Who would dare stop Amazon from creating 25,000 to 40,000 high-paying jobs in Long Island City? Who would be stupid enough to chase away billions of dollars in tax revenue for transportation and education and affordable housing? Listening to the chorus of journalists, editorial boards, and pro-Amazon politicians, this is everyone’s fault but Amazon’s.
NY1 political anchor Errol Louis described it as “another case where so-called progressive politicians allowed middle-class jobs, and dreams, and hopes, to die.”
“The New York State Senate has done tremendous damage,” Governor Andrew Cuomo said in a statement. “They should be held accountable for this lost economic opportunity.”
— Azi (@Azi) February 15, 2019
So who is to blame for Amazon’s departure? Who had power, and how did they wield it?
— Amir Korangy (@mrkorangy) February 15, 2019
Blame Senator Michael Gianaris And Those Loose Cannon Senate Democrats
“This is the man who delivered the death blow to Amazon deal,” the New York Post blared above a photo of Gianaris, who represents Long Island City in the State Senate, and had led the political opposition to the company’s campus.
The Post reports that Gianaris rejected three invitations from Amazon to meet one-on-one, and that his appointment by Senate Majority Leader Andrea Stewart-Cousins to the Public Authorities Control Board, which would need to unanimously approve the current deal for it to move forward, “put the deal over the cliff.”
But Gianaris hadn’t even taken his seat on the PACB, because Stewart-Cousins's recommendation still faced one more obstacle: Governor Cuomo’s approval. If Cuomo wanted to send a signal to Amazon that he was still in control, why not state that he would veto Gianaris and ask Stewart-Cousins for another name? (Gianaris's office did not immediately respond to a request for comment. The governor’s office declined to comment on the record for this article.)
Perhaps Cuomo didn’t want to offend the powerful senator who is largely credited with the organizing strategy that swept the Senate Republicans out of office in 2018, and who he will need to pass his ambitious 2019 legislative agenda. But Gianaris was just one noisy speedbump. At some point, the Amazon plan was going to have to pass the state legislature, either in a vote to raise the monetary cap and the duration of the Excelsior Jobs Program to meet Amazon's targets, or to approve the $505 million capital grant from the state, or both.
Gianaris did use his bully pulpit stridently and frequently, riling up those damned...
Progressive Activists Killed The Amazon Deal
They rallied, they canvassed, they tweeted, they got AOC to tweet, they dropped banners during raucous City Council meetings, egged on by City Council Speaker Corey Johnson (who never officially opposed the deal) and Queens Council Member Jimmy Van Bramer (who did oppose it but apparently also took private meetings with the company). They pointed to Amazon’s anti-labor stance, its relationship with ICE, its track record in Seattle, where it crushed the city’s effort to tax large employers in order to address its homelessness epidemic.
Or maybe it was the makeup of these activists that made people in power pay attention—some have suggested that Amazon’s departure was a victory for “white hipsters” over NYCHA residents and longtime members of the community. After all, Amazon told the city that half of those 25,000 jobs wouldn’t be tech related.
("This fight was led by working-class women of color from the very beginning,” Maritza Silva-Farrell, the executive director of ALIGN told Gothamist last night. “People will look for any reason to undermine the work of communities of color.”)
In truth, the Memorandum of Understanding between Amazon, the state, and the city was short on specifics: the company pledged to chip in $5 million, along with another $10 million from the city and the state, to fund “workforce development initiatives” over a ten year period, targeting students and “non-traditional demographics including NYCHA residents.” Amazon agreed to fund “semi-annual” job fairs at the Queensbridge Houses for three years. The rest was still up for negotiation.
No matter what, Amazon was still on track to get as much as $3 billion in tax incentives and grants from the city and state, which for a trillion-dollar company run by a man who makes $11.5 million an hour, looks somewhat unseemly. So maybe...
It Was Those $3 Billion In Subsidies!
Despite the sticker shock, the Amazon deal itself featured few discretionary incentives aside from the $505 million the state planned on giving the company in a capital grant. Amazon was poised to get as much as $1.7 billion from the city for two tax benefits that any company could have applied for (the Industrial and Commercial Abatement Program (ICAP) property tax breaks for new development and per-employee tax rebates under the Relocation and Employment Assistance Program [REAP]).
The state’s Excelsior Jobs Program tax breaks are tied to actual job creation, but any corporate applicant can receive them. Assuming the Amazon deal would have spurred an equal number of jobs from other companies and retailers in their orbit, the total subsidy amount per job worked out to around $55,000, which is par for the course across the country.
In their editorial, the Times warns of the consequences of spurning Amazon “if New York gets a reputation for the smugness of its politicians and their hostility to business.”
Hostility to business? A 2015 study by the Upjohn Institute for Employment Research showed that New York was second in the nation to New Mexico (and above Louisiana) in corporate incentives. Just last week, the Citizens Budget Commission reported that New York gave corporations roughly $10 billion in economic incentives in 2018 alone, with very little real oversight.
Andrew Rein, the CBC’s president, told Gothamist that it was “incredibly unfortunate” that New York was losing out on Amazon’s jobs, but that he hoped it would spur a conversation about how to make sure that economic incentives go to companies that truly need them.
“ICAP and REAP in the city... we should really revisit and modify those, it would be good to do,” Rein said. “That doesn't mean we don't need some performance-based economic development programs, but they need to keep pace with changing geography and changing industries and changing jobs over time.”
"It just dispels the notion that these big corporations are willing to be good citizens and good neighbors," says @NYCMayor, who spent the last few months trying to convince people of exactly that.
— Jillian Jorgensen (@Jill_Jorgensen) February 15, 2019
Maybe Amazon’s Decision Was Amazon’s Decision?
Of course, Amazon could have avoided much of the state legislative intrigue, and silenced critiques of backroom dealing if they had gone through the city’s public land use review process to build their new campus, like any other developer.
But Mayor Bill de Blasio, who pushed for the deal, albeit tepidly, told Brian Lehrer on Friday morning that the company refused to consider it.
“If I had said, ‘Hey Amazon, you’re going to have to wait a year-and-a-half for the full land use process,’ I guarantee—guarantee—they would have said, ‘Sorry, we’re going to Virginia, we’re going to Dallas, we’re going somewhere else,” and then all of you Brian, respectfully, would have said, ‘How on Earth did you lose 25,000 to 40,000 jobs,’ so, there’s a lack of integrity in this debate, people should come to grips with it."
The mayor added that he was blindsided by Amazon’s about-face.
“To get a call after, you know, months of attempting to build a productive partnership on behalf of this city, to get a call out of the blue saying ‘see you,’ you know, ‘we're taking our ball and we’re going home,’” de Blasio said. “It’s absolutely inappropriate.”
Greg LeRoy, the executive director of Good Jobs First, a government watchdog group that tracks state and local job subsidies, says that this kind of negotiating tactic is a hallmark of corporations plying the “tax break industrial complex.”
“An essential working part of it is to degrade and demean public officials. It’s to get them to internalize, you Hartford, you New York, you Chicago, are not worth very much. We have lots of other choices. You’ve got lots of problems. If you don’t pay us a lot of money to offset the things we don't like about you, you’re disposable.”
LeRoy added that Amazon initially had “a very strong business case for them to come to New York, and I think they really wanted to come, and then I think they really ran into a buzzsaw.”
“Their arrogance about the way they approached the deal made it much harder for them than it had to be," LeRoy said. "If they had not preempted the City Council, if they had not expected those huge as-of-right incentives from the city, if they had not wired the thing for Cuomo to just run over the City Council, and actually talked to people in the neighborhoods, things might have played out very differently."