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Old 02-14-2019, 02:08 PM
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Explain the Amazon HQ withdrawal from NYC


As is typical all the news articles say nothing of the specifics. They allude to some politicians not liking us and mayor saying they didn't want to play ball. How informative. So what was the point(s) of contention that caused the change of plan?
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Old 02-14-2019, 02:13 PM
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Giving billions of taxpayer money to the world's richest man.
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Old 02-14-2019, 02:42 PM
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In what is a startling and rare defeat for the $800 billion tech giant, the company said in a statement that “a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City.”

The absence of a mention of community-activist opposition was not an accident; that’s because the company expected some local pushback and felt it could work through it, according to a source. But Amazon was not as prepared for a huge wave of opposition from local politicians, and ultimately determined that its opponents didn’t want a compromise or constructive dialogue: They just wanted Amazon gone.

The local political opposition included New York City Council Speaker Corey Johnson, Councilman Jimmy Van Bramer, and Representative Alexandria Ocasio-Cortez (D-NY). New York State Senator Michael Gianaris, also an outspoken critic of the deal, was recently nominated for a seat on a state board that would vote on part of the $3 billion incentive and subsidy plan that Amazon was offered.
https://www.recode.net/2019/2/14/182...-city-new-york
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Old 02-14-2019, 02:44 PM
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So some local politicians were opposed to the tax breaks? Yikes, welcome to the real world.
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Old 02-14-2019, 04:09 PM
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This is standard corporate lobbying. Any large company looking to establish a new plant with new opportunities plays assorted jurisdictions off against each other to determine who will give the biggest tax breaks and/or subsidies, because what large profitable enterprises need is of course to take ore money from he average taxpayer. The NDP Party of Canada coined the phrase, many years ago, of "corporate welfare bums" to describe corporate subsidies leeching off the taxpayer.
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Old 02-14-2019, 04:11 PM
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A big operation like this is going to have a major impact.

A lot more traffic, demand for housing, increased prices for said housing, changes to the character of the area, etc.

It doesn't take much for well-organized local groups to delay the project in court for a few extra years, add some additional conditions, and so on.

OTOH, there are other cities out there where the local politicians just steam roll right over all that. You wake up one morning and find out about a surprise deal for a new stadium (at taxpayer expense) has been made and no one can stop it. There are no groups to oppose it, well-organized or not.

Four years later the stadium has been open long enough to prove it's a white elephant. Goodbye tax money.

Bezos likes the latter kind of places.
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Old 02-14-2019, 11:37 PM
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OTOH, there are other cities out there where the local politicians just steam roll right over all that. You wake up one morning and find out about a surprise deal for a new stadium (at taxpayer expense) has been made and no one can stop it. There are no groups to oppose it, well-organized or not.

Four years later the stadium has been open long enough to prove it's a white elephant. Goodbye tax money.

Bezos likes the latter kind of places.
The Toronto bid included no tax breaks or subsidies. Some people are saying that losing the contest was a kind of win.
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Old 02-15-2019, 09:19 AM
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Giving billions of taxpayer money to the world's richest man.
I would quibble with the words "giving billions of taxpayer money". They are tax breaks. Consider two different scenarios.

1. Amazon doesn't come. Amazon does not pay taxes to NY.
2. Amazon does come. Amazon does not pay taxes to NY for a long time. However, they bring in lots of other people and businesses that do pay taxes.

The people who didn't like Amazon coming because of the tax issue chose scenario 1 over scenario 2.

Maybe there are lots of other reasons they don't like it (gentrification, traffic, etc). I am fine with that. But the financial argument doesn't make sense to me, but hey, to each his own.

Last edited by Hermitian; 02-15-2019 at 09:22 AM.
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Old 02-15-2019, 10:28 AM
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The problem is that the tax breaks and other incentives sometimes result in a net loss for the cities that offer them. As an example, read this transcript of a Planet Money podcast about these economic incentives, and how they sometimes don't pay off for the cities involved. (The podcast focuses on the neighboring cities of Kansas City, Missouri and Kansas City, Kansas. They're very close to each other, and offer incentives for companies to move from one to the other.)

Last edited by Dewey Finn; 02-15-2019 at 10:29 AM.
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Old 02-15-2019, 10:28 AM
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1. Amazon doesn't come. Amazon does not pay taxes to NY.
2. Amazon does come. Amazon does not pay taxes to NY for a long time. However, they bring in lots of other people and businesses that do pay taxes.
This only works if you assume that NYC incurs no additional costs associated with Amazon's presence. The city provides transportation, policing, fire protection, sanitation, &c, that Amazon would get and not be paying for for the duration of their tax-free period. After all, NYC doesn't tax just for funsies -- it taxes to provide revenue for services.

You can certainly make an argument that the taxes from Amazon's people/associated businesses, will more than compensate for the hit of providing these unpaid services, but it could also go the other way. Many a city has built a football stadium on promises of enhanced revenue from associated businesses that didn't pan out.
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Old 02-15-2019, 11:06 AM
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There was also substantial union opposition to Amazon (company workers aren't unionized).

