Incentives

Georgia’s Commitment to Amazon HQ2’s Success

Georgia will partner with Amazon HQ2 as it has always partnered with businesses in the state to facilitate their successful start and growth here. Georgia’s long-standing commitment to helping its new and existing businesses grow has recently been recognized by the State being named the No. 1 State for Business for four years in a row by both of the leading publications for economic development professionals (Site Selection, November 2013-2016 and Area Development, September 2014-2017).

Economic developers know Georgia is the best in its business – just as everyone knows Amazon is the best in its business.

Today is Day One for the best to partner together, which begins with Georgia’s offer to Amazon HQ2:

Over $2 Billion

Value Incentive Use of Dollars Impact of Value
$1,312,500,000 Mega Project Tax Credits (MPTC) Effectively unrestricted cash to the company.

After MPTC credits are applied to exhausting corporate income tax liability – which the Apprenticeship Tax Credit and other tax credits will also help defray, thus preserving as much of the MPTC value as possible – all remaining credits can be applied to payroll withholding. Hence, unrestricted cash.
The value, per square foot per year, is 117% of the average cost of Class A real estate in Atlanta. Thus, the credit value effectively eliminates Amazon HQ2’s lease payments in those critical initial years
$320,400,000 Sales & Use Tax Exemption on Construction Materials Effectively unrestricted cash to the company

Based on $450/sqft estimated cost of construction in the City
This value dedicated to paying Amazon HQ2’s operating costs will enable HQ2 to focus its revenues on being the disruptive engine of change on which it has built its success
$100,000,000 Georgia investment in Amazon HQ2 site & building development To be determined once the location of choice is selected and Georgia has an understanding of Amazon HQ2’s needs related to that site This means Amazon HQ2 can be much closer to the $300,000,000 than the $600,000,000 estimated cost of Phase 1 Building, but without any loss of capacity or quality in its design
Incalculable/TBD A stable, business-friendly inventing & working environment Amazon Georgia Academy Apprenticeship Tax Credit, Child Care Tax Credit, Film Tax Credit
$1,732,900,000
+ Community
+ More to Come

= a priceless Day One in Atlanta that starts with a cost savings expected to be well over $2 Billion

Elected Leadership Commitment to Business

Georgia has achieved its premier business-friendly environment in large part due to the elected leadership of the state. Upon taking office in 2011, Governor Deal immediately began a "Competitiveness Initiative" – enlisting state government and business leaders to travel the state and hear directly from employers how Georgia could help them further succeed. The General Assembly has consistently supported Governor Deal's economic development initiatives during his entire term, creating policy and enacting legislation to maintain a business-friendly environment in Georgia that positions the state well for job and investment growth.

As a general rule, pro-business and incentive-related legislation receives bi-partisan support in the General Assembly. Even when there have been policy differences, Governor Deal and legislative leaders have been able to find compromise because of their mutual end-goal of Georgia consistently being ranked as the top state to do business.  For example, in the 2017 legislative session (which concluded in Spring 2017), there was only one no vote on the state budget that included increased funding for the Georgia Department of Economic Development (GDEcD) and discretionary grants. And during this session. GDEcD was involved with several pro-business initiatives that were considered and passed by the General Assembly and signed into law.

Business-Friendly Tax Climate

Georgia’s tax climate is favorable to businesses in its structure and its stability; for example:

