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TENNESSEE
From Site Selection magazine, January 2019
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The Waiting Game Is Over

How Amazon’s Nashville pick ended a lot of anticipation in Tennessee.

TENNESSEE
Nashville photo courtesy of Tennessee Department of Economic & Community Development
by RON STARNER

Good things come to those who wait. In Tennessee, a decade of preparation came to an end on Nov. 13 when Amazon announced it had selected Nashville for a $230-million, 5,000-job Operations Center of Excellence.

“This was 10 years in the making,” says Bob Rolfe, commissioner of the Tennessee Department of Economic and Community Development. “This did not happen overnight. Nashville has been working up to this for years.”

The much-ballyhooed site selection process itself took 14 months, but Tennessee sealed the deal when it offered Seattle-based Amazon up to $102 million in performance-based incentives. The package is conditional upon Amazon creating 5,000 jobs with an average annual wage of over $150,000. This includes a cash grant from the state of $65 million based on the company creating those 5,000 jobs over the next seven years — or $13,000 per job. It also includes a cash grant from the city of Nashville of up to $15 million based on $500 for each job created over the next seven years; and a job tax credit to offset franchise and excise taxes from the state of $21.7 million, based on $4,500 per new job over the next seven years.

Amazon plans to build its operations center in Nashville Yards, a 15-acre (6-hectare) mixed-use development in downtown Nashville. The 1-million-sq.-ft. (92,900-q.-m.) office complex will house the tech and management functions of Amazon’s Retail Operations division, including customer fulfillment, customer service, transportation and supply chain.

“This is a game changer for Tennessee,” said Gov. Bill Haslam. “The ripple effect of Amazon’s decision to invest $230 million in our state and create 5,000 high-paying jobs in downtown Nashville will be felt for years to come. Amazon has spent the past year searching the nation for the best possible locations to expand and it chose Tennessee because of our business-friendly policies, low taxes and skilled workforce.”


“This was 10 years in the making. This did not happen overnight. Nashville has been working up to this for years.”
— Bob Rolfe, Commissioner, Tennessee Department of Economic and Community Development

In an exclusive interview with Site Selection, Commissioner Rolfe said Tennessee thought it was competing for Amazon’s HQ2 project when the company informed the state in September that it had changed strategy and was considering Nashville for a new logistics center of excellence.

“We were ecstatic when we learned this news,” says Rolfe. “The original RFP of 50,000 jobs would have required Nashville to just about build a second city, but this new project was a perfect fit for us. We were very excited.”

‘The Kind of Jobs We All Dream About’

Rolfe calls Amazon “the most outstanding economic development accomplishment in the tenure of Gov. Haslam. This is the largest jobs announcement in state history. The payroll alone will be $750 million a year, based on 5,000 jobs paying [an average of] $150,000 a year.”

Rolfe adds that “these are the kind of jobs we all dream about in Tennessee. But I want everyone to know that this was a city-driven initiative. The state was involved in economic development incentives, but they would have applied to any winning city in Tennessee.”

Originally, four cities in Tennessee submitted bids to land Amazon HQ2: Nashville, Memphis, Chattanooga and Knoxville. “We knew that none of our cities met all of Amazon’s parameters for HQ2, but we were very pleased when Nashville made Amazon’s top 20 short list.”

Amazon also had a history of investing heavily in Tennessee. From 2011 to 2017, Amazon invested more than $5 billion in the state, including customer fulfillment infrastructure and compensation to its 6,500 employees in Tennessee.

The new deal began to come together in September when Amazon executives, under the leadership of project head Holly Sullivan, returned to Nashville for a day and a half of meetings and negotiations, says Rolfe. “They said, ‘We are changing our strategy for Nashville,’ ” says Rolfe. “Then we didn’t hear anything until the Monday afternoon of Veterans Day. I called the Governor at 1:30 p.m. Central Time that day with the news. Amazon originally was going to make this announcement just with a press release, but with Holly being from Nashville, we wanted to have our own media event here. We managed to pull everything together on less than 24 hours’ notice.”

Rolfe credits the city of Nashville, Davidson County, the Tennessee Valley Authority, the Nashville Area Chamber of Commerce, the Governor’s Office, and other state and local entities with working around the clock to close the mammoth deal.

“Former Mayor Megan Barry and current Mayor David Briley really stepped up,” says Rolfe. “It was a total team effort.”

Nashville Faced ‘Enormous Competition’

The project site chosen is an ideal fit, he adds. “It is right along Interstate 40, just two blocks from the highway,” he notes. “It has enormous visibility. Lots of housing options are there already, and more are coming. A new Grand Hyatt Hotel is under construction there now, and more retail, office, residential and entertainment are coming.”

Rolfe says that “there was enormous competition for this Center of Excellence,” although he would not divulge the other finalist locations. “It was very stiff competition for this red-ribbon project. This will be one of 17 Amazon divisions that will report directly to Jeff Bezos, and we know that 20 percent of the jobs will be IT-related tech positions such as programmers and software developers.”

Nashville’s talent and academic footprint helped close the deal, says Rolfe. “We provided Amazon with a labor shed report of all the talent they needed within a 90-to-100-mile radius,” he says. “Nashville has so much going for it.”

Amazon will house workers in temporary space while the new facilities are being constructed, Rolfe adds. “They are in the final design stages now for their new building. It will take them about 20 months to complete construction, but we know this about Amazon: They grow ahead of schedule.”

Ron Starner
Executive Vice President of Conway, Inc.

Ron Starner

Ron Starner is Executive Vice President of Conway Inc. He has been with Conway for 20 years and serves as editor of the TrustBelt Report and lead organizer of the annual TrustBelt Conference. He also writes extensively for Site Selection and Conway's Custom Content Publishing Division. His Twitter handle is @RonStarner.

  


Mark Arend
Editor in Chief of Site Selection magazine

Mark Arend

Mark Arend has been editor in chief of Site Selection magazine since 2001. Prior to joining the editorial staff in 1997, he worked for 10 years in New York City at Wall Street Computer Review, ABA Banking Journal and Global Investment Technology. Mark graduated from the University of Hartford (Conn.) in 1985 and lives near Atlanta, Georgia.

 




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