On November 14, one day after Amazon formally announced its plan to open half of its so-called “second headquarters” in New York City, nearly 100 politicians, union organizers, and community members gathered in a Long Island City park to protest the company’s impending expansion.
The mood in Gordan Triangle, located down the block from Amazon’s future New York City campus, was a stark contrast to the celebratory press conference New York City Mayor Bill de Blasio and Gov. Andrew Cuomo held a day earlier. “This is a big moneymaker for us,” said Cuomo, who, a few weeks earlier, said he’d change his name to Amazon Cuomo if the company agreed to set up shop in New York City. “It costs nothing — nada, niente, goose egg. We make money doing this. To get Amazon, did we have to win the competition? Yes. We had to win the competition.”
In a statement announcing the deal, de Blasio said Amazon’s presence in Queens “is a giant step on our path to building an economy in New York City that leaves no one behind.” But as details of the agreement Amazon reached with Cuomo and de Blasio — and just how high a price the city will pay — began to emerge, New Yorkers increasingly began expressing concern that Amazon’s new Long Island City office could do the opposite.
The false promise of HQ2
When Amazon announced its plans to open a new North American headquarters, dubbed HQ2, in September 2017, the company’s founder and CEO Jeff Bezos said the new office would be “a full equal” to Amazon’s Seattle headquarters. Enticed by Bezos’s promise of 50,000 new jobs and $5 billion in investments, more than 200 cities submitted proposals for Amazon’s consideration. Many attempted to lure the company by offering hundreds of millions of dollars in tax breaks and other subsidies.
Amazon released its shortlist of 20 cities in January and required all elected officials involved in the negotiations to sign nondisclosure agreements, which meant that the details of the deal remained top-secret even as news about the HQ2 winners began leaking.
Instead of opening a new office in one city, though, Amazon decided to split its “second headquarters” — and those 50,000 jobs — in half. And rather than take its economic power to any of the dozens of small to midsize cities that submitted a proposal, Amazon decided to build those two new offices in New York City and Arlington, Virginia, two areas already notorious for congestion and expensive housing.
These promised jobs won’t be created immediately, and they’re going to cost the host cities massively. According to Amazon’s own calculations, the company’s office in the Crystal City neighborhood of Arlington (which the company has seemingly rebranded as “National Landing”) will cost Virginia $22,000 for each job created over the next 12 years.
New York, which offered Amazon more than $1.5 billion in subsidies — more than twice the amount Virginia is giving the company — is effectively paying $48,000 per job, a fact that rubs many residents and community leaders the wrong way.
Despite de Blasio’s claims that the city wouldn’t offer Amazon any financial incentives, New York City is giving the company $1.3 billion in tax breaks on top of the $1.5 billion it’s receiving from the state. Thanks to the aforementioned nondisclosure agreement, elected officials in the city council and state legislature had no idea what Cuomo or de Blasio offered Amazon until after the deal was announced. The governor and mayor are also letting Amazon sidestep the city’s land use review process, meaning the city council has no sway over the negotiations.
“Think about how crazy this is: a private company forced the government to sign a secrecy agreement and not tell its own people what it’s doing with this money,” state Sen. Michael Gianaris said at the rally. “If we had known what was going on six months ago or 10 months ago, we could have stopped this a long time ago.”
“We should be investing in academics, not Amazon,” state Assembly member Michael Blake, who represents several Bronx neighborhoods and is the vice chair of the Democratic National Committee, told me. “We were open to a conversation, but this wasn’t a conversation — this was a secret deal. If you can find the money for tax breaks and incentives, why can’t we find it for the kids? This was done in secrecy to evade the [review] process by the city council.”
A tale of two Long Island Cities
Deborah Axt, the co-executive director of the immigrants’ rights group Make the Road New York, described Long Island City as one of the “epicenters of gentrification” in New York City. More than 12,000 apartments were built in the neighborhood between 2010 and 2017, and luxury developments were being built so rapidly that rent prices actually began decreasing after July of last year, since there weren’t enough well-heeled tenants in the area to fill the supply of vacant, amenity-laden dwellings.
The neighborhood is also home to the Queensbridge Houses, the largest public housing development in the country. Nearly 60 percent of Queensbridge’s 6,000-odd residents use food stamps, and the median household income for a family of four there is $15,843.
At the Monday press conference, de Blasio suggested that putting Amazon’s headquarters in Long Island City would be beneficial to the neighborhood’s underserved residents. “One of the biggest companies on earth next to the biggest public housing developments in the United States,” de Blasio said. “The synergy is going to be extraordinary.”
Amazon’s memorandum of understanding for the Long Island City site, which the company released in full on Monday, includes an agreement to host “semi-annual” events at the Queensbridge Houses, “such as job fairs and resume workshops in order to promote employment opportunities to [public housing] tenants,” as well as a commitment to fund one-third of a workforce development program that includes “training programs targeting non-traditional demographics.”
(The agreement also requires the city and state to “secure access to helipad” for Amazon, which will presumably be used to airlift Bezos to and from the site and can be used “no more than 120 [times] per year.”)
But where de Blasio and others see a win-win opportunity for “synergy” between Amazon and its low-income neighbors, HQ2 critics see an attempt to deflect criticism about the fact that billions of dollars in subsidies that could otherwise be invested in public schools, public housing, or the city’s crumbling public transit system are instead going to one of the biggest companies in the world.
“I don’t believe this is how it’s going to play out,” City Council member Jimmy Van Bramer, whose district includes Long Island City, says Queensbridge residents, told me, referring to de Blasio’s “synergy” remarks. “Queensbridge residents are good, smart people. They’ve been promised the moon and the stars in the past, but … the people of Queensbridge deserve more than vague promises of job fairs and other things that won’t necessarily allow [them] to compete for these $150,000-a-year jobs.”