  • Georgia has not changed its 6% corporate income tax rate since it was first put in place almost 50 years ago (1969).
  • In 2005, Georgia became the first state in the southeastern U.S. to adopt a single-factor gross receipts apportionment formula. This apportionment formula treats a company’s gross receipts, or sales in Georgia, as the only relevant factor in determining the portion of that company’s income subject to the state corporate income tax rate. This formula is highly-valued by Georgia’s companies with substantial sales to out-of-state customers because it significantly reduces their tax liability to the state.
  • Since it was created 23 years ago (1994), Georgia’s job tax credit program has been a staple of the state’s job creation incentives for both new and expanding companies. Since it was enacted, the program has only had slight modifications, and when changes have been pursued the goal has always been to further improve companies’ tax position as an incentive for job creation in the state.
  • Georgia’s additional tax credit incentives for large projects (Mega Tax Credit) and for higher-paying jobs (Quality Job Tax Credit) were first enacted almost 15 years ago. While both of these have had changes since their start, the modifications have always only been to provide additional benefits to companies creating new jobs in the state.
  • Georgia has a fully-funded rainy day fund, now approaching $2.5 billion (more than 10 percent of annual expenditures). Georgia has a constitutional requirement that the state operate with a balanced budget; this rainy day fund provides a more stable fiscal environment for the state.
  • For the 20th year in a row, in June 2017 all three credit agencies – Fitch, Moody’s and Standard & Poor’s – gave Georgia the highest possible credit rating (AAA); only ten states meet this standard today. Georgia kept these strong ratings even during the economic slowdowns in the early 2000s and late 2000s.

Georgia’s strong governance framework and financial management practices have helped to support the state’s Aaa rating over many years.

Moody’s Investors Service, June 2017

Building/Site Development Support

Building/Site Development

The State of Georgia is dedicated to addressing Amazon HQ2’s selected site’s preparation costs to the fullest extent possible by the state and local leadership. The State will do all that it can to make Amazon HQ2 in Georgia a long-term success. Georgia has a proven track record of helping companies achieve speed to market through its existing partnerships at all levels of government.

The State of Georgia has the REBA grant program to partner with companies to help alleviate their start-up costs.

Governor Deal has already committed $100 million in REBA grant dollars to Amazon HQ2.

The State’s leadership is prepared to dedicate additional, significant resources to the project as more details are known of how Amazon HQ2’s preferred building parameters fit in the context of its preferred site.

The details of the state’s discretionary grant program are as follows.

REBA Grant

  • Type of incentive: Discretionary grant
  • Granting/Administering authority: Recommendation made by GDEcD; grant administered by Georgia Department of Community Affairs (DCA); funds dispersed to company through local development authority.
  • Eligibility requirements: Competitive projects, with an expected meaningful impact, that have an identifiable gap between the community’s incentive offer and the company’s business requirements for locating. GDEcD has confirmed Amazon HQs’s eligibility for this incentive.
  • Use of funds: Can fund various fixed-asset needs of a company including infrastructure, real estate acquisition, construction, or machinery and equipment.
  • Method of calculating value: GDEcD makes the recommendation based on the identified gaps between a community’s incentive offer to the company and the company’s business requirements for locating.
  • Estimated value to the Project: Governor Deal has already committed $100 million to Amazon HQ2.
  • Timing: Once Amazon HQ2 has provided all required documentation for the application the local development authority will assemble, DCA will move the application process as expeditiously as possible through the approval and disbursement of funds process. The full process can take about 60 days, as the below timeline illustrates.

The process begins with the company, development authority, and State of Georgia all executing a Memorandum of Understanding (MOU) and a Performance and Accountability (P&A) agreement. Once those two documents are fully funded, the timeline is as follows. For purposes of illustration, this example timeline assumes the MOU and P&A are fully executed and received by DCA by the end of the state’s fiscal year.

Timeline for REBA Grant

Based on hypothetical start date of 6/29/2018

  • 6/29/2018: DCA receives fully executed MOU and P&A (1-2 business days later).
  • 7/3/2018: Development Authority receives application from DCA (application due in 30 days). During this period the Development Authority works on the application, while the company first assembles then submits the required paperwork. Assuming the company promptly submits the paperwork.
  • 8/2/2018: Development Authority completes application and submits it to DCA (approximately 30 days later).
  • 9/4/2018: DCA approves grant, funding nearly immediately available to disburse to Development Authority. If Development Authority board action is required, then the next board meeting and vote would need to occur before.
  • Possibly as early as 9/5/2018, company receives reimbursement from Development Authority.

Talent Support: Recruiting, Hiring, Training and Growing the Pipeline

The State of Georgia and its partners in training and education are committed to assisting Amazon HQ2 where it needs help with recruiting, hiring, training, and growing a pipeline of talent to meet its employment goals.

Growing the Talent Pipeline

On site at the Amazon HQ2 offices, the State of Georgia will offer an Amazon Georgia Academy.

