Hogan Unveils Legislation to Help Lure Amazon to Montgomery County

Gov. Larry Hogan | Governor’s Office

Gov. Larry Hogan on Monday announced a package of state income, property and sales tax credits and exemptions as part of Maryland’s bid for a possible second headquarters for Amazon.

Last week, the company announced an unnamed Montgomery County site was among 20 potential locations for so-called HQ2, which is expected to bring 50,000 jobs to winning community.

Hogan’s incentive package is called Promoting ext-Raordinary Innovation in Maryland’s Economy (PRIME) Act of 2018, a play on Amazon Prime, the company’s shipping, music and video service.

The legislation is one component of a major incentive package that includes a budget allocation of $10 million per year to the state’s Sunny Day Fund over 15 years and billions of dollars in road, transit, and infrastructure upgrades, according to a news release issued Monday morning. The state’s package for Montgomery County totals over $5 billion in incentives and transportation improvements.

The PRIME Act provides the following tax incentives for a period of 10 years:

  • A state income tax credit equivalent to 5.75 percent of wages for each new qualifying headquarters job. To qualify, a job must be established within the first 17 years of the project and pay between $60,000 and $500,000;
  • A state and local property tax credit, including a requirement for the state to reimburse the local jurisdiction for half of the property tax that would have been collected; and
  • A state sales and use tax exemption for construction material or warehousing equipment used in the project.

The Maryland Department of Commerce will administer the PRIME Act and specifically applies to a Fortune 100 company creating a new headquarters facility in the state with employees earning an average salary of at least $100,000 per year, the release said.

Additionally, the company must commit to spending a minimum of $5 billion in capital expenditures over 17 years, including $500 million in initial project costs, and employ at least 40,000 people over this 17-year period. Amazon’s HQ2 is projected to fulfill these requirements, according to the company’s Request for Proposal (RFP).

The incentives being provided through this legislation based on the RFP, in combination with support from the Sunny Day Fund, will total over $3 billion.

The bill contains claw back provisions, enabling the state to recoup any or all tax credits if the company does not meet the requirements, and stipulates that the company will cease to receive tax credits if the number of jobs declines.

The PRIME Act is part of Governor Hogan’s 2018 jobs legislation, which includes the More Jobs for Marylanders 2.0 to expand and diversify the administration’s successful More Jobs for Marylanders program, which incentivizes manufacturing companies to locate and grow in areas of the state with higher-than-average unemployment. Landing HQ2 in Maryland would build on the administration’s major economic development successes, including retention and expansion of major companies like McCormick, Northrop Grumman, and Marriott.

Here are the details of the PRIME Act:

Like this post? Sign up for our Daily Update here.

Comments

| No comments yet.



Engage us on Facebook

Follow us on Twitter