On the one hand, I'm dubious about cities competing to give huge tax breaks and other incentives to corporations whose moves may be only temporary and create problems as well as opportunities.

On the other hand, this rejection is going to be fodder for Republicans who'll argue that radical Democrats torpedoed the project at the expense of 25,000 jobs.

Last edited by Jackmannii; 02-15-2019 at 11:06 AM.
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Old 02-15-2019, 11:11 AM
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New York City is large enough and desirable enough that the loss of Amazon isn't going to break it. I expect if Amazon chooses not to come there, someone else will.
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Old 02-15-2019, 11:12 AM
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I would quibble with the words "giving billions of taxpayer money". They are tax breaks.
The phrase you're looking for is "corporate welfare."

The reasons why there was so much pushback against the deal was because it was fundamentally unfair to the taxpayers who were expected to pay the bill for the massive increase in services and infrastructure the deal would require in a city that is already in the midst of an unprecedented housing crisis with a broken, dysfunctional transit system and the infrastructure of a third-world kleptocracy. It didn't help that the deal was largely negotiated by the corrupt thugs in the Cuomo administration with little or no input from downstate politicians, the City Council, or community members who would actually be affected.
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Old 02-15-2019, 11:13 AM
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New York is going through a serious real estate boom for at least Manhattan (spilling over to the rest of the city, I presume). A major local concern is that the existing inhabitants would be displaced by a flood of new high-paid employees, as is happening in San Francisco right now apparently. Plus the transportation infrastructure issues, etc. Of course, current locals vote, future inhabitants don't yet.
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Old 02-15-2019, 11:15 AM
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1. Amazon doesn't come. Amazon does not pay taxes to NY.
2. Amazon does come. Amazon does not pay taxes to NY for a long time. However, they bring in lots of other people and businesses that do pay taxes.
1a. Amazon doesn't come. The property that would have become Amazon HQ2 remains vacant.

1b. Amazon doesn't come. Other businesses develop the property instead and pay taxes.


It's not a foregone conclusion that 1 would have meant 1a and not 1b.
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Old 02-15-2019, 11:45 AM
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I would quibble with the words "giving billions of taxpayer money". They are tax breaks. Consider two different scenarios.

1. Amazon doesn't come. Amazon does not pay taxes to NY.
2. Amazon does come. Amazon does not pay taxes to NY for a long time. However, they bring in lots of other people and businesses that do pay taxes.

The people who didn't like Amazon coming because of the tax issue chose scenario 1 over scenario 2.

Maybe there are lots of other reasons they don't like it (gentrification, traffic, etc). I am fine with that. But the financial argument doesn't make sense to me, but hey, to each his own.
I'd be kind of the other way around. If the extra cost of city services exceeds the economic benefit of all the tax revenue, which includes also personal City income tax on higher wage employees who move to NY, sales tax on their greater spending etc. not just corporate tax from Amazon, then I'd be against it.

But I doubt that's really it. Rather it's IMO mainly symbolic nonsense like 'opposition to corporate greed' and 'world's richest man' or even 'gentrification' as a vague bogey man. From the other actions and statements of the notable political people against this deal, I don't have any confidence in the validity of their decision about this. Or perhaps more simply, if Bill de Blasio (the mayor, probably the furthest left elected executive in the US for an anywhere near comparable population to NY) can accept the 'gentrification' or 'corporate greed' of this deal, he was solidly for it though now criticizing Amazon as 'not tough enough to make it NY', that itself tends to paint the opponents as extreme. Which they otherwise are, in my observation.

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Old 02-15-2019, 12:28 PM
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This only works if you assume that NYC incurs no additional costs associated with Amazon's presence. The city provides transportation, policing, fire protection, sanitation, &c, that Amazon would get and not be paying for for the duration of their tax-free period. After all, NYC doesn't tax just for funsies -- it taxes to provide revenue for services.
I find it hard to believe that Amazon is going to significantly increase city costs. Most of those are sunk costs of providing services to an area. I don't think they are going to lead to an increase of fires or crime in that area. Some increase? Sure, but more than enough paid by the salaries and extra businesses.

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You can certainly make an argument that the taxes from Amazon's people/associated businesses, will more than compensate for the hit of providing these unpaid services, but it could also go the other way. Many a city has built a football stadium on promises of enhanced revenue from associated businesses that didn't pan out.
Yes, and those arguments were tried when cities were actually paying large sums of money directly for those stadiums. Here, NYC isn't paying directly for anything.
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Old 02-15-2019, 12:56 PM
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But I doubt that's really it. Rather it's IMO mainly symbolic nonsense like 'opposition to corporate greed' and 'world's richest man' or even 'gentrification' as a vague bogey man. From the other actions and statements of the notable political people against this deal, I don't have any confidence in the validity of their decision about this. Or perhaps more simply, if Bill de Blasio (the mayor, probably the furthest left elected executive in the US for an anywhere near comparable population to NY) can accept the 'gentrification' or 'corporate greed' of this deal, he was solidly for it though now criticizing Amazon as 'not tough enough to make it NY', that itself tends to paint the opponents as extreme. Which they otherwise are, in my observation.
I'm partially inclined to agree with you, but the flipside is that Amazon "folded" too easily.