Governor Deal, the University System of Georgia, and Technical College System of Georgia have committed to the Amazon Georgia Academy being a successful resource that effectively addresses Amazon HQ2’s priority talent pipeline needs.

A cost estimate that illustrates the financial value of this to HQ2 will be created once Amazon HQ2 and the State of Georgia are able to discuss the details of what this can best be for Amazon HQ2. For now, know that the State of Georgia is committed to investing in this facility and its operations in a manner that will enable its success.

As a national and international leader in educational innovation, the University System of Georgia (USG) and the Technical College System of Georgia (TCSG, a recognized leader in workforce development) will work directly with Amazon HQ2 to utilize existing programming and delivery methods in the short term. However, more importantly, this partnership will create a dynamic and innovative approach for future coursework to develop an educational system of formal and informal learning communities for world-class workforce and talent development across all ages, genders, socio-economic and other diverse populations.

With support from the State of Georgia and in collaboration with Amazon HQ2, Georgia is excited to bring this alliance to Amazon HQ2 leadership, and are confident that Georgia’s adaptive education and industry partnership will be the sustainable foundation for talent development and lifelong education for its employees, for the employees in their value chain, and for a model that others seek to emulate worldwide.

Georgia’s concept for the Academy includes:

  • Boot Camp Series: Boot camp programs (24 weeks) are designed to accelerate prime students for careers by providing concentrated practical education and foundational skills needed by industry. The USG would also provide a career service specialist who will offer job support throughout and beyond the length of these courses. Some example boot camps would include Coding boot camp, Analytics boot camp, Cyber boot camp, as well as focused sessions on Design Thinking and Customer Discovery for Problem Solving. For a Georgia Tech coding boot camp example: https://pe.gatech.edu/computing/georgia-tech-coding-boot-camp.
  • Undergraduate: The undergraduate learning community activated by Georgia’s partnership with Amazon HQ2 would be a product of campus-based coursework specialized to meet the needs of Amazon HQ2 in key fundamental areas of technology, application, and development of online coursework and degree programs.
    • USG eCampus is a unit of USG that provides on-demand, online post-secondary degrees and credentials. The USG eCampus provides an excellent interface for dedicated Amazon HQ2 content development that can further inform and focus the curriculum.
    • For onsite students, the USG would accelerate an Amazon HQ2-informed curriculum into USG institutions, supported by programs in computer science, user experience, design thinking, analytics, supply chain, design, business and more.
    • The USG as a convener would work with individual schools and learning professionals from Amazon to craft curriculum guidance and plans to meet, inform and prepare the next generation of university graduates.
  • Graduate and Professional Education: The USG will work with Amazon HQ2 to develop unique graduate program tracks focused on themes of top priority to Amazon HQ2. Using this fellowship – Amazon Supply Chain Systems Design Fellowship – as an example, similar programming can be built out in partnership with the company in just about any area that the USG has graduate degrees, and with any number of USG schools of interest.
    • For online and blended master’s degrees, the USG and its schools could create Amazon HQ2-guided or themed content/case study to best target the students for employment with the company. One example would be Georgia Tech’s Professional Master’s Degree in Applied Systems Engineering, referred to as PMASE, where the course fundamentals remained the same but the examples and cases were customized for an Amazon HQ2 cohort of employees.
    • To address the need for advanced coursework and skills, balanced with active employment, the USG will work with Amazon HQ2 to further develop our “Mini Masters” program. These programs allow employees to add coursework and skills to areas that add value in the workplace but also support nontraditional student schedules and lifelong learning. Using these "Mini Masters" analytics programs as a template, USG institutions can create (based on company interest and demand) programs in other specialized areas such as computer science, cybersecurity, supply chain design, logistics, and engineering to name a few. Georgia’s suggestion is that, like the undergraduate program, this would all be branded for Amazon HQ2, for the prospective hires and current employees. Georgia Tech is one of a handful of universities across the US that are partnering with edX in these programs. This existing partnership would allow the USG to expand these offerings in a unique way to support Amazon HQ2’s interests and needs.
    • The USG will work with Amazon HQ2 to develop coursework specialization that can be delivered in the MOOC format. Examples of highly successful courses and degree programs are the Online Masters in Computer Science, and the new Online Masters in Analytics delivered by Georgia Tech.
    • Profession Education: The sample list below represents additional areas where USG can begin to work immediately with Amazon HQ2’s talent development team:
      • Software Development processes
      • Information Privacy
      • Cybersecurity
      • Data Analytics
      • Performance Management
      • Leadership/ supervisory skills
      • Organizational Behavior
      • Information Technology Management
      • Project Management
      • Design Thinking
      • Product Development
      • Process Improvement
      • Presentation skills
  • An on-site Amazon Georgia Recruitment Center: State-sponsored professional recruiters will tap into colleges and universities from Georgia and beyond, in order to support Amazon HQ2’s personnel search and hiring activities.  Services will include posting job openings, collecting and screening applications and resumes, hosting job fairs, providing information and assistance to potentially relocating individuals, and ultimately referring qualified candidates for further individual recruitment and employment interviews.

