Amazon Backs Down
By J. David Goodman of the New York Times
Feb. 14, 2019
Amazon on Thursday canceled its plans to build an expansive corporate campus in New York City after facing an unexpectedly fierce backlash from some lawmakers and union leaders, who contended that a tech giant did not deserve nearly $3 billion in government incentives.
The company, as part of its extensive search for a new headquarters, had chosen Long Island City, Queens, as one of two winning sites, saying that it would create more than 25,000 jobs in the city.
But the agreement to lure Amazon stirred an intense debate about the use of public subsidies to entice wealthy companies, the rising cost of living in rapidly gentrifying neighborhoods and the city’s very identity.
“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,’’ Amazon said in a statement.
The company’s decision is a major blow for Gov. Andrew M. Cuomo and Mayor Bill de Blasio, who had set aside their differences to bring the company to New York.
But it was at least a short-term win for insurgent progressive politicians led by Representative Alexandria Ocasio-Cortez, whose upset victory last year occurred in the area where Amazon had planned its site. Her win galvanized the party’s left flank, which mobilized against the deal, and on Thursday she seemed to revel in the company’s retreat.
As opposition mounted, the governor and the mayor met on Monday in Albany and discussed how to save the deal, according to a person familiar with the conversations but who was not authorized to discuss them.
After the meeting, Mr. de Blasio spoke to a senior Amazon executive by phone on Monday and the mayor was told that the company remained committed to coming to New York, the person said. Mr. de Blasio was in the process of connecting with Jeff Bezos, Amazon’s chief executive, the person said. It was unclear if he did.
Both the mayor’s and the governor’s offices reassured Amazon executives that, despite the vocal criticism, the deal they had negotiated would be approved. But the company appeared upset at even a moderate level of resistance, the person said.
Amazon’s leadership agreed to pull out of New York on Wednesday evening, according to two people familiar with the decision. The company did not inform the governor or the mayor until Thursday morning, shortly before posting its announcement.
Mr. Cuomo and Mr. de Blasio reacted in starkly different ways to Amazon’s decision. The governor blamed newly emboldened Democrats who now control the State Senate for derailing the project.
He said in a statement: “A small group of politicians put their own narrow political interests above their community — which poll after poll showed overwhelmingly supported bringing Amazon to Long Island City — the state’s economic future and the best interests of the people of this state.”
For his part, Mr. de Blasio seemed to shift away from his backing of the deal.
“We gave Amazon the opportunity to be a good neighbor and do business in the greatest city in the world,’’ Mr. de Blasio said. “Instead of working with the community, Amazon threw away that opportunity.”
But Kathryn S. Wylde, the chief executive of the Partnership for New York City, an influential business group, said the reception Amazon had received sent a “pretty bad message to the job creators of the city and the world.”
“How can anyone be surprised?” Ms. Wylde said. “We competed successfully, made a deal and spent the last three months trashing our new partner.”
As recently as Wednesday, Mr. Cuomo had brokered a meeting between Amazon executives, including Brian Huseman, who had represented the company at the City Council, and union leaders who had been resistant to the deal — including from the Retail, Wholesale and Department Store union and the Teamsters, according to two people briefed on the sit-down.
The meeting ended without any compromise on the part of Amazon, according to the people. But Stuart Appelbaum, of the retail union, who was part of the meeting, said, “Amazon and the governor and everybody agreed yesterday on a way to move forward.’’ The company, he said, had agreed to keep talking.
“It was a productive meeting,’’ Mr. Appelbaum added. “Shame on them. The arrogance of saying ‘do it my way or not at all.’’’
Some unions supported the deal, and even those who had been opposed appeared willing to work with Amazon if the company agreed to not actively work against the unionization of its employees in New York.
An Amazon representative, during one City Council hearing, pointedly said the company would not agree to such terms.
The company had enjoyed public support in two polls of voters, conducted by Quinnipiac University and Siena College, after the deal was announced. While the subsidies were less popular, the deal to bring Amazon, and tens of thousands of jobs, was popular across a variety of groups.
In recent days, backers of the deal had begun mobilizing and some could be seen wearing pins in support of Amazon.
State Senator Michael Gianaris, a vocal critic who was chosen for a state board with the power to veto the deal, said the decision revealed Amazon’s unwillingness to work with the Queens community it had wanted to join.
