Amazon Threatens to Cancel New York City Headquarters if It Doesn’t Receive $3 Billion in Subsidies

David Dayen

Protestors rally against Amazon and the company's plans to move their second headquarters to the Long Island City neighborhood of Queens, at New York City Hall, January 30, 2019 in New York City. (Photo by Drew Angerer/Getty Images)

Fear­ful of los­ing near­ly $3 bil­lion in sub­si­dies for its expan­sion in New York City, Ama­zon has moved to a new strat­e­gy, one involv­ing threats. The Wash­ing­ton Post (owned by Ama­zon CEO Jeff Bezos) report­ed on Fri­day that the com­pa­ny is recon­sid­er­ing” its plan to place an office facil­i­ty for up to 25,000 employ­ees in Long Island City, Queens. In doing so, Ama­zon is sig­nal­ing that it will squeeze oppo­nents of the deal polit­i­cal­ly unless they sup­port the mas­sive sub­sidy package.

New York City law­mak­ers who weren’t inti­mate­ly involved with the HQ2” bid to bring in Ama­zon have been sharply crit­i­cal of giv­ing bil­lions in tax­pay­er dol­lars to the world’s most valu­able cor­po­ra­tion, so it can add to an already exist­ing pres­ence in the region. The deal bypassed city coun­cil approval, adding to the consternation.

Any major multi­na­tion­al would have mul­ti­ple rea­sons to expand in New York City, giv­en its high­ly skilled work­force and sta­tus as a hub for the tech­nol­o­gy, enter­tain­ment and adver­tis­ing indus­tries — all areas where Ama­zon is expand­ing. That makes the bil­lions in sub­si­dies seem gratuitous.

Ama­zon has been grow­ing into the largest com­pa­ny we’ll ever see,” says Jonathan West­in of New York Com­mu­ni­ties for Change, one of the groups lead­ing the charge against the Ama­zon deal. The idea that we need to sub­si­dize them in any way blows our mind.” West­in has helped ral­ly oppo­si­tion to the deal from labor unions, com­mu­ni­ty groups and promi­nent politi­cians like Rep. Alexan­dria Oca­sio-Cortez, whose dis­trict is adja­cent to the pro­posed site.

Sev­er­al oth­er issues have inspired out­rage over what crit­ics call the #HQ2scam. Even before these sub­si­dies, New York City has been strug­gling to fund accept­able pub­lic trans­porta­tion and afford­able hous­ing. Plus, adding 25,000 high-pay­ing jobs to this cor­ner of Queens will only make gen­tri­fi­ca­tion worse, activists warn. I think any­one who’s mid­dle class is not going to be able to live in Long Island City much longer,” West­in says.

Final­ly, at a City Coun­cil meet­ing last week, the com­pa­ny refused to agree to remain neu­tral if Ama­zon work­ers attempt­ed union­iza­tion in New York City, a red flag for a labor-friend­ly city. The HQ2 project has actu­al­ly split the city’s labor move­ment. The Retail, Whole­sale, and Depart­ment Store Union and the Team­sters are against the project, while the Build­ing and Con­struc­tion Trades Coun­cil that would build the HQ2 facil­i­ty, and the SEIU local 32BJ that would staff the build­ing for secu­ri­ty and cus­to­di­al work, have come out in favor. Coun­cil Speak­er Corey John­son crit­i­cized Ama­zon last week for pit­ting work­ers against one another.

Ama­zon can see its grasp on $2.808 bil­lion in sub­si­dies slip­ping away. This week, the State Sen­ate rec­om­mend­ed the appoint­ment of Sen. Michael Gia­naris, a bit­ter crit­ic of the deal, to the Pub­lic Author­i­ties Con­trol Board, which reviews and approves state-based eco­nom­ic devel­op­ment sub­si­dies. About $1.5 bil­lion of the grants for HQ2 come from the state and could go before this board, and the way the board is struc­tured, Gia­naris would have an effec­tive veto over those funds.

Demo­c­ra­t­ic Gov­er­nor Andrew Cuo­mo, a sup­port­er of the deal who offered to change his name to Ama­zon Cuo­mo if the com­pa­ny agreed to choose New York City, would have to approve Gia­naris, but that would cre­ate a stand­off between the gov­er­nor and the leg­is­la­ture, reflect­ing the ten­sions that have accom­pa­nied the Ama­zon deal.

While all of that is hap­pen­ing, Ama­zon float­ed this pull­back from New York, cit­ing how wel­com­ing” politi­cians in Vir­ginia and Nashville, Ten­nessee have been in hand­ing over pub­lic mon­ey for its site loca­tions. Embat­tled Vir­ginia gov­er­nor Ralph Northam, weath­er­ing a scan­dal over black­face pic­tures in his med­ical school year­book, found time to qui­et­ly sign off on $750 mil­lion in sub­si­dies for a 25,000-employee facil­i­ty near Arling­ton, which the leg­is­la­ture advanced with lit­tle oppo­si­tion. Nashville is get­ting a 5,000-person oper­a­tions cen­ter, and though the city bud­get is so strapped pub­lic work­ers were denied a promised raise, this week offi­cials passed a $15 mil­lion infra­struc­ture grant for the area Ama­zon will occu­py, the first of $117 mil­lion in sub­si­dies for the project.

Ama­zon is like­ly threat­en­ing this pull­out to con­cen­trate minds among New York politi­cians, in an effort to pin blame on them for los­ing” Ama­zon. The com­pa­ny is hir­ing lob­by­ists and a com­mu­ni­ty affairs man­ag­er” in New York, so it’s clear­ly still com­mit­ted to the deal at some level.

Ama­zon may also have a Plan B. One of the twen­ty final­ists for HQ2 was Newark, New Jer­sey, just across the bor­der from New York City. It was one of the rich­est sub­sidy offers of the entire process – up to $7 bil­lion from the city and state to lure Ama­zon. The com­pa­ny could cer­tain­ly skip over to Newark and re-open talks to place its offices there, if only to loosen resis­tance in New York City.

What­ev­er the out­come, Amazon’s gam­bit shows how much the HQ2 sweep­stakes has back­fired. What start­ed as a vir­tu­al cel­e­bra­tion of Amazon’s promi­nence has trans­formed into con­dem­na­tion over a big com­pa­ny using its clout to extract tax­pay­er dol­lars and dis­rupt com­mu­ni­ties. Even Michael Bloomberg is denounc­ing tax gifts to Amazon.

More broad­ly, the Ama­zon farce has shone a spot­light on the sor­did process of eco­nom­ic devel­op­ment deals, which cost cities and states up to $90 bil­lion annu­al­ly while local ser­vices suf­fer from a lack of funds. Deals that would receive almost no scruti­ny, like U.S. Steel win­ning $47 mil­lion in tax breaks from impov­er­ished Gary, Indi­ana, now make head­lines. By mak­ing the spec­ta­cle so pub­lic, Ama­zon may have ruined this gravy train for the rest of cor­po­rate America.

David Dayen is an inves­tiga­tive fel­low with In These Times’ Leonard C. Good­man Insti­tute for Inves­tiga­tive Report­ing. His book Chain of Title: How Three Ordi­nary Amer­i­cans Uncov­ered Wall Street’s Great Fore­clo­sure Fraud won the 2015 Studs and Ida Terkel Prize. He lives in Los Ange­les, where pri­or to writ­ing about pol­i­tics he had a 19-year career as a tele­vi­sion pro­duc­er and editor.
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