The USG and TCSG stand ready to work with Amazon HQ2 on identifying students, addressing needs and interests related to unique content, creative curriculum, adaptive programming and delivery methods, all which align with their demand for talent. With support from the State of Georgia and in close collaboration with Amazon HQ2, Georgia’s partnership with Amazon HQ2 will provide significant positive impact through HQ2’s talent network and value chain.

The Amazon Georgia Academy will be a partnership of the State of Georgia, University System of Georgia, and the Technical College System of Georgia. The state’s coverage of the costs will include:

  • Build out of the space;
  • Computer hardware, software, and other necessary equipment for a first-class educational facility; and
  • First five years of operating costs, including salaries of professors/teachers and recruitment personnel, with an option to renew for additional years, or to modify and evolve the program further, based on Amazon HQ2’s needs and/or knowledge gained during the initial phase.

The Amazon Georgia Academy will be promoted to K-12 and post-secondary institutions in all twelve regions of the state.  Courses and certificates taught and earned through the Amazon Georgia Academy will help instruct and guide local decisions regarding academic curriculum and student learning choices, helping to transform future young professionals, as well as potentially inform Georgia's entire education ecosystem.

The State, USG, and TCSG leaders look forward to discussing further details of how the State of Georgia’s on-site presence at the Amazon Georgia Academy can best meet the company’s recruiting, hiring, and training needs.

Tax Savings = Additional Building/Site Development Support

Legislative Opportunities

The State of Georgia has a number of statutory tax credits that will help alleviate Amazon HQ2’s state corporate income tax liability, and leadership has identified legislative changes to the Mega Project Tax Credit to advance the size of the benefit to Amazon HQ2. Georgia’s leaders have also identified a new tax credit for companies in the state – the Apprenticeship Tax Credit – for which the state understands Amazon HQ2 will be eligible.

The Mega Project Tax Credit (MPTC) – which is worth $1,312,500,000 to Amazon HQ2 – is applicable to state payroll withholding, after state corporate income tax liability is exhausted. These credits applied to payroll withholding are effectively unrestricted cash the company can reinvest in its future.

With the MPTC equating to $32.81 per square foot per year, these credits applied to payroll withholding cover 117% of the average cost of Class A real estate in Atlanta.

Mega Project Tax Credit Value: Building/Site Development Support

The $1,312,500,000 MPTC value to Amazon HQ2 over a five-year period equates to $26,250 per employee. From a real estate perspective, that means this benefit is worth $32.81 per square foot per year over a five-year period.

Atlanta is uniquely positioned to offer the benefits of being one of the largest metropolitan area in the United States – top tier higher education system, mass transit, the world’s busiest airport, comprehensive cultural and recreational offerings, etc. – while retaining inexpensive real estate. As a result, the more than $1.3 billion in tax credits have the potential to completely offset Amazon HQ2’s real estate costs over a five-year period.

