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Amazon Drops Plan to Build Headquarters in New York City

Amazon Drops Plan to Build Headquarters in New York City

By Robert McCartney, Jonathan O'Connell, The Washington Post | Updated: 15 February 2019 10:14 IST

Highlights

There are a number of folks who oppose our presence: Amazon
"We don't think there's a path forward"
The decision was made by the senior leadership team, which includes Bezos

Amazon cancelled plans to build a New York campus, which would have included at least 25,000 high-paying jobs, Thursday because of resistance from local politicians, unions and community activists who said a project initially hailed as an economic triumph was a lousy deal.

"There are a number of folks on the ground who oppose our presence," Amazon spokeswoman Jodi Seth said. "We don't think there's a path forward in terms of working with them over the long term."

The company issued a statement shortly before noon, saying it did not intend to reopen its search for a second headquarters at this time but would continue with plans to put at least 25,000 jobs in Northern Virginia's Arlington County and 5,000 in Nashville, Tennessee.

The decision was a stunning reversal for Amazon, which miscalculated how it would be received when it announced in November that it would put half of the 50,000 jobs promised in its much-publicised HQ2 search in the Long Island City neighbourhood of Queens.

While Gov. Andrew Cuomo and Mayor Bill de Blasio, both Democrats, had celebrated the project, and opinion polls showed large majorities in favour of it, a strong backlash quickly developed.

Opponents, including freshman Rep. Alexandria Ocasio-Cortez, D-N.Y., protested that the influx of Amazon employees, to be paid an average salary of at least $150,000 a year, would cause housing costs to skyrocket, drive out low-income residents and worsen congestion on the subway and streets.

They also objected to the up to $3 billion in state and local incentives promised to Amazon, the world's most valuable company, headed by Jeff Bezos, the world's wealthiest person. (Bezos also owns The Washington Post.)

Ocasio-Cortez - who has attracted national attention for her liberal views, and whose district borders the proposed Amazon site - hailed the company's pullout.

"Today was the day a group of dedicated, everyday New Yorkers & their neighbours defeated Amazon's corporate greed, its worker exploitation, and the power of the richest man in the world," she tweeted.

But some opponents said Amazon should have stayed in New York and made concessions, such as promising not to oppose efforts by its employees to organize unions.

Cuomo expressed deep disappointment and put the blame on what he called "a small group of politicians (who) put their own narrow political interests above their community."

The governor, who had joked that he would change his name to "Amazon Cuomo" to win the deal, said the project would have brought in nearly $30 billion in revenue - a 9-to-1 return on the subsidies - and helped diversify the New York economy away from real estate and finance.

Cuomo singled out the state Senate for playing a leading role in killing the deal, because it nominated an outspoken critic of the Amazon incentives package to a state board where he would have effectively been able to veto it.

"The New York state Senate has done tremendous damage," Cuomo said. "They should be held accountable for this lost economic opportunity."

Other Amazon supporters, including elected officials and business leaders, were aghast at the defeat.

"New York needs an attitude adjustment," Rep. Thomas Suozzi, D-N.Y., said. "This is a huge loss for New York and Long Island, and it will make it harder to attract major employers and jobs here in the future."

Arlington plan still on track
The decision to cancel the New York project was made Wednesday evening by Amazon's senior leadership team, which includes Bezos and the executives who directly report to him, Seth, the spokeswoman, said.

The announcement came six days after The Washington Post broke the news that the company was reconsidering the project because of local opposition. That report prompted more than a dozen of the 238 jurisdictions that pursued the deal originally - including the District of Columbia, Maryland, Chicago, Miami and Newark, New Jersey - to contact Amazon again in hope of luring the campus if the New York deal collapsed.

But the company said Thursday that it was not looking to put all 25,000 of the jobs slated for New York in a single location.

"We do not intend to reopen the HQ2 search at this time," the company said in a blog post. "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."

Arlington County Board Chairman Christian Dorsey, a Democrat, said an Amazon representative confirmed that "nothing has changed" regarding the company's plans in Northern Virginia. He said the county will not attempt to get more than the jobs already foreseen under Virginia's agreement with Amazon.

"We have a path for 25,000 (jobs) and up to 37,850. We're comfortable with that. We're not going to make a play for any more," Dorsey said in a conference call with reporters.

In answer to a question, Dorsey acknowledged that New York opponents' success in blocking Amazon was likely to encourage Virginia critics, who are not nearly as numerous. But he expressed confidence that the project would stay on track.

"It likely will cause people to increase their opposition, but . . . I do want to underscore how very different our community circumstances are," Dorsey said. "In Arlington, we have had these difficult community conversations about growth. . . . Our community is ready to embrace that level of activity" that Amazon will bring, Dorsey said.

The Arlington board plans to consider a $23 million local incentives package for Amazon in March, he said, adding that "Arlington and the entire region are still honoured that Amazon recognized this region as a top area for businesses and workforce talent and selected us as a site for its headquarters expansion."

'Bad partner for New York'
De Blasio, whose support for the Amazon project disappointed many of his liberal supporters, faulted the company for backing out.