“Like a petulant child, Amazon insists on getting its way or takes its ball and leaves,” said Mr. Gianaris, a Democrat, whose district includes Long Island City. “The only thing that happened here is that a community that was going to be profoundly affected by their presence started asking questions.’
“Even by their own words,’’ he added, pointing to the company’s statement on the pullout, “Amazon admits they will grow their presence in New York without their promised subsidies. So what was all this really about?”
Both Mr. Gianaris and Jimmy Van Bramer, a City Councilman who represents Long Island City, had shifted from being proponents to opponents of the deal. Mr. Van Bramer called Amazon’s decision “a victory against unchecked corporate welfare.’’
While small protests greeted the company after its initial announcement in November, the first inkling that opposition had taken hold among the city’s Democratic politicians came during a hostile City Council hearing the next month. Protesters filled the seats, unfurled banners and chanted against the company. Not a single council member spoke up in defense of the deal or the company.
Company executives fared no better at their second appearance, in January, though supporters, lobbyists and consultants were better prepared. Unions supporting the deal, including the powerful 32BJ Service Employees International Union and the Building and Construction Trades Council of Greater New York, held a rally outside City Hall immediately after one by opponents.
Still, the company did not hire a single New Yorker as an employee to represent it in discussions with local groups. Its main representatives traveled between Washington and Manhattan, and only one had moved into an apartment to work with community members and foster support.
To attract Amazon, city and state officials offered the company one of the largest-ever incentive packages in exchange for a much larger return in jobs and tax revenue.
They agreed to remake plans for the Queens waterfront and move a distribution center for school lunches. They even agreed to give Mr. Bezos access to a helipad.
Under the plan, within 15 years the company could occupy as much as eight million square feet of office space, including office buildings for as many as 40,000 workers.
But almost as soon as it was announced, the deal was met with resistance, from local elected officials like Mr. Gianaris and progressive groups. Many critics were angered that the deal-making circumvented the normal land-use process and essentially eliminated any veto power by the City Council.
The idea of scaling back plans for the New York campus was a subject that had become increasingly discussed among Amazon’s board, according to a person familiar with the board’s deliberations. The meetings between Amazon and Mr. Cuomo and Mr. de Blasio before the company decided to come to New York led executives to believe that there would be greater political support than turned out to be the case.
The company had chosen New York, as well as a site in Northern Virginia, for major expansion. On Thursday, it said it had no plans to reopen a search for a second location.
Amazon still planned to add 25,000 jobs in Northern Virginia and 5,000 in Nashville, where it announced a project to build a center for its operations. It will take the 25,000 jobs that would have gone to Queens and spread them out over its 17 tech hubs across the United States and Canada, including Manhattan.
Here is the statement released by Amazon:
After much thought and deliberation, we’ve decided not to move forward with our plans to build a headquarters for Amazon in Long Island City, Queens. For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term. While polls show that 70% of New Yorkers support our plans and investment, 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.
We are disappointed to have reached this conclusion — we love New York, its incomparable dynamism, people, and culture — and particularly the community of Long Island City, where we have gotten to know so many optimistic, forward-leaning community leaders, small business owners, and residents. There are currently over 5,000 Amazon employees in Brooklyn, Manhattan, and Staten Island, and we plan to continue growing these teams.
We are deeply grateful to Governor Cuomo, Mayor de Blasio, and their staffs, who so enthusiastically and graciously invited us to build in New York City and supported us during the process. Governor Cuomo and Mayor de Blasio have worked tirelessly on behalf of New Yorkers to encourage local investment and job creation, and we can’t speak positively enough about all their efforts. The steadfast commitment and dedication that these leaders have demonstrated to the communities they represent inspired us from the very beginning and is one of the big reasons our decision was so difficult.
We do not intend to re-open the HQ2 search at this time. We will proceed as planned in Northern Virginia and Nashville, and we will continue to hire and grow across our 17 corporate offices and tech hubs in the U.S. and Canada.
Thank you again to Governor Cuomo, Mayor de Blasio, and the many other community leaders and residents who welcomed our plans and supported us along the way. We hope to have future chances to collaborate as we continue to build our presence in New York over time.