To highlight, the average cost of Class A office space in The City of Atlanta is currently $27.88 per square foot per year. Hence, with the MPTC equating to $32.81 per square foot, these credits applied to payroll withholding cover 117% of the average cost of Class A real estate in Atlanta. Focused on the most urban submarkets of Atlanta, these tax credits offset between 74% and 90% of rent in new construction and between 96% and 126% of rent in existing buildings.

Comparison of Annual Real Estate Rent to Incentive

  New Construction(1) Existing Building(1)
Submarket Gross Rent $/SF % of Rent Covered by Incentive Gross Rent $/SF % of Rent Covered by Incentive
Downtown $44.50(2) 74% $25.99 126%
Midtown $44.50(2) 74% $32.84 100%
Buckhead $44.50(2) 74% $34.04 96%
Central Perimeter $36.60(3) 90% $28.76 114%

(1) Source: Cousins Properties, CoStar Third Quarter 2017 Atlanta Office Market Overview
(2) Assumes $450/SF construction cost and a 7% return on cost; $9.00/SF in operating expenses and $4.00/SF in real estate taxes (assumes 50% tax abatement from Invest Atlanta)
(3) Assumes $380/SF construction cost and a 7% return on cost; $7.50/SF in operating expenses and $2.50/SF in real estate taxes (assumes 50% tax abatement from Invest Atlanta)

Lastly, assuming $450/SF construction cost over 8 million square feet, 36% of total construction cost would be covered by the MPTC value.

Total Proposed SF 8,000,000
Cost of New Construction per Square Foot $450
Total Projected Cost $3,600,000,000
   
MPTC value $1,312,500,000
   
Total MPTC value as % of Total Project Cost 36%

Mega Project Tax Credit: Legislative Change

Georgia’s Mega Project Tax Credit is valued at $5,250 per job created for five years, with applicability to payroll withholding once state corporate income tax liability is exhausted. This high-value credit is reserved for the largest projects that locate or expand in the state, as defined by these eligibility thresholds:

  • Create a minimum 1,800 net new jobs and
  • Invest a minimum $450 million or
  • Have a minimum annual payroll of $150 million

The challenge with this tax credit that Georgia leaders immediately identified for Amazon HQ2 is that for each “qualified project”,1 Mega Project Tax Credits are limited to 4,500 jobs. Any job creation within that qualified project after that 4,500 cap is eligible for Job Tax Credits.

To proactively address the uncertainty of how the Georgia Department of Revenue may define Amazon HQ2’s future phased growth as one or more projects, when the General Assembly next convenes in January 2018, Governor Deal will propose a new provision to the Mega Project Tax Credit statute.

The change is that for companies which create at least 20,000 net new jobs and invest at least $1.5 billion in one qualified project, there is no cap on the number of jobs to qualify, and the company has 15 years to create the required 20,000 net new jobs and invest the $1.5 billion.

Everything else in the Mega Project Tax Credit language will still apply as written for this new high-impact category of the Mega Project Tax Credit. The details of the current Mega Project Tax Credit are as follows:

1 The Mega Project Tax Credit statute (O.C.G.A. §48.7-400.24) states that: (11) "Qualified project" means a project which meets the job creation requirement and either the payroll requirement or qualified investment property requirement. If the taxpayer selects the qualified investment property requirement as one of the conditions for its project, the property shall involve the construction of one or more new facilities in this state or the expansion of one or more existing facilities in this state. For purposes of this paragraph, the term "facilities" means all facilities comprising a single project, including noncontiguous parcels of land, improvements to such land, buildings, building improvements, and any personal property that is used in the facility or facilities.

Mega Project Tax Credit (current)

  • Type of incentive: Statutory corporate income tax credit, also applicable to state payroll withholding. There is an application and approval process by the commissioner of DCA, the commissioner of GDEcD, and the director of the Governor’s Office of Planning and Budget.
  • Granting/Administering authority: Georgia Department of Revenue (GDOR)
  • Eligibility requirements: To qualify, jobs must be located in the state, have a regular work week of 35 hours or more, have no pre-determined end date, and pay at or above the average wage of the county with the lowest average wage in the state ($480/week as of June 2017).  A maximum of 4,500 new jobs created by any one project are eligible for the Mega Project Tax Credit. Any additional job creation is eligible for Job Tax Credits.
  • Use of funds: Applicable to 100% of state corporate income tax liability, with excess applicable to payroll withholding. These credits also have a 10-year carry forward.
  • Method of calculating value: Value of job tax credit ($5,250) multiplied by eligible new jobs. Credits are claimed for 5 years for each qualifying job that is maintained during that period.
  • Estimated value to the Project: The conservative estimate – if there is no legislative change and the entire Amazon HQ2 is defined as one qualifying project – is $118,125,000 (4,500 jobs x $5,250 credit value x 5 years). After the change becomes law, the value to Amazon HQ2 is $1,312,500,000 (50,000 jobs x $5,250 credit value x 5 years).

