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Amazon's 2nd HQ could be bad for local taxpayers: Minneapolis Fed Bank president

The second city that Amazon.com Inc. ultimately chooses for its second North American headquarters could find itself with a burden on local taxpayers, Federal Reserve Bank of Minneapolis President Neel Kashkari said Feb. 2.

In an interview with CNBC, Kashkari, a Republican, said his research director Mark Wright told him Minneapolis "dodged a bullet" when Amazon CEO Jeff Bezos did not name the northern city as a finalist for the second headquarters in January. He warned against some of the massive tax breaks cities, counties, states and regions have already offered to entice the retail giant.

"I'm betting [Amazon founder, President, CEO and chairman] Jeff Bezos knows exactly where he wants to put his second headquarters and he's getting all the cities to compete to who can write the biggest check so that he can get this location he wants and the biggest subsidy from taxpayers," Kashkari said. "I think that’s a money-losing investment for taxpayers."

When asked by CNBC if the location that Amazon eventually settles on will be a "loser" as a result, Kashkari said, "Let's see how big a check they write."

Offering tax breaks could very well pull money from other local infrastructure, education, and other departments and agencies, and would require additional housing developments and an influx of traffic to accommodate the up to 8.1 million-square-foot headquarters Amazon is planning.

On Jan. 18, Amazon released its short list of 20 U.S. and Canadian cities and regions for its $5 billion second headquarters, a list that includes Philadelphia, Los Angeles, Chicago, Boston, Toronto and three possibilities in the Greater Washington, D.C., area, where Bezos owns a home. Amazon has said it plans to invest $5 billion in its new headquarters and hire as many as 50,000 workers in its new location.

Both before and after the short list was announced, several cities, states and regions made pitches for tax breaks and other offers to entice Amazon to choose their region.

On Jan. 22, Maryland Gov. Larry Hogan announced legislation that would offer $3 billion in tax credits and $2 billion in road and infrastructure projects to entice Amazon to select Montgomery County, in metropolitan Washington, after Amazon announced the county as a finalist. The legislation includes a budget allocation of $10 million per year to Maryland's Sunny Day Fund for 15 years.

In October 2017, New Jersey Gov. Chris Christie and Sen. Cory Booker offered $7 billion in tax credits to lure Amazon to Newark, another city eventually named to the finalist list.

The Chicago Tribune also reported in October 2017 that state and local officials penned a letter to Amazon executives offering $2 billion in incentives to bring the company to the Greater Chicago area.

Amazon has its headquarters in Seattle and says its investments in the Northwest city in 2010-2016 resulted in an additional $38 billion to Seattle's economy.

A decision on the second headquarters is expected at sometime in 2018.