Hogan Proposes ‘PRIME Act’ Catering to Amazon HQ2 with $3 Billion in Tax Credits

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Amazon’s fulfillment center in Southeast Baltimore. Photo via Wikimedia Commons.

With Baltimore entirely out of the running now for Amazon’s second North American headquarters, Gov. Larry Hogan is all on Montgomery County, with an unofficially Amazon-branded bill to show for it.

The acronym-chasing “Promoting ext-Raordinary Innovation in Maryland’s Economy (PRIME) Act of 2018,” announced this morning, would offer $3 billion in tax incentives and billions more in state-funded transportation improvements for the area where a certain Fortune 500 company decides to building a massive office.

“HQ2 is the single greatest economic development opportunity in a generation, and we’re committing all of the resources we have to bring it home to Maryland,” the governor said in a statement.

The bill’s incentives include a tax credit of 5.75 percent of wages per each new job with a salary of $60,000 to $500,000, a state and local property tax credit reimbursing money to the county, and a tax exemption for any construction material or warehousing equipment used in the project.

Hogan’s bill is geared toward Fortune 100 companies – not Amazon, explicitly – though his office noted in a release that Amazon’s request for proposals meets the bill’s requirements. Among those: the beneficiary firm’s average employee in the new headquarters must earn an average salary of at least $100,000; the company commits to spending at least $5 billion on the facility, including $500 million in initial construction; and the company hires at least 40,000 employees people over a 17-year period.

The bill does include a clawback provision if the company doesn’t meet those expectations, which would let the state recoup some of its incentive money.

Amazon unveiled its short list of places for “HQ2” consideration on Thursday, excluding Baltimore’s separate proposals for the center of the city and Port Covington, but including Montgomery County, Washington D.C. and Northern Virginia, among 17 other places. Amazon CEO Jeff Bezos notably owns The Washington Post and has a $23 million mansion in the District.

The retailer and technology firm is seeking a supplemental headquarters to go with its existing one in Seattle. HQ2 will be 8 million square feet and bring 50,000 tech jobs and $5 billion in investment to the selected locale, Amazon has promised.

Hogan’s bill is just a piece of a package of $5 billion worth of incentives he’s touting. The governor is also offering $150 million in grant funding from the state’s Sunny Day Fund over a 15-year stint. The package is among the largest offered by any state in the country in Amazon’s bidding war.

“The Hogan administration has put forth an incentive package that makes Maryland competitive with any state or city in the country – we’re playing to win,” said Commerce Secretary Mike Gill in a statement.

But the PRIME Act’s name alone won’t make it law, as state lawmakers must first pass it through both houses of the General Assembly. According a Baltimore Sun report from Thursday, that could prove challenging. Both House Speaker Michael Busch and Senate President Thomas V. Mike Miller declined to throw their full weight behind a tax incentive package for the Montgomery County bid.

“First, we have to take care of the needs of the state, then we can focus on attracting a world-class company like Amazon,” Miller said.

State Sen. Rich Madaleno, a Montgomery County Democrat running for the Democratic nomination to challenge Hogan in the fall, said in a statement on Thursday that he would prefer to entice Amazon by investing $1 billion in the University System of Maryland, rather than through tax breaks.

“Now is the time to demonstrate Maryland’s innovation and creativity: not by simply offering billions in tax incentives which drain needed resources from the state but instead by showing a deep commitment to our greatest resource – our people,” he said.

Ethan McLeod
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Ethan McLeod

Senior Editor at Baltimore Fishbowl
Ethan has been editing and reporting for Baltimore Fishbowl since fall of 2016. His previous stops include Fox 45, CQ Researcher and Connection Newspapers in Northern Virginia. His freelance writing has been featured in Baltimore City Paper, Leafly, DCist and BmoreArt, among other outlets. He enjoys basketball, humid Mid-Atlantic summers and story tips.
Ethan McLeod
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