“It may be cold outside, but I am steaming mad that the governor and the mayor have decided to throw Jeff Bezos almost $3 billion in subsidies and tax breaks, and throw in a helipad so he doesn’t have to take the damn 7 train,” Van Bramer said at the rally. “Just this morning, several residents contacted us to say that there’s no heat in Queensbridge. But somehow folks who consider themselves progressive Democrats have seen fit to throw away $3 billion to the richest man in the world.”
“This is a gentrifying neighborhood,” said Gianaris. “A lot of people who have lived here for a long time can no longer afford to live here, and just from the announcement of this Amazon deal, already the real estate speculators are starting to buy up properties, which is going to increase the rents even more.”
Several rally attendees who live in Long Island City and the surrounding neighborhoods said they’re concerned they’ll soon be priced out of their homes. “Before we start spending billions of dollars on setting up an Amazon office, let’s fund our schools, fund our trains, set up protections for small business owners, so that we can still have creative and vibrant communities,” said Shawn Dixon, who owns a barbershop in the neighborhood called Otis & Finn.
“There wasn’t any information there until the deal was seemingly sealed and done,” said Laura Reinhalter, an Astoria resident who attended the rally. “Right now, I’m paying almost 50 percent of my take-home salary in rent, so there’s not a lot of wiggle room. I moved to Queens to be able to survive New York, and it’s a fear of mine that we get pushed further out.”
Cristián Pietrapiana, an artist who has lived in the neighborhood for 20 years, carried a sign that read “Greed kills LIC,” and said Amazon’s presence in the neighborhood would only exacerbate the gentrification that had been going on for years. “Already, too many people moved in because of all these residential developments, so this is going to make things worse,” he said. “We voted for de Blasio and Cuomo to represent the interests of New York City, and they seem to be representing big corporations instead — a monopoly, in this case. Besides, it’s in a flood zone.”
What’s good for Amazon may not be good for New Yorkers
Cuomo and de Blasio seem to have an answer for any criticism of HQ2 or the decision-making process.
The city and state are technically giving Amazon nearly $3 billion in subsidies, Cuomo said on Monday, but claimed it’s not actually costing anyone anything since the project will generate $9 in revenue for every dollar given to Amazon — “the highest rate of return for an economic incentive program the state has ever offered.” (That figure, Gianaris pointed out, relies on the assumption that no company would otherwise build on the land that has been set aside for Amazon. “That’s funny math,” the senator said.)
Besides, the mayor and the governor argued, the subsidies are worth it because Amazon is bringing an “unprecedented” 25,000 jobs to the city. (Those jobs will be rolled out over the course of a decade.) It’s also worth noting that Google, which has an office in Manhattan’s Chelsea neighborhood, is reportedly adding more than 12,000 jobs in the city despite not having received any subsidies.
In addition to those 25,000 jobs, Amazon will hire union construction workers to build its offices, de Blasio said (though Amazon is decidedly anti-union when it comes to its own employees). And anyway, both Cuomo and de Blasio suggested, the subsidies were a way of giving New York City a competitive edge over the 237 other municipalities that wanted to be the home of Amazon’s newest office.
Some critics, meanwhile, have suggested that Amazon wanted to set up shop in New York City and the DC area all along, and that the HQ2 “application process” was a way of getting as many incentives as possible from local governments.
Assuming that all of this is true — that New York City’s bet on Amazon will lead to even more billions of dollars in returns, that the company will flood the city with high-paying jobs, that other industries will benefit, and that Amazon’s HQ2 selection process really was a good-faith attempt to secure the best location possible for its new offices — one doesn’t need to look much further than Seattle to see why people are concerned that what’s good for Amazon’s bottom line isn’t always good for regular people.
A Zillow analysis found that rents in Seattle increased by 31 percent between 2013 and 2018, and home values increased by nearly 73 percent during that same time frame, due in large part to an influx of well-paid tech workers, many of whom worked for Amazon.
And while rising housing costs may be good for landlords and homeowners, as Vox’s Matt Yglesias wrote last week, a similar influx of white-collar jobs in an expensive city like New York could actually end up exacerbating income inequality. Seattle has been battling a homelessness crisis for years, which was partially caused by Amazon’s presence in the city. And instead of helping solve the homelessness crisis it helped create, Amazon was instrumental in killing a tax on businesses that could have partially alleviated the problem.
There are already signs that something similar could happen in New York. Just a few hours after the Amazon HQ2 deal was official, the Wall Street Journal reported that the company’s impending presence in Long Island City had sparked a “condo frenzy” that reminded some brokers of the “pre-crash property boom.”
Cuomo and de Blasio’s “corporate welfare,” as many speakers called the tax breaks at the rally, have caused local lawmakers — many of whom were previously enthusiastic about a possible Amazon presence in the city — to reconsider whether the tech giant’s presence will really be an unassailable win for New Yorkers.
Gianaris and Van Bramer were two of more than 70 elected officials who signed an October 2017 letter encouraging Amazon to “make New York City the home of its second headquarters.” Both said they didn’t realize the HQ2 negotiations would happen behind closed doors, or that Amazon would be so heavily subsidized by the city and state governments.
“I have no problem with jobs coming to our community. I have a problem with $3 billion in taxpayer money being given to the biggest company on earth,” said Gianaris. “If Amazon wants to come here, we need to have a conversation about what they’re going to do to subsidize our neighborhood, not what we need to do to subsidize them.”