Exclusive: Rochester’s Amazon bid included $700M in local tax breaks

ALBANY - More than $700 million of local tax breaks wasn't enough to persuade Amazon to transform Rochester's downtown corridor by locating its second headquarters in some of the city's most iconic buildings.

Buffalo and Rochester's joint bid for Amazon's $5 billion HQ2 project shows the lengths the cities were willing to go to try to lure the company to western New York, offering up buildings that dominate the cities' skylines and pairing them with local incentives worth hundreds of millions of dollars.

The 208-page bid, which was ultimately rejected by Amazon, was obtained this week by USA TODAY Network's Albany Bureau under the state Freedom of Information Law.

More: Read the Buffalo-Rochester joint Amazon bid

The document shows:

Rochester officials envisioned Amazon taking over space in Xerox Tower, Kodak Tower Commons and Legacy Tower, the former Bausch + Lomb headquarters.

The County of Monroe Industrial Development Agency offered incentives worth more than $700 million, including a 20-year property-tax break.

Buffalo's proposal centered on the city's tallest building — One Seneca Tower — and included more than $500 million in local tax breaks.

The offers were on top of any tax breaks and incentives offered by the state, which have not yet been revealed publicly.

In a letter introducing Rochester's proposal, Mayor Lovely Warren said Amazon could transform the city "just as Kodak transformed Rochester" at the beginning of the 20th century.

"We are a resilient city that has faced many challenges, but we are stronger for the challenges we have faced, and we are excited by the prospect of Amazon playing a lead role in this transformation," Warren wrote.

Downtown campus

Amazon first began seeking bids for its HQ2 project in September, pledging to bring 50,000 jobs to whichever city ultimately won out.

The company's request for proposals ultimately drew 238 bids from across North America, including four within New York state: Buffalo-Rochester; Syracuse-Utica; the Capital Region; and New York City and its suburbs.

More: Amazon HQ2: Rochester out of running, so what's next?

Only the New York City bid — which includes the Lower Hudson Valley — remained after Amazon narrowed its shortlist to 20 bids in January.

The Buffalo-Rochester bid sought to hone in on Amazon's preference for an urban site, with both cities focusing on available spaces within their downtowns.

"There's no doubt that the sense that we had with Amazon was they were looking for an urban environment," Robert Duffy, president and CEO of the Greater Rochester Chamber of Commerce, which helped put together Rochester's bid, said Tuesday.

"There could be some overflow someplace else, but the whole issue was urban transformation, which is why we focused on our downtown."

Rochester's pitch

Buffalo and Rochester submitted their own proposals that were packaged together and sent to Amazon, which has pledged to build the headquarters in three phases.

For the first phase, Rochester's bid suggested the company set up shop in Xerox Tower and in Kodak Tower Commons, which have hundreds of thousands of square feet of office space available for lease.

The proposal was made even before Xerox pledged to move its operations out of downtown and into Webster by year's end.

Phase 2 of Rochester's bid would have seen Amazon expand to Legacy Tower, the former Bausch + Lomb headquarters, with plans to connect it to the Xerox Tower.

Phase 3 called for the development of various sites and surface lots on State and Andrews streets, ultimately pushing the proposed Amazon campus to about 2 million square feet of space.

Buffalo's bid, meanwhile, offered up three spaces for the first phase: One Seneca Tower, the HSBC Atrium and The Buffalo News building, which are all near one another.

In the later phases, new buildings would have been built alongside the tower and in the Canalside district, with some public land transferred to the company for $1.

Major tax breaks

All of New York's bids, meanwhile, came with an across-the-board offer of major tax breaks and other incentives that the state has declined to detail, citing competitive reasons while the bidding process remains ongoing.

But local economic-development agencies tried to sweeten the deal, tossing in hundreds of millions of dollars in local tax breaks in hopes of attracting Amazon.

That included the estimated $700 million package from COMIDA, which would have applied if Amazon chose Rochester.

Rochester's bid included a two-page letter from COMIDA Director Jeffrey Adair laying out the offer, which included a payment-in-lieu-of-taxes agreement that phased out over 20 years.

More: Read the COMIDA letter outlining Amazon tax breaks

COMIDA also offered a sales-tax exemption for any construction and non-manufacturing equipment purchased for the facility, as well as grants for equipment and job training.

"This project will have a significant impact in the community," wrote Adair, who did not immediately respond to requests for comment Tuesday.

The Erie County Industrial Development Agency, meanwhile, offered a smaller package: about $500 million of similar incentives with a PILOT agreement that lasted 10 years.

More: Read the Erie County IDA letter outlining Amazon tax breaks

Duffy, the former lieutenant governor and Rochester mayor, said the local incentives were necessary given the intense competition for the Amazon project.

"Here's where elected officials have a balance to make: What is too much and what is too little," he said. "If they offer too much, they're accused of giving away the bank. You offer too little and you lose."

Albany, Syracuse bids

The USA TODAY Network's Albany Bureau had attempted to obtain copies of the state's Amazon bids shortly after they were submitted last year.

But the initial request under the state's Freedom of Information Law was rejected by the state while the bids were still in contention, citing a provision of the law that allows the state to withhold documents if their release would "impair present or imminent contract awards."

When Amazon eliminated the Buffalo-Rochester, Syracuse-Utica and Capital Region bids in January, a new FOIL request was filed.

The documents were ultimately provided Monday evening by Empire State Development, the state's economic-development branch, though the state's tax-break offer remains secret.

The Capital Region bid focused heavily on downtown Albany and the city of Rensselaer, just across the Hudson River.

More: Read the Capital Region's bid for Amazon HQ2

It promoted the area's colleges and included the possibility of establishing an "Amazon High School" for job-training purposes, but didn't include much detail on what that would entail.

The bid included the promise of "long-term tax abatement," promised that employees would be provided a break on personal income taxes and pledged the city, county and state would pick up the tax for site-preparation costs.

The Albany bid did not estimate how much those tax breaks would be worth.

That was also the case with the Syracuse-Utica bid, which had previously been made public by the officials who put it together.

Amazon would likely have qualified for a 25-30 year PILOT agreement if it had chosen Syracuse, according to the bid, which did not estimate how much that would have been worth.

The Syracuse bid did, however, pledge at least $100 million of funds from the Upstate Revitalization Initiative, a pot of $500 million in state funds awarded to the central New York region in 2015.

JCampbell1@Gannett.com

Jon Campbell is a correspondent with USA TODAY Network's Albany Bureau.