Five Reasons Why Amazon Opening in Newark Would Be a 360° Win
By Lyneir Richardson, Executive Director, Rutgers University Center for Urban Entrepreneurship and Economic Dev. On Nov 7, 2017
Recently, Governor Chris Christie sought to entice Amazon to open its second US headquarters in Newark by offering $5 billion in tax incentives. Newark added to the honey pot by promising a local property tax break that could save the company another $1 billion, and is also offering to waive $1 billion worth in wage taxes for employees over 20 years.
While critics have said that all of these financial incentives would diminish the benefits that the opening of Amazon’s HQ2 in Brick City would deliver, there are at least five upsides that the naysayers aren’t including in their calculations. These attractive perks would dramatically outweigh the state and local dollar downsides of the tax plan that’s being promised to the company:
Amazon’s current success in Newark – Audible, the world’s top audiobook producer and seller, opened up shop in Newark ten years ago. The company, which was bought by Amazon in 2008, moved to Newark with less than 150 employees, and now has over 1,000 team members working here every day. It’s inspiring to see Audible’s employees eating in local restaurants, going to sporting events and concerts at Newark’s Prudential Center and the New Jersey Performing Arts Center, and moving into the city. Audible is as an example of how a modern tech company can create jobs and accelerate urban revitalization while creating value for its shareholders and employees.
Ancillary economic development – Along with Amazon’s proposed delivery of 50,000 new jobs, secondary economic bumps would result if the company hangs its shingle in Newark. Area restaurants would become busier, and new ones would open. Local/regional providers of business goods and professional services would see their receivables ramp up. The benefits to small businesses in Newark and vicinity would be widespread, and the jobs created by the owners of these business would be significant.
Burgeoning residential options and population increase – Over 1,000 new apartments have been developed in Newark’s downtown, and more than 8,000 units are in the pipeline or are under construction. Historic and vacant former Class C office buildings stand ready to be converted into residential units. These future homes, which would rent at a fraction of NYC’s rates, would provide Amazon employees and vendors with first class housing options in close proximity to HQ2. Best of all, none of this downtown vertical development would cause longtime Newark residents to be priced out of their neighborhoods or homes.
New state and local tax revenue – While the above described tax abatements for Amazon would reduce receivables to the city and state, offsetting upticks such as parking taxes, sales tax, property taxes, hotel occupancy taxes, and income taxes (just to name a few) would deliver enduring and emergent sources of revenue.
Enticement for additional company openings/relocations – In the same way that visionary retailers such as Whole Foods act as an anchor for other retailers when they open a new store in an urban location, Amazon’s HQ2 would be a company magnet – and job generator – for Newark. (FYI, Whole Foods, an Amazon company, opened a new location in Newark in a previously vacant office building this past year, and has created 100 jobs. It’s one of Newark’s most popular food stores among both area workers and long time residents, and additional new retailers are gradually joining the neighborhood.)