October 18, 2017 Amazon Office of Economie Development lo Site Manager Golden 2121 7th Ave ‘Seatle, WA 98121 Re: Amazon HQ? Incentives Proposal Dear Amazon Leadership, ‘The Michigan Economic Development Corporation (MEDC), together with the Detroit Economie Growth Corporation (DEGC), are pleased to provide the following incentives proposal for the development of Amazon's HQ2. Using perhaps the most innovative existing economic development programs inthe United States, we have identified a total incentive package for HQ2 valved at approximately $4.0 billion. This proposal is in addition to the support for talent development, transportation infrastructure, utility and Sustainability initiatives that are addressed separately. The components ofthis package are summarized below and additional details onthe programs and methodology used o develop estimated values follow in the attached table. Proposal Summary In 2017, by overwhelming bipartisan margins, Michigan created two new innovative tools to support transformational realestate development and job creation, which are tailor-made for HQ2. This proposal ‘combines these new programs with a Renaissance Zone tax abatement, a national model for simple and ‘comprehensive tax relief, to support the development of HQ2 and to reduce Amazon's operating costs for the next 30 years. Transformational Brownfield Program (S364 7 million ‘The Transformational Brownfield Program (TBP) authorized a new Tax Increment Financing (TIF) program with imovative tax capture mechanisms not seen anywhere in the nation. The program is designed {o support mixedcase development projects that will have a wansformational impact on local economic ‘development and community revitalization based on the extent of brownfield redevelopment and growth in population, commercial activity nd employment opportunities. The TBP authorizes the capture of 50% of the sate personal income tx generated from residents and 50% ofthe withholding tax generated from new {bs located within the development site for 20 years. It also authorizes the capture of 100% of the income tax generated fom the construction of the project and fully exempts the construction materials used to build the project from the state sales and use tax. All evelopment costs ar eligible for TIF reimbursement, so Jong as the proposed amount is economically justified during the application review. ‘The sites included inthis proposal for HQ2 Phases 1 and 2 are expected to qualify as eligible “brownfield” sites under Michigan law. In order to estimate a specific valuation, it was assumed that Amazon fully ‘ecupies the office space in the planned "wransformational project" i the Detroit CBD that were identifiedinthe RFP response. As qualifying projects must be mixed-use, the estimated value of this incentive reflects the subsidy forthe office space only. Good Jobs for Michigan ($200 million 12017, the legislature also enacted the Good Jobs for Michigan program to suppor large-scale job creation. For companies that will ereate over 3,000 jobs in the State of Michigan within a five-year period, the Good Jobs package allows them to be reimbursed up to 100% of the withholding tax associated with the newly created jobs for up to 10 years. Inthis instance, because the State of Michigan is prepared to support combining the Good Jobs for Michigan program withthe Transformational Brownfield Program, Amazon would be eligible for reimbursement of ‘up to 50% of the withholding tax generated ftom the newly created jobs located within the TBP eligible property (asthe other 50% is already being reimbursed through the TIF to support the office development) ‘Newly created jobs that are located ovtsde the TBP eligible property are eligible for reimbursement of up to 100% of the withholding tax generated as a result of the project. Based on Amazon's projeted job ‘creation, the Good Jobs for Michigan initiative would provide up to $200 million in withholding tax reimbursement to support Amazon's growth. ‘Michigan Renaissance Zone de Associated Local Tax Abatements ($3.33 bill ‘Michigan led the nation when it created the Renaissance Zone program in 1996 with the mantra of “zero taxes, no paperwork, no bureaucracy.” Twenty years later, the program continues to be defined by its simplicity and comprehensiveness. The City and State further propose to combine the Renaissance Zone ‘with a Commercial Rehabilitation Act real property tax abatement to provide Amazon witha favorable tax environment to support its growth and investment in Michigan. The State of Michigan as current statutory authority to designate the Amazon sites as a Renaissance Zone. In total, the 30-year Renaissance Zone package is estimated to provide: ‘© $3.33 billion in total benefit to Amazon ‘© Zero real and personal property taxes for 10 years, and a 1.1% rate for the next 20 years. This 30- year average property tax rte of 0.733% is lower than the established rate in any major U.S. ety + Zero City corporate income tx ability + Zero City wlty users tax ‘Michigan Business Development Program (S40 milion Jn 2012, the Michigan legislature approved the Michigan Business Development Program, This highly sccesful program has supported hundreds of companies and brought in bilions of investment dollars to the State. Itis the MEDC’s flagship business development program for its ease of application, flexibility to ‘accommodate company needs and timing, and access to cash to support the project and encourage jobre ‘growth, Michigan has commited an additional $40 milion ($10 millon per phase) of cash to support ‘Amazon as it creates jobs at HQ2 under this program. Personal Property Tax Relief (899 million ‘This automatic incentive was established under Public Act 37 of 2007 amended MCL. 380.1211 to exempt ‘Commercial Personal Property from up to 12 mills of local school district operating millage. This automatic incentive requires no paperwork and will be automatically applied to Amazon as tex savings ‘when locating in Michigan, ‘We understand that upfront development costs and long-term operating costs are important factors for Amazon's HQ2 location decision. We believe that Michigan today offers the most innovative incenti ‘programs in the nation tailored to support the development and long-term operation of transformational investments like HQ2, Of cours, incentive awards are contingent upon the ability of the project to meet ‘program requirements and are subject to standard application and approval processes. Al indications are that program requirements will readily be met Sincerely, Jeff Mason Glen W. Long, J. (Chie Executive Officer (CFOrInterim President & CEO Michigan Economie Development Corporation Detroit Economic Growth Corporation