Apprenticeship Tax Credit: New Legislation

GDEcD’s Workforce Development division started work this summer on a proposed tax credit for apprenticeships, in response to feedback received from the Governor’s High Demand Career Initiative (HDCI). The Governor created this initiative in 2014 to allow state partners involved in training Georgia’s future workforce – primarily the University System of Georgia (USG) and the Technical College System of Georgia (TCSG) – to hear directly from the private sector about what specific needs they have from a workforce perspective (i.e., degrees/majors, certificates, courses, skillsets, etc.). With decision makers from each of these entities at one table, Georgia has been able to identify some strategies to more effectively address the most pressing workforce needs of the state’s leading employers in a number of key industries.

Registered apprenticeships are one workforce tool that have been frequently mentioned by companies in the HDCI forums. As a proven and closely monitored talent development system that has been in place for centuries, apprenticeships have recently been recognized and promoted in the U.S. as one of the most promising workforce development tools available to employers.

Amazon knows this as evidenced by its own creation of an apprenticeship program with the U.S. Department of Labor (USDOL) focused on training veterans for technical careers. As a company that has a registered apprenticeship program certified by USDOL, Amazon HQ2 is eligible for this proposed apprenticeship tax credit. Additionally, the State has created a standalone initiative, the Georgia WorkSmart program, which aims to support and expand apprenticeship programs throughout the State. Georgia WorkSmart works to utilize various resources throughout Georgia to add greater value and sustainability to new and ongoing Registered Apprenticeship programs.

It is the State of Georgia’s hope that this new tax credit will enable Amazon HQ2 to create and extend its apprenticeship programs within Georgia in IT, logistics, and other eligible occupations Amazon hires at HQ2 and its facilities across the state.

The below are the details of the proposed Apprenticeship Tax Credit:

Apprenticeship Tax Credit (proposed new credit)

  • Type of incentive: Statutory corporate income tax credit
  • Granting/Administering authority: GDEcD Workforce Development Division will certify that it is an eligible apprenticeship, and remainder of program will be administered by GDOR
  • Eligibility requirements: To qualify, the apprenticeship must be a USDOL registered program and the position must be within one of the HDCI occupations identified by the GDEcD Workforce Development Division.2 Further, the apprenticeship must be located in the state, have a regular work week of 30 hours or more, and pay at or above the state’s minimum wage. If the apprenticeship position is a net new job in the state, and that position meets the eligibility requirements of the Mega or Job Tax Credit programs separately, then the company may claim both Mega or Job Tax Credits and the Apprenticeship Tax Credit for the position.
  • Use of credits: Applicable to 100% of corporate income tax liability, with a 5 year carry forward.
  • Method of calculating value: Value of apprenticeship tax credit ($2,500) multiplied by eligible apprenticeships. Credits are claimed for up to 4 years as long as the apprentice is maintained during that period.
  • Estimated value to the Project: If Amazon HQ2 created 30 apprenticeships that were maintained for four years, then the value of the tax credit would be $300,000 (30 apprenticeships x $2,500 credit value x 4 years).

Discretionary

Governor Deal has confirmed that Amazon HQ2 is eligible for the state’s discretionary incentive of an exemption of sales and use tax on construction materials for buildings which are 100% occupied by Amazon HQ2.

2 This list includes occupations related to software development, computer programming, logistics, and business support.

Governor Deal has committed to Amazon HQ2 receiving the sales and use tax exemption on construction materials; this incentive has an estimated $320,400,000 value to HQ2.

