinois is not always just raising taxes with a corrupt system,” Rauner said. “So I hope we can make these changes. It’ll help us bring Amazon here.”

Emanuel seemed to understand why Rauner, his longtime friend, had rained on Chicago’s parade.

“He’s in the middle of a campaign season,” Emanuel said of Rauner. The only campaign season I have is to convince … Amazon and the others to move their operations here,” the mayor said at a news conference to announce that JLT Specialty U.S.A. has chosen Chicago as its U.S. headquarters.

In its announcement, Amazon said that culling the field of 238 applicants to 20 finalists “was very tough – all the proposals showed tremendous enthusiasm and creativity. … 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.”

According to Amazon, the company now “will work with each of the candidate locations to dive deeper into their proposals, request additional information, and evaluate the feasibility of a future partnership that can accommodate the company’s hiring plans as well as benefit its employees and the local community.”

Emanuel has known privately for weeks — through back-channel communication with Amazon — that Chicago would make the cut. What the mayor didn’t know was that Chicago would have so much company on that list.

“The range of cities in terms of where they are, what they are and their airport, transportation and higher ed capabilities, their cost of living, the size and depth of their workforce, their diversity is still so varied that it is hard to read too much into this list,” a mayoral confidant, who asked to remain anonymous, wrote in a text message to the Sun-Times.

“No city on the list is that surprising to see and nobody missing that you thought you were in real competition with,” the person continued. “They received over 200 applications. Had to spend time on all of them. The hard work begins now.”

Despite the heavy competition, Chicago “makes a ton of sense” for Amazon, Google, Apple or “any other fast-growing company looking for scale. … We will compete hard and show well. We are very strong when you dig deep into the data and analyze it,” the Emanuel confidant said.

The exact timing of a final decision is unclear, the confidant said, nor is it certain whether Amazon would visit all the cities again or make another cut before eventually announcing a winner.

The city and state have already offered 10 sites in the Chicago area’s $2.25 billion bid for Amazon’s second North American headquarters. The pot could easily be sweetened as the Amazon sweepstakes continues.

Those same 10 sites are likely to be offered to Apple and Google.

Emanuel said then there’s a reason why corporations like Google, Amazon and Apple are looking to “do different things” away from the West Coast.

“Their employees are getting paid an incredible amount of money. They have to live an hour and 50 minutes away because they can’t afford to live near where they work. And they’re all miserable,” the mayor said.

“So companies that are based there and have everything there are realizing this is unsustainable on a long-term basis. Nobody wants a second headquarters. It has its own challenges. But, companies in those coastal areas [realize] their employees cannot afford to work or live where they are.”

The Chicago area’s bid incentives for Amazon’s second North American headquarters will be even more than $2.25 billion if the company chooses the Thompson Center or the old Michael Reese Hospital site where the city and state could provide free land.

The incentive package includes:

  • Roughly $1.4 billion in state EDGE tax credits. The newly-revised program provides a 50 percent tax break for every job they create in Illinois.
  • $170 million in state sales tax breaks for building materials purchased by and new construction completed by “high-end businesses.”
  • $60 million in property tax breaks through the city and county programs known as Class 7B and 7C.
  • $450 million in site-specific infrastructure improvements that would come from the Illinois Department of Transportation, the Chicago Department of Transportation, the CTA and other agencies.
  • $250 million worth of investments in education, workforce development and “Neighborhood Opportunity Funds” to make certain that all Chicagoans can qualify for the 50,000 high-end Amazon jobs and that businesses that spring up or move here to support Amazon locate in Chicago neighborhoods.
  • Free land worth $100 million, if Amazon chooses to build its second headquarters at the old Michael Reese Hospital site purchased by former Mayor Richard M. Daley as the site for an Olympics Chicago didn’t get. If Amazon chooses either to re-purpose or demolish and rebuild the Thompson Center that the state has been trying desperately to sell, the free land would be worth even more money.

The incentive package pales by comparison to the $9 billion that New Jersey Gov. Chris Christie offered in hopes of luring Amazon to Newark.

But sources close to the negotiations view the package as a good-faith effort to lure the motherlode of all economic development projects and a far cry from the “corporate welfare” so many critics and gubernatorial candidates have decried.

Contributing: Tina Sfondeles

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