The Seattle City Council has unanimously passed a scaled-down version of the tax on mega-companies that caused Amazon to suspend its construction in the city earlier this month. It now seems like Amazon was bluffing when it threatened to pull out if the measure went through, as pre-construction work on the 17-story Block 18 tower is reportedly back on. Seattle is weathering an affordability crisis as rents and homelessness rates continue to rise, and a tax on companies grossing $20 million a year or more was proposed as a way of funding new affordable housing. The proposed tax would have originally hit those larger companies (about three percent of businesses in Seattle) with an annual, $500-a-head charge. After deliberations between the Council, Mayor’s office, and the business community, a leaner, $275-per-employee bill that sunsets in five years was eventually passed. The original measure was expected to bring in around $75 to $86 million a year for the city, which would have built approximately 1,700 affordable units over the next five years; as passed, Seattle will reap $45 to $49 million a year, and only build out 591 units over that same period. Still, even these changes haven’t appeared to sit well with Amazon. Although construction will move forward on Block 18, an office tower in downtown Seattle that could hold 7,000 Amazon employees, Amazon issued a sternly-worded statement after the vote threatening to reduce its footprint in the city. With 45,000 employees currently in Seattle, the tech giant would have ended up paying around $12 million a year. “We are disappointed by today’s City Council decision to introduce a tax on jobs,” Drew Herdener, an Amazon vice-president, told The Guardian. “We remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.” Amazon’s statement isn’t just bluster. While the Graphite Design Group–designed Block 18 will rise after all, the company is still debating about whether it will take the 722,000-square-feet of office space it was going to lease in the forthcoming Rainer Square building. As the HQ2 search continues, it remains to be seen whether Seattle’s pushback against Amazon will have an effect on what prospective cities are willing to concede; 40 officials from cities all over the country, including some of those still in the HQ2 running, have signed an open letter throwing their weight behind Seattle in this tax fight.
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Ending months of speculation and handwringing, Amazon has announced that the company has cut its list of prospective locations for its second headquarters from 238 down to 20. Competition over HQ2, a $5 billion co-headquarters expected to bring 50,000 jobs to the area it touches down in, has been fierce, as cities submitted bids that aggressively gave away land and tax breaks to the tech giant. While Amazon had received offers from all over North America, including Canada and Mexico, their shortlist skews heavily toward the East Coast of the United States. All of the following metropolitan areas met Amazon’s requirements of having at least one million people, and zoning capable of building up to eight million square feet of office space. The full list includes: Atlanta Austin, Texas Boston Chicago Columbus, Ohio Dallas Denver Indianapolis Los Angeles Miami Montgomery County, Maryland. Nashville Newark New York Northern Virginia Philadelphia Pittsburgh Raleigh, North Carolina Toronto, Canada Washington, D.C. The selection is notable not only for the cities it includes but the locales that didn’t make the cut. Los Angeles is the only west coast city on the list despite competing bids from Seattle, which holds Amazon’s current headquarters, and cities throughout California. Detroit is absent, as is Baltimore, even as both cities had promised to give Amazon hundreds of developable acres. Tax considerations seem to have played a major role in the final decision, as the inclusion of two cities in Texas, as well as Nashville and other southern cities and regions might attest to. While none of the Mexico-based bids made it through to the final round, Toronto may have been chosen for the money Amazon could save owing to the weakened Canadian dollar; $1 USD at the time of writing is worth $1.25 CAD. Details on what these 20 metropolitan areas have offered Amazon in exchange for HQ2 have been hard to come by. Muckrock has been tracking down bid packages for all 238 of the areas that submitted initial proposals, and while many of them have refused to release detailed packages, giving away unrestricted development rights or heavy tax breaks have been common. Chicago, for instance, has offered to return 50 to 100 percent of the income tax collected from Amazon employees straight back to the company itself. Newark, New Jersey, has explicitly offered to give Amazon a $7 billion tax break, which is the highest among any of the other finalists. New York, for its part, had offered potential space in four neighborhoods across three boroughs: Midtown West, Lower Manhattan, the Brooklyn "Tech Triangle" between Downtown Brooklyn, the Brooklyn Navy Yard and DUMBO, and Long Island City. The RFP for HQ2 can be read here, and should give some idea of what the headquarters will mean for the winning city when Amazon chooses its final location later this year.
