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Amazon Second HQ

amnesiajune

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Given our 53.5% marginal income tax rate that kicks in at CAD220k, and Amazon's very highly paid tech and managerial workforce, Toronto would appear to be a weak contender.
California has a top tax rate of 55%, and they don't seem to have much trouble attracting a "very highly paid tech and managerial workforce". Neither does New York with a 51% top marginal rate.
 

jje1000

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A few thoughts:

While I'm far from certain Toronto will get this, we do appear on most people and publication's lists.

The Unilever site would be an obvious choice given 'new build', large enough, transit connections (proposed)

While the portlands has the greenfield space, there is no notion of a direct connection to subway/RER which I think rules it out.

The Oxford proposal would close in on the right size and could be made larger conceivably, sitting virtually on top of Union Station it could also make sense.

Finally, if they were really open to the burbs, the only practical choice would be downtown Vaughan, and/or a massive build out on York's campus; but both seem unlikely to me.

***

In our favour, easier access to a global workforce, lower corporate taxes, we don't double tax repatriated earnings, large enough, strong tech workforce, global airport, sufficient space.

Against us, optics in the US, and likely lower tax-incentive availability. I don't see QP or Ottawa opening the purse up on the scale some US cities might. Though I'm sure they'll throw something out there. Note I didn't say 'cost' as I think we're ballpark w/the other areas I see as most likely in the running.
I have a gut feeling that Amazon might want a second headquarters a certain distance from their 'HQ1', perhaps closer to the eastern seaboard for the PST/EST timezones. Vancouver feels too close and similar- any Amazon headquarters there might as well be an extension of the main headquarters. New York is an obvious choice (they will bend over backwards with incentives), as is Boston for its tech clusters. Austin is definitely a contender since it's Bezos' hometown, perhaps as compensation for the WF takeover & for its lack of state taxes. Maybe Pittsburgh or Detroit if they want the 'underdog'/ rebirth of the American city theme.

Toronto might have a chance- but it'll take a lot of work, IMO- especially if Amazon considers the current US government an aberration, and is thinking past the 2020 US elections.

If the city can coordinate with Oxford on the convention centre site, it might be an interesting proposal, especially with GO/TTC service and GO RER construction starting over the next few years.

I feel like the Unilever site is still too isolated from Union, especially with the lack of existing transit (still a lot of pieces to coordinate) and any sort of urban vibrancy around the site at the moment (it will improve, though).
 
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pman

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California has a top tax rate of 55%, and they don't seem to have much trouble attracting a "very highly paid tech and managerial workforce". Neither does New York with a 51% top marginal rate.
Well yes. However, they have mortgage interest deductibility, deductibility of state income tax for federal income tax purposes, and much higher thresholds for top marginal rates to kick in. Also, AMZN is coming from Washington, which has no state income tax, so the top marginal rate there is the federal 39%.
 

amnesiajune

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However, they have mortgage interest deductibility
Yes, but there's talk of capping it.

Deductibility of state income tax for federal income tax purposes
That's factored into those rates, and there's talk of ending this altogether.

Also, AMZN is coming from Washington, which has no state income tax, so the top marginal rate there is the federal 39%.
We're not talking about Amazon specifically. We're talking about the myth that tax rates in Canada and Ontario make it harder for all companies - not just Amazon, but also many California-based firms - to hire talented workers.

Also, don't forget about things like health & dental benefits that employers in Canada don't have to worry about as much as they do in the United States.
 

