Amazon in Nashville: Tech giant's planned job infusion biggest in Tennessee history

Amazon's announcement that it will bring a new operations hub to Nashville may have been a consolation prize in the national sweepstakes for the tech giant's coveted "HQ2," but it remains the single largest jobs announcement in Tennessee's history. 

And, city leaders said Tuesday, the $230 million investment, which will bring as many as 5,000 jobs, is the right fit for a city already growing by roughly 100 people a day.

"The 5,000 is a good fit in lots of ways, not just in size," Nashville Area Chamber of Commerce CEO Ralph Schulz said. "It is something we can absorb more easily, quickly." 

The new Amazon center will be located at Nashville Yards, a major commercial site under construction between Church Street and Broadway near Interstate 40. The company will begin hiring in 2019.

"These are great-paying jobs," Gov. Bill Haslam said. "This is a huge deal for the state of Tennessee and our partners in the city of Nashville."

The announcement falls short of Nashville's initial pursuit to become Amazon's second headquarters, a split designation awarded to northern Virginia and New York City. But the third-place prize was heralded by city and state officials who saw it as appropriate for Nashville's infrastructure and talent base. 

A second headquarters was expected to yield 50,000 jobs. While that prospect was welcomed by city and business officials, some local leaders questioned how Nashville would confront such a large impact on affordable housing and traffic, already posing significant challenges to the city. 

"If you look at all of downtown Nashville, currently there are 70,000 jobs. It gives you an idea of the scale of the project," Haslam said. "We've realized, and Nashville and Amazon realized, to do something that big, as much as Nashville has grown, would still be a challenge to infrastructure and talent."

Haslam declined to say if he preferred the scaled-down project to an HQ2 selection.

"It would have been a challenge over time," Schulz added.

Metro Councilman Freddie O’Connell, whose district is home to Nashville Yards, said gaining 5,000 corporate jobs despite missing out on the larger HQ2 is a happy middle ground for Nashville. The city has been grappling with the side effects of its rapid growth in recent years, with issues like public transportation, affordable housing and quality of life for urban residents rising to the forefront.

“Good-paying jobs added to the Nashville economy are always a good thing,” O’Connell said. “It demonstrates that Nashville remains competitive as a city and a market for talent. They would not be announcing 5,000 jobs here if they didn’t think they could find the talent right here in Nashville, or attract the talent to Nashville in relatively short order.”

Amazon, based in Seattle, announced in September 2017 it would be seeking a second headquarters location and named Nashville as a top 20 finalist four months later, narrowing down a pool of 238 applicants. The city's ability to attract new residents was among its strong points, said Amazon Senior Vice President Jay Carney.

"We realized that it would make a lot of sense for us to have an Eastern United States regional hub for our operations business, and Nashville just really impressed us in the HQ2 process," Carney said. "It’s a city pointing toward the future. It made itself very appealing for investment. It's a place where, if people don’t already live there, they are excited about moving there. That's always an important issue for us."

The new site, dubbed the Operations Center of Excellence, will be responsible for the company's customer fulfillment, transportation, supply chain and other similar activities. The Nashville jobs will include management and tech-focused positions, including software developers, with earnings expected to average $150,000, Carney said. He said he expected Amazon to recruit locally and from outside the area. 

Nashville Yards is a $1 billion development located where the old LifeWay building previously stood. It includes plans for a $44 million performance venue, a movie theater, a Hyatt Regency hotel and a 1.3-acre park.

“The citizens of Nashville, Davidson County, Middle Tennessee and the state should look at this moment as a testament to the hard work and leadership that has been in this community for many years," Nashville Mayor David Briley said. "This is 5,000 jobs that are going to be jobs that offer great prosperity to our community."

Amazon to be awarded incentives from city and state

Amazon said it will receive performance-based incentives of up to $102 million based on the company creating 5,000 jobs with average wages greater than $150,000. That includes a $65 million cash grant for capital expenditures from the state over the next seven years, or $13,000 per job. It also includes a $15 million cash grant from Metro Nashville over the next seven years. A nearly $22 million job tax credit will offset franchise and excise taxes from Tennessee as well. 

Haslam said he expects every Amazon job to yield another 1½ indirect jobs and that $15 million is "a deal" for the city of Nashville. He emphasized that the incentives will be repaid in about a year and that the HQ2 process was fair. 

"They were not playing hide the ball at any time," Haslam said. "They have been entirely transparent throughout this process. When they said they were going to do something, they did it." 

More:Here's what incentives Tennessee, Nashville have promised Amazon in exchange for 5,000 new jobs

The city's incentive package for Amazon comes amid fierce debate on the Metro Council about economic development incentives. But O’Connell pointed out that the incentive deal is based on actual job creation. The per-job grants carry less risk on local government than tax increment financing incentives, which the city decided to suspend using earlier this year.

“These jobs incentives are, to me, the most appealing type of incentive because they are directly tied to the function of economic development, and the incentive is not allowed to be applied when the jobs don’t exist,” O'Connell said.

Amazon said incentives weighed in its decisions for the three sites but said talent was the biggest factor.

"It’s the right size for us," Belmont University economics professor Patrick Raines said. "I don’t know if we could have really done the 50,000, but we can do the 5,000."

Raines said he expects the Amazon presence to add to the urgency for addressing housing and public transportation needs and increase the conversations surrounding those issues. 

"We have some work to do there," Raines said. 

Briley said the city is already working on traffic improvements to better manage traffic from 5,000 new downtown employees. 

"One-third of workers are expected to walk or bike to work," Briley said. "We're in the process of making a significant investment with TDOT to manage existing traffic with more technology so we can move people in and out. We know we've got work to do on that front."

Carney said Amazon will work with each of the three cities to address housing and transportation issues, and there are specifics in agreements with each city. Nashville officials said no details had been determined.

"We will work with all the locations to help mitigate the impact on housing and transportation," Carney said. "Knowing in advance what we are doing will allow us to work with the city and state to make sure the impact is a positive."

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Reach Jamie McGee at 615-259-8071 and on Twitter @JamieMcGee.