"You have to be tough to make it in New York City," de Blasio said in a statement. "We gave Amazon the opportunity to be a good neighbour and do business in the greatest city in the world. Instead of working with the community, Amazon threw away that opportunity." We have the best talent in the world and every day we are growing a stronger and fairer economy for everyone. If Amazon can't recognize what that's worth, its competitors will."

A union that helped lead the opposition said Amazon should have worked with the community to address its concerns.

"Jeff Bezos had the opportunity to listen to the voices of working families and support the good-paying jobs New Yorkers deserve," Marc Perrone, president of the United Food and Commercial Workers International Union, said in a statement. "But now we can see this is all about blind greed and Jeff Bezos' belief that everyday taxpayers should foot the bill for their new headquarters even as the company actively works to eliminate millions of American retail jobs."

National politicians also took aim at the company. Sen. Elizabeth Warren, D-Mass., who is running for president, tweeted: "Amazon - one of the wealthiest companies on the planet - just walked away from billions in taxpayer bribes, all because some elected officials in New York aren't sucking up to them enough. How long will we allow giant corporations to hold our democracy hostage?"

New York's resistance to the Amazon project was in sharp contrast with the generally warm welcome that Virginia gave the company. With little opposition, Virginia has already passed a law granting Amazon up to $750 million in state incentives over the next 15 years, on the condition that it create 37,850 new jobs over that period.

In New York, however, it would have taken until 2020 to win final approval for the state's subsidy package. In a critical setback for the project, the state Senate on Feb. 4 nominated a strong critic of the incentives, Sen. Michael Gianaris, D-Queens, to a state board on which he could effectively veto the deal.

Gianaris said Amazon's decision to abandon the project "shows why they would have been a bad partner for New York in any event." His statement continued: "Rather than seriously engage with the community they proposed to profoundly change, Amazon continued its effort to shake down governments to get its way. It is time for a national dialogue about the perils of these types of corporate subsidies."

Grassroots opposition to the deal was evident at two New York City Council hearings, where activists booed Amazon executives and unfurled banners criticizing the company. Key officials opposing the project included City Council Speaker Corey Johnson, D-Manhattan, and Deputy Leader of the City Council James Van Bramer, D-Queens.

Van Bramer and other critics assailed Amazon for companywide policies such as having a nonunion workforce and for partnering with firms that work with U.S. Immigration and Customs Enforcement.

"We are proud that we fought for our values," Van Bramer said. "Our values in New York City are to defend working men and women, labor unions. . . . . And we're fighting for immigrants. Yes, Amazon . . . proudly works with ICE to terrorise immigrants."

Reputation concerns
The Amazon announcement cited the elected officials' opposition as a major reason for its decision.

"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," the company said. "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."

After The Post reported that Amazon was having second thoughts, business leaders in New York began raising concerns about what a rebuff of the company would mean for the city's reputation. Speaking to investors Tuesday, Steven Roth, CEO of commercial real estate stalwart Vornado Realty Trust said, "If the political climate in New York blows this deal, it would be the stupidest damn thing I've ever seen."

After Amazon announced its decision, concerns grew about the message that New York was sending to other tech firms. Julie Samuels, executive director of the industry group Tech: NYC, said the decision was a reminder that despite the city's growing economy, "there is no guarantee we will maintain this status in the future, which makes this news so disappointing."

"It's especially disappointing given the overwhelming local support for the deal and there can be no doubt that bad politics got in the way of good policy here," she said in a statement.

Even though Amazon said it wasn't looking to shift the 25,000 New York jobs to a single spot, the announcement prompted suitors to renew their pitches to the company.

Asked about Amazon's decision Thursday, Maryland Gov. Larry Hogan, a Republican, said, "We actually have had preliminary discussions with them already, and we're looking forward to meeting with them to discuss it further."

Maryland offered Amazon more than $8 billion in state and local incentives for 50,000 jobs when Montgomery County made the list of 20 finalists in the HQ2 contest. Hogan previously had championed Port Covington in Baltimore as his favoured site.

Brian Kenner, Washington's deputy mayor for planning and economic development, said, "We continue to have conversations with Amazon, as we do with other companies, to discuss how the city can collaborate to support job growth and workforce development."

Shortly before Thursday's announcement, Miami Mayor Francis Suarez said he had reached out to Bezos through two intermediaries and was waiting to hear back.

"We definitely think Miami is the best choice," Suarez said. "We're a little bit of the antithesis of New York. We're low taxes, they're high taxes. We are significantly less dense than they are."

Newark was hoping to attract Amazon by offering less political opposition but geographic proximity - right across the Hudson River - to the New York tech talent pool, according to Aisha Glover, president of the Newark Alliance.

Amazon's pullout from New York eliminates a semantic puzzle by giving Arlington exclusive claim to the "HQ2" label.

"It certainly makes it less complicated, whether we called it HQ2 or HQ2B," Arlington's Dorsey said. "I never quite wrapped my head around what to call that."

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