TheTigerMaster

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For reference, here are the qualities Amazon desires:
  • 1. Site/building. Amazon is looking for existing buildings of at least 500,000 square feet and total site space of up to 8 million sq ft. It would like the site to be within 30 miles of a population center and within 45 minutes of an international airport. It prefers metro areas with more than 1 million people. Its Seattle headquarters includes 33 buildings totaling 8.1 million sq ft.
  • 2. Capital and operating costs. Amazon is prioritizing “stable and business-friendly regulations and tax structure” in its considerations. The company is seeking out incentives from state and local governments “to offset initial capital outlay and ongoing operational costs.” At its Seattle headquarters, Amazon says it invested $3.7 billion in buildings and infrastructure from 2010 to 2017, and spent another $1.4 billion on utilities and maintenance.
  • 3. Incentives. The company is asking applicants to outline the specific types of incentives they could offer, such as tax credits and relocation grants, as well calculations on the amount of total incentives that could be provided. “The initial and ongoing cost of doing business are critical decision drivers,” the RFP states.
  • 4. Labor force. Hiring 50,000 skilled workers is no easy task, and Amazon wants to make sure its new headquarters is in an area with a readily available pool of talent. The company is prioritizing sites with a “strong university system.” It’s asked cities to provide a list of universities and community colleges with “relevant degrees” plus the number of students to graduate with those degrees over the past three years. Amazon also wants information on computer-science programs in the local and regional K-12 education system.
  • 5. Logistics. Amazon is first and foremost a master of logistics, so it should come as no surprise that the company cares a lot about transportation. Amazon wants on-site access to mass transit—train, subway, or bus—and to be no more than one or two miles from major highways and connecting roads. It wants to be within 45 minutes of an international airport with daily direct flights to Seattle, New York, the San Francisco Bay area, and Washington DC. The company is also asking applicants to identify “all transit options, including bike lanes and pedestrian access” for the proposed site and to rank traffic congestion during peak commuting hours.
  • 6. Time to operations. To begin construction as soon as possible, Amazon wants an outline of the permitting process and approximate timetable ahead of “Phase 1” of the building process—the first 500,000 to 1 million sq ft, for an investment of $300 million to $600 million.
  • 7. Cultural community fit. Like any tech company, Amazon cares about “culture fit.” It defines this as a diverse population, strong higher-education system, and local government that is “eager and willing to work with the company.” Amazon is asking cities to “demonstrate characteristics of this” in their responses. “We encourage testimonials from other large companies,” it adds.
  • 8. Community/quality of life. The new headquarters should be in a place where people want to live. Amazon is interested in daily living and recreational opportunities for people in each proposed metro area. It is also requesting information about housing prices and availability, general cost of living, and crime statistics.
 

TheTigerMaster

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1. Site/building. Amazon is looking for existing buildings of at least 500,000 square feet and total site space of up to 8 million sq ft. It would like the site to be within 30 miles of a population center and within 45 minutes of an international airport. It prefers metro areas with more than 1 million people. Its Seattle headquarters includes 33 buildings totaling 8.1 million sq ft.
As mentioned before, the Unilever site should be able to accommodate up to 1 Million square feet. Unilever is 45 mins from Pearson.

Edit: As AoD pointed out, it's actually 1.2 Million square metres, approximately 13 Million square feet. Even better!

2. Capital and operating costs. Amazon is prioritizing “stable and business-friendly regulations and tax structure” in its considerations. The company is seeking out incentives from state and local governments “to offset initial capital outlay and ongoing operational costs.” At its Seattle headquarters, Amazon says it invested $3.7 billion in buildings and infrastructure from 2010 to 2017, and spent another $1.4 billion on utilities and maintenance.

3. Incentives. The company is asking applicants to outline the specific types of incentives they could offer, such as tax credits and relocation grants, as well calculations on the amount of total incentives that could be provided. “The initial and ongoing cost of doing business are critical decision drivers,” the RFP states.
Canadian corporate tax rates are typically lower than their US counterparts. Obviously any incentives US states throw in could change this, but Toronto is starting from an advantage.

The Loonie is typically valued less than the USD, meaning Amazon's dollars should go further here than any US city. Furthermore, tech salaries here are abnormally low compared to US cities. Operating costs in Toronto should be relatively low for Amazon.

4. Labor force. Hiring 50,000 skilled workers is no easy task, and Amazon wants to make sure its new headquarters is in an area with a readily available pool of talent. The company is prioritizing sites with a “strong university system.” It’s asked cities to provide a list of universities and community colleges with “relevant degrees” plus the number of students to graduate with those degrees over the past three years. Amazon also wants information on computer-science programs in the local and regional K-12 education system.
Toronto has a very high quality talent pool, and two top universities a stone throw from downtown.

5. Logistics. Amazon is first and foremost a master of logistics, so it should come as no surprise that the company cares a lot about transportation. Amazon wants on-site access to mass transit—train, subway, or bus—and to be no more than one or two miles from major highways and connecting roads. It wants to be within 45 minutes of an international airport with daily direct flights to Seattle, New York, the San Francisco Bay area, and Washington DC. The company is also asking applicants to identify “all transit options, including bike lanes and pedestrian access” for the proposed site and to rank traffic congestion during peak commuting hours.
Unilever, if all is built to plan, will be able to accommodate this fantastically. They'll be the Gardiner Expressway, GO RER, Relief Line and the new TTC Streetcar all running through that area. I don't suppose there are very many other readily available site for Amazon's HQ in North America with such an abundance of infrastructure connections. Of course, Unilever is 45 mins from Pearson, and it offers daily direct flights to Seattle, New York, San Francisco and Washington.

