New York City mayor Bill de Blasio and New York State governor Andrew Cuomo have been taking a victory lap ever since Amazon announced last week that New York City had won the competition for one of its two HQ2 sites. But the  details just emerged about exactly what the city and state are giving the online retailer in exchange, and many New Yorkers are decidedly less than happy. Some question whether the city and state are paying too much--a total of more than $2 billion in subsidies and tax breaks--and getting too little in return, especially in a town where housing is already overpriced, both roads and public transportation are already overcrowded, and unemployment is at a 30-year low

Amazon's plan to move one of its two HQ2 locations to Long Island City in Queens has some pretty local and high-profile detractors.

The intellectual Liberal/left-leaning New York Times and the right-leaning Wall Street Journal don't often agree, but both published editorials written by their editors explaining why they believe that the deal made to bring Amazon to New York is great for Amazon but awful for the city.

The centrist-to-right-leaning New York Post took it a step further.

Why all the objections? A big sticking point are the tax breaks and incentives the city and state piled on to bring Amazon to town. These are dramatically higher than what Northern Virginia will pay to get the other half of HQ2--even though some believe that even Northern Virginia's lower incentives are too much to pay for Amazon. Cuomo told the Times that the incentives were necessary to keep Amazon from choosing a lower-tax state such as Texas. The Wall Street Journal also hypothesized that they're meant to offset the higher cost of construction and other blue-collar work in the heavily unionized town New York is. 

But most experts observers agree that the incentives probably weren't even needed. A frequently-heard complaint is that Amazon should have put HQ2 in a location that needs more employment, such as Derby, near Buffalo, which just learned it will lose 200 jobs when a local plant closes next year. Amazon can--and does--put its fulfillment centers in places that are in need of jobs. It can't and won't do that with a headquarters office, though, for the simple reason that it needs to hire many thousands of software engineers and there just aren't thousands of software engineers living near Derby, N.Y., or willing to relocate there.

Ask any company big or small, high-tech or not what its biggest challenge is these days, and the answer is likely to reference talent, and the difficulty of hiring people with the right skills. Amazon certainly know this, and so smart observers have said from the beginning that Amazon would put HQ2 in a location with lots of available tech talent. Sure enough, that's what it did--in fact it chose the two locations in the nation with the most high tech employees--321,000 for the New York metro area, and 264,000 for the Washington D.C. metro area (which includes Northern Virginia), according to the Brookings Institution. In fact, talent was so important to Amazon that it turned down much higher incentives from many other cities vying for HQ2, some of them very near its final picks, such as Newark, N.J. and Montgomery County, Maryland. Montgomery County, which neighbors Northern Virginia, reportedly offered Amazon $8.5 billion in incentives compared to Northern Virginia's less than $1 billion. As one economist told the Times, "An additional $7.5 billion in subsidies wasn't enough to get Amazon to move across the river. That just says that subsidies were never what mattered."

But not wanting to pay for subsidies in the form of higher taxes is only one reason many New Yorkers are unhappy about having Amazon come to town. They're afraid that having Amazon nearby will mean even higher housing costs and even more overburdened infrastructure. They're skeptical that Amazon will pay for such things as parks and schools.

What will you do for The Queensbridge Houses?

The company has said it will bring 25,000 jobs paying an average $150,000 over 10 years. But those in the Queens neighborhood of Long Island City, site of New York's HQ2, doubt that their neighbors will be getting most of those jobs. The planned Amazon site is near The Queensbridge Houses, the nation's largest public housing project, where people live on about one tenth of the salary Amazon says will be its employees' average.

Amazon says it will hold job fairs there and seek other measures to support Queensbridge residents. But Amazon needs people with high-tech, up-to-date skills and those people are not living in housing projects. Plus, if the company has the expected effect on housing costs, it will make it that much harder for those living in Queensbridge to move anywhere else. "Investing in luxury condos is not the same thing as investing in people and families. Shuffling working class people out of a community does not improve their quality of life," Ocasio-Cortez tweeted. To add insult to expected injury, one of the city's concessions is to build a helipad for Jeff Bezos' use--something that particularly sticks in the craw of working-class New Yorkers. There has already been a protest at the planned Amazon site, with demonstrators holding signs telling Amazon to meet their demands or "Get the helipad out!" It likely won't be the last such protest. 

It may be that Jeff Bezos outsmarted himself by setting cities up to compete in a highly public contest for HQ2. If Amazon had quietly chosen its new sites and negotiated a good but perhaps less lavish incentive package from the city and state, it would likely not be drawing the sort of fierce opposition and demand for community participation it's now facing in Queens. It must be galling since exactly that sort of opposition is likely why it didn't try to expand further in the Seattle area.  

But then, as the Times has noted, nothing is "carved in stone" yet. "The agreement is a memorandum of understanding, not a binding contract," its editors write. "No final deal should be pushed through without public input or approval."

The city can back out of the deal--and of course, Amazon can too. All this resistance may be giving the company's leaders cause to reconsider their choice. Who knows? The search for a site for one-half of HQ2 may be on again.

Published on: Nov 15, 2018
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