Grand Rapids: Amazon tax incentives could have totaled up to $2B

Grand Rapids development officials said Wednesday that Amazon could have saved about $2 billion in potential tax payments over 30 years had the giant online retailer chosen the west Michigan city for its second headquarters.

Birgit Klohs, president and CEO of the nonprofit Right Place development agency in Grand Rapids, and other officials released the data in response to Freedom of Information requests, briefing reporters on the details Wednesday.

Grand Rapids failed to make Amazon's shortlist of 20 finalist communities bidding for its second headquarters. Neither did Detroit, the only other Michigan city to bid.

By far the greatest share of the potential incentives in Grand Rapids' offer stemmed from personal and property tax abatement under Michigan's Renaissance Zone program. About 90% of the roughly $2 billion in tax savings Amazon could have reaped in Grand Rapids stemmed from that program alone.

Additional tax savings would have come from various state and local tax breaks for creating jobs, cleaning up a brownfield location and similar existing programs permitted under state law.

Klohs emphasized that all of the incentives would have been performance-based, meaning that Amazon would have received them only if it created the tens of thousands of jobs and billions in new tax base that its second headquarters reportedly will involve.

And Klohs stressed that all of incentives would come only in the form of future tax savings, not from any cash outlay by the state or local government. "There are no checks being written," she said.

More on Amazon:

While the $2 billion sounds like a huge amount, it actually is in line with what many other metro areas were offering Amazon. Published reports say Chicago was offering $1.7 billion in incentives; Philadelphia between $2 billion and $3 billion; Newark, N.J., $7 billion; and Dallas up to $15 billion, including creation of a new bullet train for Amazon.

Detroit has not released its own details on incentives, but since Detroit would have relied on the same state programs as Grand Rapids, it is likely they were in the same range. Detroit also would have offered city income tax abatements, an option Grand Rapids doesn't have.

The Grand Rapids incentives varied depending on which of three locations Amazon might have chosen there. A downtown Grand Rapids campus involving about a dozen sites would have generated about $776 million in tax savings over 30 years. A site near the Gerald R. Ford International Airport could have generated $1.7 billion.

The most lucrative in terms of potential tax savings would have been a former General Motors stamping plant site in suburban Wyoming where future tax incentives could have totaled $2 billion or a little more.

Klohs said Wednesday that Grand Rapids failed to make Amazon's shortlist for the same reasons cited for Detroit's failure — not a deep enough talent pool and not enough public transportation options.

"It was talent, it was transit," she told reporters.

In the future, she said, Michigan needs to work on education, transportation and multiple other challenges if it wants to compete for the likes of an Amazon second headquarters.

"We've got to do a much better job," she said. "There are no silver bullets."

Contact John Gallagher: 313-222-5173 or gallagher@freepress.com. Follow him on Twitter @jgallagherfreep.