Amazon Got a Taste of New York’s Messy Politics… and Clicked ‘Return’
A couple of months ago, when Amazon announced that New York City’s Long Island City neighborhood would host one of its two new “HQ2” headquarters complexes, the reaction was… mixed, to say the least. Some residents celebrated the company’s promise of 25,000+ new jobs. However, others reacted with dismay.
Long Island City, like many neighborhoods in New York, is wrestling with crumbling infrastructure, gentrification, and a host of other issues; crunching a tech giant’s massive complex into the mix seemed like a surefire way to make those issues a lot thornier. In the wake of Amazon’s announcement, emotions ran high; protests erupted; borough community board meetings got a lot more interesting — the equivalent of must-see TV for the civic-minded.
But a funny thing happened on Amazon’s way to settling down in Queens: It abruptly decided to scuttle the deal. In its statement, the company alluded to negativity on the part of local politicians; here’s the opening sentence:
“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.”
Actually, “negative” is a bit of an understatement when it comes to the local politicians. When Amazon sent fliers to Long Island City residents that asked them to support the deal, State Senator Michael Gianaris issued a highly sarcastic flier in return that highlighted the massive tax breaks that the city and state were giving the company. New York City Councilman Jimmy Van Bramer also pushed back hard against aspects of the deal, and subsequently called Amazon’s pullout a victory; in his view, approving Amazon’s entry would have opened the door to other companies extracting huge concessions from a city that’s already wrestling with revenue, infrastructure and budget issues.
(Whoever decides to compete against Gianaris and Van Bramer in their next elections will surely use the loss of potential jobs as their primary weapon.)
Just as quickly, reaction from the community flipped: Those happy with the deal were furious at its implosion, while those miserable at the prospect of Amazon next door were elated at this unexpected turn of events. Some local business owners weren’t amused by the decision, to say the least:
(By the way, if you’re ever in LIC, go to John Brown Smokehouse. It’s amazing! Best BBQ in the city, no joke.)
Why did Amazon pull out so quickly? If the company’s dealings with Seattle, where it has its headquarters, is any indication, it’s historically allergic to resistance. The very public challenge to the $3 billion in tax subsidies offered by New York’s governor and mayor, combined with aggressive public hearings in which Amazon’s labor practices and corporate dealings were questioned, no doubt spooked the executives tasked with settling the deal.
There was also substantial angst over Amazon’s choice of neighborhoods within New York. Had the company opted for Hudson Yards, a massive commercial development on the West Side, or one of the large skyscrapers near Manhattan’s tip, it might have driven through its plans with relatively little opposition; what’s one more mega-company in an area filled with them? But deciding to land in a residential community with the aforementioned gentrification issues was a recipe for drama, especially since the initial deal was made in secret, with a minimum of community input.
Still, none of those issues were (theoretically) insurmountable; Gianaris was going to be appointed to the Public Authorities Control Board, which technically had the power to scuttle the plan, but he might have negotiated over those controversial tax breaks. The governor and mayor remained firmly behind the deal until it vaporized. In other words, the company wasn’t cornered. Yet it retreated— and isn’t trying to place its “HQ2” in another, potentially more accommodating city.
That refusal to name another HQ2 is a bit odd, given how Amazon spent many months collecting bids and analyzing potential cities as ideal hosts. As I Tweeted yesterday, and as other pundits have opined online, there’s every possibility that Amazon’s HQ2 search wasn’t ultimately so much about building a “second headquarters” as extracting favorable tax concessions for a (massive) branch office or two in cities where it always intended to build. Crystal City, Virginia, which received the other HQ2 complex, has shown no sign of pushing back against Amazon’s plans; but New York City did, and so Amazon scuttled that part of the deal. Since New York City is a tech hub bustling with talent, and the company already has a presence here, it will continue to hire at a more organic rate — although it’s questionable whether it will hire 25,000 more people to fill local office space.
Those who supported the deal are citing the loss of those jobs as a disaster. However, Amazon was looking at years of conflict in New York’s highly aggressive political arena — and it decided to cut bait. Will that curb New York’s reputation as “Silicon Alley,” the East Coast competitor to Seattle and San Francisco for tech talent? I’m betting not. Even as Amazon curbs its plans, tech giants such as Google are rapidly adding more jobs; the city’s resources, talent pipeline, and culture remain largely unchanged.