IMHO, Amazon expected after their dog-and-pony auditioning for HQ2 that any city or region that threw its hat in the ring would be 100% for HQ2 coming to their area. However, some politicos, some groups, in NYC pushed back. Some indeed did it for the vague reasons you mention. But some weren't opposed outright to HQ2, they just wanted Amazon to provide some benefit to the community in exchange for the tax breaks. Amazon made vague promises to give back to the community, and I'm sure some of the local officials just wanted to have those promises made more concrete or enforceable. Traffic or the subways will get worse? Amazon makes a financial contribution to improve the roads and subways. Housing will be made less affordable by the influx of high-paying jobs? Amazon provides some housing, or pays someone else who does. Etcetera.

But the local officials can't get that if they sign off on the proposal as-is right off the bat. So they say no, or "wait a minute," and then the negotiations begin. As Amazon offers more to back up their promises, more officials and groups are mollified. Some core of opposition with the vague or mushy criticisms wouldn't be, of course, but their support would be dwindling as Amazon put its money where its mouth is and answers the reasonable criticisms of the proposal.

Or that's what could have happened if Amazon didn't treat the matter as take-it-or-leave it.

Tl,dr: Some of the locals were expecting too much (we don't expect you to talk, Mr. Bond, we expect you to die), but Amazon also showed that they weren't willing to even try throwing a few sops to the community to split the opposition show their good faith.

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Old 02-15-2019, 01:19 PM
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Liberals and Democrats tirelessly argue that copious amounts of taxpayer spending on education and other government services will cause businesses to literally beg to set up shop in an area. Apparently, this is not the case. It was New York that had to do the begging.
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Old 02-15-2019, 02:25 PM
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I think too it's a normal form of wallet envy - "why should they get those tax breaks when my small business / Wall Street giant has to pay full taxes?" Which of course is the essence of fair play - everyone meets the same terms. If thing are so great, they should be willing to locate without extra incentives.

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Old 02-15-2019, 02:56 PM
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Liberals and Democrats tirelessly argue that copious amounts of taxpayer spending on education and other government services will cause businesses to literally beg to set up shop in an area. Apparently, this is not the case. It was New York that had to do the begging.
Isn't this threadshitting post basically stating exactly the opposite of what happened?
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Old 02-15-2019, 03:55 PM
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New York is going through a serious real estate boom for at least Manhattan (spilling over to the rest of the city, I presume). A major local concern is that the existing inhabitants would be displaced by a flood of new high-paid employees, as is happening in San Francisco right now apparently. Plus the transportation infrastructure issues, etc. Of course, current locals vote, future inhabitants don't yet.
The housing prices in the neighborhood were a big part of the stated reason. I’m a local resident and I was very much in favor of the move. The area has already been upscaling rapidly, which I find to be a good thing - other people not so much. Sue me, I like cool upscale trendy shops and restaurants instead of crappy bodegas.

Unsurprisingly, property owners tended to be in favor of the Amazon HQ, renters not so much. But the housing has already been getting expensive fast, I purchased my home in 2005 and the value has increased 105% ( slightly more than doubled) over the past 13 years, even though I didn’t buy at a particularly optimum time,

Local real estate professionals were very much split on whether the move would even hasten the trajectory of increasing housing prices. I had an appraisal done recently and the appraiser didn’t think Amazon was going to have much effect on values - I got the same opinion from a couple of local real estate agents.

This is been a contentious issue and their is a lot of discussion on the local Facebook pages, opinions seem split about 50-50 but they are all vocal. I suggested that if keeping property values down was such a neighborhood priority, maybe they should look into slaughterhouses, garbage dumps and crack houses.

I do have to admit that the whole deal was a little stealthy and took locals by surprise, we were never even mentioned as a serious candidate until we were selected. It probably would’ve been better to have some public debate while the deal was being cut. But I’m still not sure why Amazon backed out so fast. Possibly because it was widely reported that my state Senator Michael Gianaris felt he had a legislative path to block the deal. He’s never getting my vote again.

But I wouldn’t be surprised if they just realized they had overreached and didn’t need 25,000 of the 50,000 new employees they were talking about adding.

Last edited by Ann Hedonia; 02-15-2019 at 03:57 PM.
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Old 02-15-2019, 04:12 PM
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I don’t think there really is a GQ answer to this. But, I think there’s one easy reason. The second sight picked was Crystal City, VA in the Washington DC (DMV) area. The Washington DC area tends to be a lot more transient and a lot of the political activism is more on the national scale rather than local. I can easily see Amazon deciding, since they’re a very popular target these days, that they just didn’t want to deal with local politicians, anti-gentrification activists, and strong unions.

I’ve spent a lot of time in DC the past few months and will probably move there this year. From all my research, I just don’t see the same level of anti-gentrification activism as I see in Chicago, NYC, San Francisco, or Seattle.