The value – effectively unrestricted cash – dedicated to paying Amazon HQ2’s operating costs will enable HQ2 to focus its revenues on being the disruptive engine of change on which it has built its success.

Sales and Use Tax Exemption on Construction Materials

  • Type of incentive: Discretionary sales and use tax exemption.
  • Granting/Administering authority: Georgia Department of Revenue (GDOR)
  • Eligibility requirements: To qualify, a project must be designated a Competitive Project of Regional Significance. GDEcD has confirmed Amazon HQ2’s eligibility for this incentive.
  • Use of funds: Effectively unrestricted cash Amazon HQ2 can reinvest in its future.
  • Method of calculating value: Sales and use tax rate x value of construction materials.
  • Estimated value to the Project: $320,400,000 (8.9% sales tax rate in City of Atlanta x $3,600,000,000 construction materials estimate based on $450/sqft cost of construction in the City).

Statutory

This section outlines Georgia’s additional tax credits which Amazon HQ2 will want to be knowledgeable about due to its potential eligibility.

Child Care Tax Credit – Facility Investment

  • Type of incentive: Statutory corporate income tax credit.
  • Granting/Administering authority: Georgia Department of Revenue
  • Eligibility requirements: Investment in a state-licensed child care facility.
  • Use of Credits: Applicable to 50 percent of corporate income tax liability. There is a three (3) year carry forward for this credit
  • Method of calculating value: 100% the cost of construction, earned over 10 years (10 percent of the cost each year).
  • Estimated value to the Project: 100% of the cost of construction.

Child Care Tax Credit – Sponsor Services

  • Type of incentive: Statutory corporate income tax credit.
  • Granting/Administering authority: Georgia Department of Revenue
  • Eligibility requirements: Provision or sponsoring of child care at a state-licensed child care facility.
  • Use of Credits: Applicable to 50 percent of corporate income tax liability. There is a five (5) year carry forward for these credits.
  • Method of calculating value: 75% of the employer’s direct costs.
  • Estimated value to the Project: 75% of the employer’s direct costs.

Retraining Tax Credit

  • Type of incentive: Statutory corporate income tax credit
  • Granting/Administering authority: Technical College System of Georgia (TCSG) will approve the training program for eligibility, and remainder of credit administered by GDOR.
  • Eligibility requirements: Training programs must be approved by the TCSG and train in quality and productivity enhancements or certain software technologies. To be eligible, employees must be first-line employees or immediate supervisors, continuously employed with the company for a minimum of 16 weeks, and work a minimum 25-hour work week. These credits can be combined with other tax credits.
  • Use of Credits: Applicable to 50 percent of corporate income tax liability. There is a ten (10) year carry forward for these credits.
  • Method of calculating value: 50% of the direct costs of retraining full-time employees up to $500 per employee per approved retraining program per year. The total amount of credit for one employee cannot exceed $1,250 per year.
  • Estimated value to the Project: If Amazon HQ2 were to have 1,000 employees that reached their maximum for the year, then the total value would be $1,250,000 (1,000 employees x $1,250 per year employee max).

Film & Television Tax Credit

  • Type of incentive: Statutory corporate income tax credit
  • Granting/Administering authority: Project must be certified by the GDEcD Film, Music & Digital Entertainment Office, and then the remainder of credit administered by GDOR.
  • Eligibility requirements: Minimum investment of $500,000 in a single tax year by eligible original-content projects produced and recorded in Georgia. Eligible projects include feature films, television movies or series, commercials, music videos, interactive entertainment, and animated projects. Qualified expenditures include materials, services, labor (with some regulations regarding salaries, loanout, or contractual workers) and postproduction of projects shot in Georgia, except story rights, marketing and distribution.
  • Use of Credits: Applicable to 100% corporate income tax, with excess applicable to payroll withholding. The company can choose to do a one-time sale or transfer of a minimum of 60 percent of the claimed credits to one or more Georgia taxpayers. These credits have a five (5) year carry forward.
  • Method of calculating value: 20% of qualified Georgia expenditures, or 30% for including an embedded animated or static Georgia promotional logo within certain approved projects.
  • Estimated value to the Project: For example, if Amazon HQ2 had original content shot in Georgia with qualified expenditures of $4,000,000, and the project embedded the Georgia promotional logo, then the value would be $1,200,000 ($4,000,000 qualified investment x 0.30).