In 2016, Jersey City’s population is set to exceed Newark’s. With an influx of newcomers, city officials have pioneered a tax incentive plan that encourages new development while actively combating segregation by income. While these goals usually conflict, officials are confident that the program, Payment In Lieu of Taxes (PILOT), will meet the needs of all stakeholders. Introduced in 2013 by newly elected Mayor Steven M. Fulop, the plan spreads affordable and market rate housing evenly throughout the city by tying development incentives to the relative desirability of given neighborhoods. Though there's been no development under PILOT yet, as of now, new developments can qualify for the program. New Jersey property taxes are one of the nation's highest. Like most tax abatements, the objective of PILOT is to encourage economic activity by easing the developer's tax burden to incentivize denser development. The city partnered with researchers at New York University and Columbia to study the city's housing market intensively at the neighborhood level. According to Ryan Jacobs, Jersey City's Director of Communications, Jersey City operates under the philosophy that "any improvement to [the] land is a good idea." Jacobs critiqued the "tale of two cities" dichotomy that prevails in many discussions around balancing affordability and development. In Jersey City, he states that "that choice is a false choice, it's more communal than that. It's not healthy to have one part of the city that is growing and one part that isn't." PILOT divides the city into four tiers, each with a different tax incentive. Tiers 1 and 2, highly developed areas, receive property tax abatements for a shorter amount of time. Tier 1, for example, has a 10 year property tax abatement, and a mandate that 10 percent of newly constructed units be affordable housing. Tier 4, by contrast, has a 15 percent affordable housing mandate and a 30 year property tax abatement. The city wants to attract concentrated investment in Tiers 3 and 4. Consequently, these zones have longer tax abatements. Regardless of their designation, there is a mandate in each tier to build affordable housing. Jersey City adopted HUD's standards of affordable housing to encompass individuals making 80 percent of the Area Median Income (AMI) and below. Tax abatements are tailored to individual neighborhoods. A special target is the revitalization of Journal Square, once the commercial heart of the city, and now a neighborhood in need of reinvestment. Currently, downtown and waterfront districts, like the 1980s New Urbanist Port Liberté, attract new residents who can afford median monthly rents greater than $2,000, while inland neighborhoods garner comparatively less investment. According to the 2010 Census, approximately 19,000 Jersey City units (29 percent) rent for greater than $1,500 per month. Port Liberté, with its canal, bike paths, and dense residential clusters, has a median household income of $100,000, compared to the citywide median of $46,813. The city intends to make the affordable housing application process as transparent as possible. Per state law, developers of market rate housing that receive tax abatements must contribute $1,500 per residential unit to the city's affordable housing fund. The fund has received $15 million dollars since 2003. These proposed developments pictured here serve as examples of projects that could be executed under PILOT. The two images at top are of a waterfront development that received an abatement (though not through PILOT). The complex is 80 percent market rate and 20 percent affordable, and the first mixed income development in that district in 30 years. On Montgomery Street, 116 new affordable units are planned (an additional 10 units will be market rate). The complex is designed by Wallace Roberts and Todd (WRT).
Although it hasn’t yet broken ground, Kansas City plans to revive a long-dormant streetcar network. Voters approved a ballot measure in 2012 to fund a 2-mile starter route from Union Station to the River Market, nearly 55 years after the city halted its original streetcar service in 1957. Now Kansas City residents are likely to vote again to help pay for streetcar construction, this time to approve taxes that would help fund a new streetcar taxing district. The measure goes to City Council on Jan. 23. The district goes far beyond the terminals of the streetcar’s starter line. As the Kansas City Star reported, it would run from State Line to I-435 and from the Missouri River to 85th Street. In a November election, voters need to approve the district and a one-cent sales tax increase there, as well as special property taxes for properties generally within about a half-mile along the actual streetcar lines. To avoid double-taxing some residents, the taxing district would replace an existing downtown transportation district currently funding some of the starter line’s construction. Streetcar expenses could reach $400 million. Some of that could be scrounged from federal dollars and other sources, but supporters say local funding is the critical first step. In Cincinnati, too, boosters of a similar streetcar plan in that city celebrated news last month that work would resume on the project after City Council members narrowly voted to halt construction. Though the governor and members of city council had previously attempted to strip the partially completed project's funding, construction has since resumed. The project is on track to finish in 2016.