I do agree that the dog and pony show that Amazon put on for the bidding last year was a bit extreme and put a target on their back. Perhaps without their Hamlet act of picking a second HQ and then dividing it, they may have avoided some of the criticism.
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Old 02-15-2019, 04:50 PM
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The New York Times has a decent article that explains how the Amazon deal in Long Island City fell apart. In short, they didn't expect and were not used to getting pushback.
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Old 02-15-2019, 05:06 PM
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Isn't this threadshitting post basically stating exactly the opposite of what happened?
Shouldn't businesses be drawn to New York based on this alone? High tech needs educated workers, right? New York state should be a factory of geniuses with this spending.

"New York spends an average of $22,593 per pupil, far exceeding any other state. It's 87 percent above the national average.

New York has increased school aid by $5.3 billion over the past five years, up 27 percent, while state agency budgets have been largely flat and the state has maintained a 2 percent spending cap, said Morris Peters, a spokesman for the state Budget Division."

https://www.lohud.com/story/news/pol...rity/95088028/
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Old 02-15-2019, 08:05 PM
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Shouldn't businesses be drawn to New York based on this alone? High tech needs educated workers, right? New York state should be a factory of geniuses with this spending.

"New York spends an average of $22,593 per pupil, far exceeding any other state. It's 87 percent above the national average.

New York has increased school aid by $5.3 billion over the past five years, up 27 percent, while state agency budgets have been largely flat and the state has maintained a 2 percent spending cap, said Morris Peters, a spokesman for the state Budget Division."

https://www.lohud.com/story/news/pol...rity/95088028/
Do you have any evidence that the education level in NY had anything to do with the decision, one way or the other?
Not to mention that I'd expect a good part of the new employees would have moved in, unemployment in NY for that kind of person being pretty low. And those that qualify would probably have read the article in the Times about what it is like working for Amazon.
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Old 02-15-2019, 08:06 PM
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Local real estate professionals were very much split on whether the move would even hasten the trajectory of increasing housing prices. I had an appraisal done recently and the appraiser didn’t think Amazon was going to have much effect on values - I got the same opinion from a couple of local real estate agents.
The Times the past two days had a couple of snarky comments about how real estate speculators had a happy valentine's day as their hopes for making a killing on nearby land just took a nosedive. No data, though.
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Old 02-15-2019, 08:12 PM
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I'm not a big fan of the anti-gentrification narrative, but I'm not sure there's any good reason to induce businesses to bring additional workers to an already-prospering city that's having trouble allowing enough new housing as it is.

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I would quibble with the words "giving billions of taxpayer money". They are tax breaks.
Some of it came from refundable tax credits, which are more like cash handouts than tax breaks. There was also a grant (not any kind of tax break whatsoever) of $505 million.

Last edited by Lord Feldon; 02-15-2019 at 08:15 PM.
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Old 02-15-2019, 10:15 PM
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It should probably be noted that despite the opposition of some big names, notably DeBlasio and Ocasio-Cortez, the project was supported by a clear majority of people in both the state and the city.

A Siena College poll, reported in https://www.wsj.com/articles/majorit...ws-11549967400, has 58% of NYC respondents supporting the plan. Support was notably higher among black and Hispanic voters (70% and 81% respectively).

Anyway, some numbers to play around with, which do seem to suggest that the opposition to the Amazon deal, at least among rank-and-file taxpayers, was not as widespread as has sometimes been reported.
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Old 02-15-2019, 11:04 PM
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I find it hard to believe that Amazon is going to significantly increase city costs. Most of those are sunk costs of providing services to an area. I don't think they are going to lead to an increase of fires or crime in that area. Some increase? Sure, but more than enough paid by the salaries and extra businesses.
Wisconsin and Milwaukee tried to close a similar deal with Foxconn. Foxconn promised to build a factory in the area. The deal: The original $3 billion in state subsidy turned into at least $4 billion. That includes local (county and city level) government committing to about $750 million for buying the land, road improvement, utilities and public safety.

Foxconn's side of the deal seems to keep changing. First it was going to be a big plant making panels for 75" TVs, then it became much smaller and cheaper plant replaced by a plant that mostly builds with robots (read less employees).

Originally it was 3,000 new jobs. Then someone started talking about 13,000 jobs. Turns out the 13k was the "If all 3,000 new employees move into the area, there will need to be more doctors, waiters and grocery baggers" type. Which is bogus. Because any employee already living in the area won't need additional services, and anyone commuting in won't need those services in the area of the plant.

So yes, deal like this CAN cost a ton of taxpayer money, and yes, they can be a bad investment. Billions of dollars for less than 5 thousand jobs could take decades, if not lifetimes, to pay for themselves.
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Old 02-16-2019, 07:15 AM
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The education angle, yes, is bogus. When Amazon or any advanced business hires, they can hire from all over the country - then those people move to the area and pay taxes. One of the pluses (despite criticism) of NYC is its transit; presumably any HQ would be located close to at least two subways, or what's the point?

The one thing that causes major problems is a lack of stability. Slow change gives all systems a chance to adjust. Abrupt changes are disruptive. Many locals are going to be upset over abrupt changes that while good for the area as a whole, may negatively affect what their experience is - high traffic, too many cars parked in too small an area, additionally crowded commuter trains, eminent domain stealing their homes to feed a rich giant, additional construction, etc.