6. Time to operations. To begin construction as soon as possible, Amazon wants an outline of the permitting process and approximate timetable ahead of “Phase 1” of the building process—the first 500,000 to 1 million sq ft, for an investment of $300 million to $600 million.
Again, Unilever is ready to accommodate this. Not sure about timelines.

7. Cultural community fit. Like any tech company, Amazon cares about “culture fit.” It defines this as a diverse population, strong higher-education system, and local government that is “eager and willing to work with the company.” Amazon is asking cities to “demonstrate characteristics of this” in their responses. “We encourage testimonials from other large companies,” it adds
Toronto should be an excellent culture fit for Amazon. Our liberal reputation and easy access to US cities would make Amazon's Toronto HQ highly attractive to foreign talent.

Community/quality of life. The new headquarters should be in a place where people want to live. Amazon is interested in daily living and recreational opportunities for people in each proposed metro area. It is also requesting information about housing prices and availability, general cost of living, and crime statistics.
Toronto is consistently recognized internationally for its high quality of life and very low crime.
 
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44 North

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Interesting wish list. The 45mins from an int'l airport somehow stands out to me, maybe UPX can be merged with RER. Regardless we got BBA (which still counts). The peak congestion point will hurt us, as it always does in rankings. But the most important one, and what I thought this AM when I saw the East Harbour thread bumped, was is the site actually ready to pick a tenant? Seems like it was made for what Amazon is asking for, but a few years too late.
 

TheTigerMaster

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Against us, optics in the US, and likely lower tax-incentive availability. I don't see QP or Ottawa opening the purse up on the scale some US cities might. Though I'm sure they'll throw something out there. Note I didn't say 'cost' as I think we're ballpark w/the other areas I see as most likely in the running.
With the combination of our low corporate tax rates, low tech salaries and low Canadian dollars, I expect that Amazon's operating costs in Toronto would be extraordinarily cheap, relative to the quality of talent here. If you believe the chart I've pasted below, virtually all American cities will be at an enormous disadvantage with regards to costs of operations. Whatever tax incentives they can come up with might not be able to beat us in costs of operations. Toronto is starting with a strong hand.

 

TheTigerMaster

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Interesting wish list. The 45mins from an int'l airport somehow stands out to me, maybe UPX can be merged with RER
Unilever is 30 mins from Pearson Airport by car. And I suppose a DRL > UPX > Person trip would take less than 45 mins as well. No modification to UPX necessary

was is the site actually ready to pick a tenant? Seems like it was made for what Amazon is asking for, but a few years too late.
Yes, this is my biggest concern. How soon can Unilever be under construction? Can it be accelerated at all? I assume Amazon would be somewhat flexible on timing, since they are intending to move into facilities that are not yet built.
 

TheTigerMaster

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Can anyone comment on how other cities compare to Toronto in the criteria outlined by Amazon? From my perspective, Toronto is able to easily meet all the criteria, while also offering low operating costs. I'm not sure what the situation is elsewhere.
 

Filip

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How many sqf can we get if the Oxford Place twins are all office?

It sounds like Amazon wants land and not a pipeline development offered by the pension funds (or First Gulf). The RFP makes it sound like they'll develop, manage and operate the complex.
 

Filip

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Can anyone comment on how other cities compare to Toronto in the criteria outlined by Amazon? From my perspective, Toronto is able to easily meet all the criteria, while also offering low operating costs. I'm not sure what the situation is elsewhere.
We can't offer the plethora of bureaucratic largess that states tend to offer. We also can't match their subsidies.

There's also the issue of optics given the economic nationalism down south. Don't discount Bezos wanting to 'stick it' though.
 

AlvinofDiaspar

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We can't offer the plethora of bureaucratic largess that states tend to offer. We also can't match their subsidies.

There's also the issue of optics given the economic nationalism down south. Don't discount Bezos wanting to 'stick it' though.
I wonder if Bezos might also want to "hedge his bets" and put it outside the US. Also, wonder how it will work with Canada, not US being part of CETA.

re: old Oxford Place proposal - 2.5M sq ft. office, 600K sq ft. residential, 1.7M sq. ft hotel, 1M sq ft. retail and 1M sq ft. convention centre.

AoD
 
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