Estimated Approvals

(RFP Question 3)

Georgia already has all approvals necessary for Amazon HQ2 for the initial $100 million in direct support for site and building development, the sales and use tax exemption on construction materials, and Amazon Georgia Academy.

As pertains to the legislative changes to the Mega Project Tax Credit and the addition of the Apprenticeship Tax Credit, Governor Deal, the Speaker of the House, and the Lieutenant Governor (leader of the Senate) are committed to these legislative items being passed by the General Assembly and signed into law. Georgia’s elected leadership has a reliable history of passing into law the legislative needs of projects of significance to the state, as all agree Amazon HQ2 will be.

Timetable for Incentives

(RFP Question 4)

For the legislative changes to the Mega Project Tax Credit and the addition of the Apprenticeship Tax Credit, the bills will be formally considered upon the convening of the General Assembly in January 2018. Historically the General Assembly has adjourned by mid-April, and the Governor signs bills into law within 40 days of their passage. So the two legislative changes will be addressed before the end of June 2018.

The following is a timetable for incentive approvals at the state level, with the hypothetical start date of 6/29/2018 for purposes of an illustration.

  • 6/29/2018: DCA receives fully executed MOU and P&A
  • 7/3/2018: Development Authority receives REBA grant application from DCA (application due in 30 days). During this period the Development Authority works on the REBA grant application, while Amazon HQ2 first assembles then submits the required paperwork. Assuming the company promptly submits the paperwork. For purposes of this illustration, assume on this day Amazon HQ2 submits its application for the Mega Project Tax Credit.
  • 8/2/2018: Development Authority completes REBA grant application and submits it to DCA (approximately 30 days later). GDOR completes review of Mega Project Tax Credit application (can occur within 3 to 4 weeks of receipt, assuming no delay in the company providing all requested documentation).
  • 9/4/2018: DCA approves REBA grant, funding nearly immediately available to disburse to Development Authority. If Development Authority board action is required, then the next board meeting and vote would need to occur before the Development Authority can start reimbursing the company. Mega Project Tax Credit application review panel makes decision (30 days after receive the reviewed application by GDOR).
  • Possibly as early as 9/5/2018, company receives reimbursement from Development Authority.
  • 9/13/2018: GDOR notifies Amazon HQ2 of Mega Project Tax Credit application review panel decision (5 to 7 business days after panel’s decision).
  • 3/14/2019: Amazon HQ2 will need to submit Notice of Intent (NOI) to apply tax credits to payroll withholding once requirements to first apply to corporate income tax credit are met.
  • 4/15/2019: When filing CY 2018 taxes, Amazon HQ2 will claim Mega Project Tax Credits for any year 1 job creation and Apprenticeship Tax Credits for any apprenticeships created in year 1.
  • 7/15/2019: DOR will send a letter to Amazon HQ2 confirming the amount of tax credits available to apply to payroll withholding. After receipt of this confirmation, Amazon HQ2 can start applying the credits at the time of the next pay period.

Summary Thoughts

The State of Georgia – and its partners in the private sector and at all levels of government – are prepared to work with Amazon HQ2 to identify any creative means possible for the state and its partners to help make the preferred site work for Amazon HQ2’s success.

The State of Georgia has committed to offering $1,732,900,000 in support to Amazon HQ2, and that number will grow as additional opportunities are identified once more details of Amazon HQ2’s preferred site in Georgia are known.

Once the value of the local offer for the preferred site is included, the State of Georgia and its partners are committed to:

Day One in Atlanta for Amazon HQ2 will start with a cost savings expected to be well over $2 Billion

The State is prepared to dedicate significant resources to the success of Amazon HQ2 in Georgia. The details of what additional may be possible will be customized to the specific needs of Amazon HQ2 associated with the preferred site, and therefore will be fully explored as the process continues and Amazon HQ2’s needs are better known.

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