The other thing is the bidding war. A lot of the push-back seems to be about handouts. If Amazon wants to build a new HQ, it will. It does not need hundreds of millions in grants. It will find a good location based on the necessary criteria. So again, wallet envy - why should one company get a better deal in grants and taxes than everyone else? Plus, never underestimate the opportunistic political grandstanding that can come from bashing the superrich for getting special treatment.

Last edited by md2000; 02-16-2019 at 07:16 AM.
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Old 02-16-2019, 09:30 AM
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The Times the past two days had a couple of snarky comments about how real estate speculators had a happy valentine's day as their hopes for making a killing on nearby land just took a nosedive. No data, though.
Now THAT may be somewhat true, it may deincentivize the rapid construction of more new luxury condo complexes. But those were being rapidly constructed everywhere prior to the HQ2 news. It’s a neighborhood that’s upscaling rapidly, and developers were already building on any plot they could get their hands on. Even rundown single family homes on large lots sell for outrageous amounts.

This may be getting out of GQ territory, but I think there may have been something else going on. It feels like Amazon was looking for an excuse to take their ball and go home. I wonder if they didn’t fully realize how difficult and expensive construction was going to be — real estate and construction in NYC is and has always been sort of a sleazy underhanded business and they may have gotten their first taste.

Last edited by Ann Hedonia; 02-16-2019 at 09:30 AM.
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Old 02-16-2019, 09:59 AM
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Third world level corruption.

Governor Cuomo commissioned a study that said New York would reap 27 billion dollars on the 3 billion dollar investment. The economics seem to be a no brainer.

However, many of the articles that I've read use the phrase "failure to engage local community leaders." Maybe I've watched too many mob movies, but I translate that to failure to bribe the right people. By soliciting bids, Amazon was asking who wants us and who can accommodate us as well as who can give us the best deal. Why submit a bid if you didn't want them?

Amazon went about this matter in a straight forward by the book legal manner. They didn't want to give campaign contributions to local political leaders which would have been de facto bribes and they didn't fund pretend foundations with community organizers getting six figure salaries for doing nothing. (The FBI recently raided a Los Angeles city councilman's office over alleged bribes from a developer.) I think many of the corrupt people of New York saw Amazon as cash cow and wanted their cut. When it didn't come, they turned on Amazon figuring like they would eventually understand how things are done in New York. Amazon backed out instead.
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Old 02-16-2019, 10:48 AM
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The housing prices in the neighborhood were a big part of the stated reason. I’m a local resident and I was very much in favor of the move. The area has already been upscaling rapidly, which I find to be a good thing - other people not so much. Sue me, I like cool upscale trendy shops and restaurants instead of crappy bodegas.

Unsurprisingly, property owners tended to be in favor of the Amazon HQ, renters not so much.

Local real estate professionals were very much split on whether the move would even hasten the trajectory of increasing housing prices. I had an appraisal done recently and the appraiser didn’t think Amazon was going to have much effect on values - I got the same opinion from a couple of local real estate agents.

... But I’m still not sure why Amazon backed out so fast. Possibly because it was widely reported that my state Senator Michael Gianaris felt he had a legislative path to block the deal. He’s never getting my vote again.

But I wouldn’t be surprised if they just realized they had overreached and didn’t need 25,000 of the 50,000 new employees they were talking about adding.
It's clear there are some 'grassroots' people with legitimate personal interest reasons to oppose this deal. Just like the opposite. Although it's clear IMO most of the opposition is not really a serious argument that the City gave up too much in tax breaks in return for future increased tax revenue from the avg $150k/yr salaries of the workers there. Reasonably assuming a significant proportion were newcomers. Also for non-NY'ers keep in mind NY (the City) has an income tax so it's not just sales tax revenue. And I also as I said earlier have zero confidence in the judgment of the political leaders against this deal. People like Gianris are ideological extremists IMO. Again if you're attacking Bill de Blasio from his left flank, you're out there.

Also though again I'm not saying nobody in northern Queens has a legitimate personal gripe about this deal, as far as rent the City already a huge, and hugely market distorting, system of rent control (called Rent Stabilization to differentiate from the older truly absurd Rent Control system, there are over a million RS units, and just a relative few RC units left in the City, if any still). One can't IMO treat the rental pricing situation as if 'the jungle'. If that enormously costly system isn't to at least allow less concern about side effects of attracting new high paying jobs/industries, what's it for?*

More basically, you can't have a city favorable to a (significantly foreign born) working class, which NY is via social subsidies and public transport, paid for by a rich elite, then complain it's unequal. The only practical way to make NY a lot more equal is to give up its position as leader in high paying industries (NY is already and still will be a tech hub if not the leading hub like it is in finance). Then how do you pay for the big local social welfare system that makes it also attractive to the working class and poor? It's very unlikely to be practical to really make NY a mainly middle class city at this point. Preventing Amazon from coming is certainly not accomplishing that anyway.

