Isn’t this threadshitting post basically stating exactly the opposite of what happened?
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.
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.
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.
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."
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.
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.
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.
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.
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 Majority of New Yorkers Support Amazon Project in Queens, Poll Shows - WSJ, 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.
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.
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.
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.
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.
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.
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.
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”)
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.
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.
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…”