NASHVILLE, Tenn. (AP) — Gov. Bill Haslam said Tuesday that an Amazon operations hub expected to create 5,000 jobs in Tennessee will be "the single largest jobs commitment made by a company in Tennessee's history."
Amazon will invest $230 million-plus to locate its Operations Center of Excellence in Nashville Yards, a 15-acre (6-hectare), mixed-use downtown development still under construction in the booming southern city. Holly Sullivan of Amazon Public Policy says Nashville will become the eastern U.S. hub for its retail operations division, with hiring to begin next year.
Amazon announced the Nashville site the same day it revealed it would split its much-anticipated second headquarters between New York and Arlington, Virginia, each getting 25,000 jobs.
"This is a game changer for Tennessee. The ripple effect of Amazon's decision to invest $230 million in our state and create 5,000 high-paying jobs in downtown Nashville will be felt for years to come," Haslam said in a statement.
Amazon's new 1 million square-foot Nashville office space will host tech and management functions, including customer fulfillment, customer service, transportation and supply chain. The project is expected to add an estimated incremental tax revenue of more than $1 billion over the next 10 years, according to the company.
Amazon says it will receive up to $102 million in performance-based incentives based on the creation of 5,000 jobs with an average wage exceeding $150,000 in Nashville.
"We think it's just a great location for our employees, but also a great location to really further the resilience and the vibrancy, and just the overall coolness of Nashville, Tennessee," Sullivan said Tuesday at a news conference with Gov. Haslam.
The company received 238 proposals for its new headquarters before narrowing it down to 20 in January, a shortlist that included Nashville.
Haslam said that in the past 30 days or so, the conversation shifted toward the possibility of the smaller hub in Nashville. For perspective, Haslam said the Amazon headquarters proposal could have resulted in 50,000 new jobs in one location, and Nashville currently only has 70,000 jobs downtown.
"I think we realized, Nashville realized and Amazon realized, to do something that big, as much as Nashville has grown, would still be a challenge to infrastructure and to the talent demand," Haslam said at the news conference.
Amazon's choice also followed the resounding defeat of a multibillion-dollar Nashville transit ballot measure in the May election, a plan that banked on tax increases to introduce a light rail system, expand bus routes and build a downtown underground tunnel. In fielding proposals for the second headquarters, Amazon stressed the importance of direct access to mass transit.
Nashville Mayor David Briley said the city still continues to invest in expanding its existing transit system.
Amazon's incentives package includes a cash grant for capital expenditures from the state of $65 million based on the company creating 5,000 jobs over the next seven years — equivalent to $13,000 per job.
Meanwhile, Nashville has agreed to give up to a $15 million cash grant based on each job created within the same timeframe. The annual payment from the city, however, will be dependent on the actual number of employees added.
Finally, Amazon will receive a job tax credit to offset 50 percent of Tennessee's franchise and excise taxes based on $4,500 per job over the next seven years — worth about $21.7 million.
A free market think-tank, Beacon Center of Tennessee, became a quick critic of the deal. Beacon Center spokesman Mark Cunningham said officials "got scammed into giving the company more than $100 million in taxpayer giveaways for a consolation prize."
But Briley and Haslam contended that Nashville and the state are getting great deals that will quickly pay themselves off. Haslam said he expects 1.6 more jobs in the state for every direct job created, for a total of 13,000-plus.
The state says Amazon currently has six Tennessee facilities employing more than 6,500 people.
Associated Press writer Kimberlee Kruesi in Nashville contributed to this report.