As for 'Amazon folded too easily', who knows. It could also be true they had second thoughts about this for reasons unrelated to the opposition. But I think some of the politicians saying that, like de Blasio, are just trying to spin it as a little less of a Democratic Party debacle than it appears at first glance, and I believe it actually is. That line of reasoning is also every easy to extend to the idea that NY doesn't have to be a business friendly place because it's so overwhelmingly attractive. I'm overall a fan of NY, my original hometown. But that's hubris I think. I remember growing up when NY was a much crappier place and financially on the brink. Those times can return.

*disclosure: I own NY RS properties. The system is the law and we follow its rules. We'd get a windfall if it were suddenly eliminated but there's zero chance of that happening in the foreseeable future no matter what I say. OTOH this position gives an insight into how costly this system is in misallocation of resources, single people incentivized to hold on to big apartments because paying 1/3 market, active discouragement of capital investment into a large share of the housing stock except insofar as legal ways around essentially fixed rents...which the newly elected legislature (the NYS govt largely controls this system not the City govt, strangely) is now suggesting reducing. Yes it's the status quo and likely to remain so in some form. But people shouldn't forget what a large misallocation of resources it causes. And seems to me some accounts of 'higher rents in Queens due to Amazon' ignore it entirely. Or forget that a lot of the reason 'free market' apts are so expensive is the price controls applying to a huge share of the market. That magnifies the effect on free market prices of changes in demand. There really is no free lunch, but semi-submerged massive subsidies like this really do escape people's attention after awhile as I think coverage of the Amazon episode v 'rents in NY' tends to show.

Last edited by Corry El; 02-16-2019 at 10:51 AM.
  #35  
Old 02-16-2019, 11:55 AM
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I read an NYT article about the situation and it had this comment from the mayor:
“We gave Amazon the opportunity to be a good neighbor and do business in the greatest city in the world. Instead of working with the community, Amazon threw away that opportunity,” Mr. de Blasio said in a statement.

“If Amazon can’t recognize what that’s worth, its competitors will.”

I know it's just a statement from a politician (meaning quality of content is assumed to be low), but I doubt that the selection of a specific city or not will tip the competitive balance between Amazon and it's competitors in any measurable way. There may be some company+city combinations that would make a competitive difference, but probably not this one.
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Old 02-16-2019, 12:01 PM
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Third world level corruption.

Governor Cuomo commissioned a study that said New York would reap 27 billion dollars on the 3 billion dollar investment. The economics seem to be a no brainer.
Isn't the very concept of paying well connected businesses special breaks to move to an area, while not giving anything to smaller businesses, exactly third world level corruption?

If you came up with a consistent law that said "if a business moves in, they get <these tax breaks>" and applied that law equally to all businesses, that's a totally different story. Heck, even making the law only help businesses that primarily employ skilled and educated workers (since those are the kind that make a city better) would be fine.

It's about equal application of the law.

Frankly, I don't see how any of these 'incentives' should be legal. They should be banned at the Federal level - it's clearly a matter of interstate commerce if cities can race each other to the bottom to give away more taxpayer money.

In calling the 3 billion an "investment", you neglect that :

a. All investments carry risks
b. Why give the first billion as basically cash? (with refundable tax credits and a half billion dollar "grant")

Last edited by SamuelA; 02-16-2019 at 12:03 PM.
  #37  
Old 02-16-2019, 04:24 PM
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I read an NYT article about the situation and it had this comment from the mayor:
“We gave Amazon the opportunity to be a good neighbor and do business in the greatest city in the world. Instead of working with the community, Amazon threw away that opportunity,” Mr. de Blasio said in a statement.

“If Amazon can’t recognize what that’s worth, its competitors will.”

I know it's just a statement from a politician (meaning quality of content is assumed to be low), but I doubt that the selection of a specific city or not will tip the competitive balance between Amazon and it's competitors in any measurable way. There may be some company+city combinations that would make a competitive difference, but probably not this one.
I don't know where you got that from the statement. de Blasio is clearly saying that other companies will make use of the space if Amazon won't, not that some company will become a market leader by moving to Queens.
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Old 02-16-2019, 04:28 PM
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It appears that public opinion was in general pro-Amazon. The top politicians were pro-Amazon. Amazon screwed up by not approaching the City Council and other lower level leaders, so whoever was advising them about NY politics screwed up. And there was definitely going to be a push from the unions to unionize the Amazon workers. From what I read they thought they were going to get bad press as these things played out, and didn't want to deal with that.
So they are a 500 pound gorilla who wants to be treated as if they were a cute little lemur.
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Old 02-16-2019, 05:01 PM
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Usually these subsidies and tax breaks come from places that need the extra business. (Think Foxconn in Wisconsin, another bid going down the tubes...) The better off a city or state, the less it need to make concessions to entice businesses. Of all the places in the USA, NYC has to rank pretty high on the list of places that won't miss if the opportunity is lost. Plus, again - wallet envy. The better a city is doing, the more other businesses who enviously say "we're here, we provide jobs, why don't we get a similar deal?" Cities without that boom will be desperate and willing to give, and won't have as many existing employers pushing back.
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Old 02-16-2019, 06:51 PM
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Usually these subsidies and tax breaks come from places that need the extra business. (Think Foxconn in Wisconsin, another bid going down the tubes...) The better off a city or state, the less it need to make concessions to entice businesses. Of all the places in the USA, NYC has to rank pretty high on the list of places that won't miss if the opportunity is lost. Plus, again - wallet envy. The better a city is doing, the more other businesses who enviously say "we're here, we provide jobs, why don't we get a similar deal?" Cities without that boom will be desperate and willing to give, and won't have as many existing employers pushing back.
What you are calling "wallet envy" sounds to me more like straight up corruption.

