New York’s deal to bring Amazon’s new headquarters to Long Island City has had no shortage of opponents, who argue that Gov. Andrew Cuomo and New York City Mayor Bill de Blasio’s private dealings with the trillion-dollar company have robbed city and state lawmakers – and taxpayers – of a say in the process. Now, the public finally has a glimpse at how New York lured Amazon in the first place, thanks to the release of New York’s response to tech giant’s nationwide request for HQ2 proposals.
Here are five ways New York struck a bargain with the behemoth.
Sacrifice Governors Island
In its joint proposal, the city and state didn’t only offer up land for HQ2 – they also introduced the idea of an extension campus on Governors Island, should Amazon want to expand beyond its new headquarters. Calling the site an “urban oasis” – the island a summertime getaway for city families – the proposal highlights nine different structures and spaces already existing on Governors Island that could serve Amazon in different ways. There’s 515 Hay Road – the former site of a 61,000 square-foot hospital – which was proposed as a venue for Amazon Academy, where the company could house mentorship programs with local academic institutions. There’s a 700-seat theater and adjacent YMCA that was cited as a possible Amazon Cinema & Community Center, where Amazon Studios could premiere its new shows as well as promote the work of local filmmakers.
And then there’s the suggestion that housing regulations on the island could be worked around. “Though residential use is not allowed on Governors Island, dwellings directly associated with tenants and short-term stays of less than six months may be possible, creating opportunities to house visiting staff and project teams for short stays,” the proposal says.
The island’s unique management would also make developing for Amazon’s purposes relatively easy, the proposal says. Of the island’s 173 acres, 150 are controlled by the Trust for Governors Island, a nonprofit charged with redeveloping the space for commercial, educational and not-for-profit use. With authority over development in those 150 acres, the trust could be a “true partner for Amazon,” the proposal points out.
Some assembly required
In its request for proposals, Amazon asked bidders to outline the incentives that the company would be eligible for, or what would be made available to them. “We acknowledge a Project of this magnitude may require special incentive legislation in order for the state/province to achieve a competitive incentive proposal,” the RFP said. “As such, please indicate if any incentives or programs will require legislation or other approval methods.”
New York may have improved its odds by asserting that there are zero legislative obstacles to the incentives it laid out, which include the state’s Excelsior tax credits, the city’s Relocation and Employment Assistance Program – or REAP – credits and the Industrial and Commercial Abatement Program property tax abatements. “These programs have been legislatively authorized,” New York’s proposal states. “No additional legislative authorization is required.”
That claim is misleading at best. The Excelsior program is set to expire in 2026, and has an annual cap of $183 million – which is far short of the $1.2 billion in breaks promised to Amazon through the program, and is even set to decrease in the coming years. The tax credits offered to Amazon would require the Legislature to expand the program and raise the cap.
What subway problems?
While New York City’s mass transit system was always poised to be a major pull for Amazon, the chaos that has plagued the the subways recently may have been a sticking point. And with New York ranking as the fifth most congested region in the nation, the city and state had to downplay street congestion while skimming over the current troubles with the trains.
So the proposal spun congestion as a positive: “Street congestion is highly correlated with economic success,” the report states, noting other tech hub cities like San Francisco and Seattle as comparably congested. “In short, in a thriving urban environment, congestion comes with the territory.” It then pointed out that 80 percent of commuters into the central business district use public transit, avoiding mentioning problems like overcrowding and delays.
No property? No problem!
Of the 24 Long Island City spaces outlined as possible sites HQ2, nine would require land-use action, according to the proposal. But in order to knock down some of those possible barriers, the proposal included an offer to acquire necessary property through Empire State Development, as first reported in The Wall Street Journal.
“The agency’s statutory authorities allow it to catalyze real estate development that supports economic growth in New York State,” the proposal says. “Subject to public approvals, ESD is empowered to acquire, encumber and dispose of any real property interest, including through eminent domain.”
Look to the children
A significant portion of New York’s proposal was dedicated to the amount of talent in occupations Amazon singled out as important, like software development and engineering. In employee counts for those occupations, the proposal states that the New York-Newark-Jersey City area has more software development engineers than any other major metropolitan area, and is second only to the Los Angeles area in terms of other engineers. It’s notable, too, that the Washington-Arlington-Alexandria area – where the second new Amazon headquarters will reside – has the second-largest workforce in software development.
But seeing as Amazon’s HQ2 is a decades-long investment, it’s not only the current size of the workforce that matters, but the opportunities for raising a whole new generation of Amazon workers. The proposal cites New York’s “built-in talent pipeline,” boasting 19 percent growth in the tech sector in recent years. And while partnerships with higher education institutions like LaGuardia Community College were emphasized as ways to connect local talent to job growth, there’s also a focus on earlier education: The proposal mentions that the state is exploring a computer science education initiative that, if implemented, would invest $5 million in teacher training across New York schools and make high school graduation contingent on students taking at least one computer science course.
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