This week a city council panel voted to advance Minneapolis’ plans for a 3.4-mile streetcar line along Nicollet and Central Avenues. The Transportation and Public Works committee’s thumbs up clears the way for a full City Council vote next week. Renderings show preliminary plans for a $200 million streetcar line instead of a bus route. About $60 million of that comes from a state-approved “value capture district,” (similar to TIF funding). The rest will come from funding not yet identified, but could include a transit sales tax. Minneapolis’ move comes alongside streetcar developments in Cincinnati and in Kansas City, among other cities.
UPDATE — November 10, 2010 — The good news is Moss reopened today after resolving a reported tax bill of around $150,000. It seems that for now the store is safe. The bad news is your credit card may not be. "Design Hates a Depression"—that was the verdict delivered by Murray Moss, owner of the eponymous store and gallery space in Soho, at the beginning of last year. It seems that he was right. As of Friday morning, the store had been seized for nonpayment of taxes. For now, the arbiter of design retail in NYC and beyond is the property of the State of New York. A visit to the store this morning found the shop shuttered, with this notice on the door: A source working with the company to procure some pieces from its warehouse for an upcoming exhibition told AN that the facility had also been shut down. Moss foreshadowed his own troubles in his response to Michael Cannell's argument that, in fact, "Design Loves a Depression," and benefits from the stresses placed on it during hard times:
"Design tends to thrive in hard times," says Mr. Cannell. No, it doesn't. It tends to suffer, like any of the other humanistic disciplines. New ideas do not get championed or realized. Leadership turns to market-driven accommodation.Whichever side of the fence you're on, Moss has been a staple of the design community for more than 15 years, and according to the owner, will remain on Greene Street for many more. In response to a request for comment on whether the company was facing bankruptcy, Moss replied in an email: "100% NOT TRUE! Will send letter to you shortly ... but we're not going anywhere...!" Stay tuned: We will post the letter as soon as we receive it. UPDATE Here's an email Moss and partner Franklin Getchell sent to AN and other contacts a little after noon today:
Quick note to our friends and colleagues from Franklin Getchell and Murray Moss, MOSS, NY, re: all is ok: As explained to us yesterday, mid-day, during an unexpected visit by officials from the NY State Tax Department, due to our failure to file a document (one of literally hundreds!) with the Department, an official, non-negotiable ‘procedure’ was triggered, whereby Moss was required to temporarily close. Our tax advisors, lawyers, and accountant have been great, working throughout the evening and morning to satisfy this State bureaucratic situation (which escalates 10-fold once the ‘procedure’ has been implemented); we believe we can get them all the documents they need within today, and re-open, if not tomorrow, then hopefully by Monday. We are of course embarrassed and a bit shaken (it’s not a fun moment when the State officials arrive…), but are at least grateful that the problem is in fact bureaucratic, and that we have resources in place, and that the problem can be remedied quickly (although at the State’s ‘pace’….). Because we’ve all been in dialogue, we know that many of you, like Moss, during the severe economic downturn of the past two years, in addition to possibly downsizing where logical, until growth is again possible, have entered into negotiations with various business partners, as well as the State, to arrive at mutually acceptable financial arrangements which make sense and allow for a stable, doable plan going forward. We have put financing in place, adjusted our overhead, and re-evaluated our projections, and are ready to go forward. This is to re-iterate to our friends: we are, in short, ok. And in two weeks we will begin to install what we believe will be a fabulous Holiday offering. That’s it! Sorry for the inconvenience; thank you for your concern and love and support. Franklin and Murray