"I'm a friend of the mayor, and I want to open a small business". "here's a tax abatement worth 200k".

"Hi, I want to open a small business." "Better pay your taxes, buddy, at full freight - in fact, we're raising them because we have a shortfall this year for some reason..."
  #41  
Old 02-16-2019, 06:58 PM
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Note that Amazon already has about 5,000 employees in NYC, and presumably without getting massive tax breaks. I would not be surprised to see the NYC numbers increase, even without HQ2.
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Old 02-17-2019, 07:18 AM
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What you are calling "wallet envy" sounds to me more like straight up corruption.

"I'm a friend of the mayor, and I want to open a small business". "here's a tax abatement worth 200k".

"Hi, I want to open a small business." "Better pay your taxes, buddy, at full freight - in fact, we're raising them because we have a shortfall this year for some reason..."
No. Because (as far as we know, we hope so) nobody is getting a cut of the money, Bezos is not friends with NYC or NY State bigwigs. It's a misguided attempt - "Let's attract a large business here - what will it take?" Now, that may be a valid strategy if it's backwater with no other redeeming qualities, but most of the USA's bigger cities (Except Detroit?) should already be chosen on the merits, not with corporate welfare. If New York is a good choice, Amazon would already pick it.

(There's always the possibility that the higher-ups would use insider knowledge to profit from, for example, real estate. I would hope the FBI would enjoy looking into that)

There are only so many airline "hub" cities with direct flights to almost anywhere - NYC, Chicago, LA, SF, Seattle, Denver, Atlanta, Washington DC, (Toronto!), Minneapolis, Dallas/Ft. Worth or Houston. If I were Bezos, the questions are simple- real estate costs, taxes, communications, desirability for the IT/MBA types, etc. Anyone else was never in the running.

The other problem with corporate welfare is, as we see with GM - you spend billions of taxpayer money to help them out, maybe even stave off bankruptcy, and how do they repay you? By pulling out as soon as there's a few bucks more to make by moving south of the border.

Last edited by md2000; 02-17-2019 at 07:19 AM.
  #43  
Old 02-17-2019, 08:58 AM
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No. Because (as far as we know, we hope so) nobody is getting a cut of the money, Bezos is not friends with NYC or NY State bigwigs. It's a misguided attempt - "Let's attract a large business here - what will it take?" Now, that may be a valid strategy if it's backwater with no other redeeming qualities, but most of the USA's bigger cities (Except Detroit?) should already be chosen on the merits, not with corporate welfare. If New York is a good choice, Amazon would already pick it.
...
The other problem with corporate welfare is, as we see with GM - you spend billions of taxpayer money to help them out, maybe even stave off bankruptcy, and how do they repay you? By pulling out as soon as there's a few bucks more to make by moving south of the border.
There are definitely issues with state/local concessions to draw employers. You can definitely pay too much. But it really depends what you pay. Which also fits with your point of what do you have to pay. If a company starting/enlarging an operation in your locality is an economic plus, why in principle would you expect to get it for free? Although you might. It depends on the market.

In this particular case it's manifest Amazon would *not* have chosen NY otherwise, so I'm puzzled by using this as an example showing you don't have to give any concessions. For this particular type of project, that's pretty obviously not the market.

You can decide the market price doesn't offer value of course, but then you have to speak in terms of particular number not an abstract principle that localities, even NY, with always come out ahead giving no such concessions.

Again a lot of my disgust with this turn of events is the lack of much argument by the opposition that the City was paying too much. The headline figures are something like $3bil in concessions v $20-something bil in tax revenue over a comparable period. That's $3bil worse than $0 concessions for the same tax bump obviously, but also not obviously a bad deal. And again the opposition IMO seemed to harp on far left ideological bullshit, not challenging those numbers. The Foxconn deal was attacked more rationally IMO on the basis of the numbers not working. The GM bailout was socio-politically driven and arguments that it made economic sense were a fig leaf IMO, that wasn't truly seriously analyzed, the political fallout of letting it collapse was too great.

Also NY (again my original and still loved hometown) is no 'backwater' by any stretch. But it's also a high tax city in a high tax state with loads of non-business friendly state and local bureaucracy. That doesn't prevent it being the national financial capital and one of a few world ones, but it's non-obvious that that doesn't hurt attempts to build up other businesses.

Last edited by Corry El; 02-17-2019 at 09:01 AM.
  #44  
Old 02-17-2019, 09:31 AM
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Any town, state, county providing tax breaks or other incentives needs to put together a business case and prove there is a return on investment (ROI).

Let's say they provide a million in incentives and they can prove to recoup the million in the 18th month and 2 million every year after, etc. Something like that. Would be a very intense and comprehensive report (and the source data needs to be good). LMAO... we're talking about politicians.

It is simply the politicians' responsibility to do the proper math and build the proper business case. The problem is that it's all 'soft' math, or high-level breakdowns and not a real ROI analysis. Sometimes, the ROI is legit, but too often, eroded trust in politicians becomes the problem.

Hate on a business? Sure, for specifics. But the theme here is that politicians don't exactly build trustworthy business cases. And the same goes for those who refuse and push back against the incentives/breaks. Those politicians better have facts and data on their side. They are likely just playing to uneducated constituents.

.

Last edited by Philster; 02-17-2019 at 09:33 AM.
  #45  
Old 02-17-2019, 10:14 AM
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No. Because (as far as we know, we hope so) nobody is getting a cut of the money, Bezos is not friends with NYC or NY State bigwigs. It's a misguided attempt - "Let's attract a large business here - what will it take?"
It's unequal application of the law. It's a straight up breakdown of the rule of law to give large, well connected, famous companies special deals while not giving them to others.

Again, it would be like you're at the DMV. "I'm a famous actor, give me a vanity plate for free. Also don't charge me a registration fee".

"well if we keep this actor happy maybe he'll keep living here in a mansion and paying taxes...give it to him"

Straight up kleptocratic graft.
  #46  
Old 02-17-2019, 05:08 PM
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The headline figures are something like $3bil in concessions v $20-something bil in tax revenue over a comparable period. That's $3bil worse than $0 concessions for the same tax bump obviously, but also not obviously a bad deal.
So the question I have with this--$20 billion as opposed to what? It's NYC, so I assume projected revenue for the area even without Amazon is non-zero, particularly since others in this thread have stated the area was gentrifying on its own anyway.

So if the expected revenue for the area over the same timeframe without Amazon was, say, $10 billion, then you're really paying $3 to get $10. If it's expected was $15 billion, then you're paying $3 to get $5, which is still a positive, but still gets into the question of if you want a single company to have that much leverage for future negotiations.
  #47  
Old 02-17-2019, 10:13 PM
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So the question I have with this--$20 billion as opposed to what? It's NYC, so I assume projected revenue for the area even without Amazon is non-zero, particularly since others in this thread have stated the area was gentrifying on its own anyway.

So if the expected revenue for the area over the same timeframe without Amazon was, say, $10 billion, then you're really paying $3 to get $10. If it's expected was $15 billion, then you're paying $3 to get $5, which is still a positive, but still gets into the question of if you want a single company to have that much leverage for future negotiations.
Or Amazon in particular moving in that big a way might end up attracting other companies which would not otherwise and no won't be as likely to come. There is definitely an effect of 'clustering' in such industries and jobs.

That's hard to say. But, the basic numbers seemed pretty favorable, and again it doesn't seem the opposition was really based on contesting them. But rather on various (highly dubious IMO, but in any case vague) 'principles' about 'greed', 'Bezos is the richest man in the world', (arguably a little more substantively) Amazon's approach to labor unions, and so forth.

Seems to me the not as extremely left politicians in NY who supported the deal, as well as perhaps some posts here, are now recasting the opposition in various ways that makes it look more well thought out than it actually was. IOW there's a hypothetical case of carefully analyzing the numbers and deciding it doesn't make sense, but I really don't think that's what happened in this particular case.
  #48  
Old 02-18-2019, 12:18 AM
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Any town, state, county providing tax breaks or other incentives needs to put together a business case and prove there is a return on investment (ROI).
I was reading about a city providing $2 million to bring in a Kohl's Department store. Four years later Target closed in that city, probably the market (35,000 or so population) not big enough to support both stores. So you can't look at just the business in isolation with respect to these incentives--the decision may result in other businesses closing/leaving.

Last edited by PastTense; 02-18-2019 at 12:20 AM.
  #49  
Old 02-18-2019, 12:34 AM
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I was reading about a city providing $2 million to bring in a Kohl's Department store. Four years later Target closed in that city, probably the market (35,000 or so population) not big enough to support both stores. So you can't look at just the business in isolation with respect to these incentives--the decision may result in other businesses closing/leaving.
And in a burgeoning city, you can get the opposite concern: If you pay for a business to come to your city, will their presence just crowd out someone who was going to start/move a business that wouldn't have needed handouts?

Last edited by Lord Feldon; 02-18-2019 at 12:36 AM.
  #50  
Old 02-18-2019, 06:24 AM
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A big operation like this is going to have a major impact.



A lot more traffic, demand for housing, increased prices for said housing, changes to the character of the area, etc.



It doesn't take much for well-organized local groups to delay the project in court for a few extra years, add some additional conditions, and so on.



OTOH, there are other cities out there where the local politicians just steam roll right over all that. You wake up one morning and find out about a surprise deal for a new stadium (at taxpayer expense) has been made and no one can stop it. There are no groups to oppose it, well-organized or not.



Four years later the stadium has been open long enough to prove it's a white elephant. Goodbye tax money.



Bezos likes the latter kind of places.
I live in said county, and there has been ZERO economic boom. However, traffic has gotten worse, and housing prices are through the roof.

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