Jeff Bezos, the ultimate heartbreaker, made sure that Valentine’s Day 2019 would be a day to live on in infamy for New York City. On that day, the Amazon founder and CEO pulled out of plans to build a new headquarters in Queens. Following the announcement in November 2018 that Amazon would be offered $3 billion in city and state tax incentives to bring 25,000 new jobs to the city, a wave of progressive political blowback emerged, driving Bezos out of Queens. It is now the stuff of endlesshot takes and it made legends out of local lawmakers who led the successful fight against the new headquarters.
Since then, as Amazon has continued to expand both office and factory space in New York, the debate over what was won and lost with the death of HQ2 has endured. Bezos may have swiftly pulled the cord on HQ2, but the fallout has lasted 11 months and counting.
That was more obvious than ever last Friday, when The Wall Street Journal reported Amazon is leasing 335,000 square feet of space in the Hudson Yards neighborhood, where it can house more than 1,500 employees. The kicker: Special incentives weren't required to lure the company this time. Opponents of HQ2 – including Rep. Alexandria Ocasio-Cortez and state Sen. Michael Gianaris, whose district includes Long Island City – rejoiced in a chorus of “I told you so” hammering home their argument that New York didn’t need to offer taxpayer dollars to attract a company that had every reason to locate in New York City anyway. Those who favored HQ2 coming to Long Island City countered that news of the company’s Hudson Yards expansion shouldn’t be celebrated as a victory, only a reduction of New York’s defeat – it’s 1,500 jobs to HQ2’s 25,000, after all. “This is crumbs from the table compared to a feast,” Gov. Andrew Cuomo said.
City & State cut through the impassioned talking points on both sides of the debate to nail down the details of Amazon’s latest expansion and bust some of the myths that have been floating around since the announcement.
Myth: Amazon is creating the same jobs in Manhattan that it would have in Queens.
This one, as former Vice President Joe Biden might put it, is pretty obvious malarkey. When Amazon struck a deal with New York City and state last November to build a second headquarters in Long Island City, the agreement included an understanding that the company would create 25,000 new jobs with an average salary of over $150,000. Within 15 years, the company said they expected to create 40,000 new jobs.
Meanwhile, the company’s new space in Hudson Yards will create the capacity for more than 1,500 jobs, though it’s not even clear that all of these will be new jobs, as opposed to consolidating jobs that already exist in New York in the new office.
In an attempt to “clear up some GOP disinfo” Ocasio-Cortez tweeted on Saturday that “it’s 1,500 jobs vs. 25,000 jobs” is misleading, because the HQ2 job projections were set over 10 to 20 years. The freshman congresswoman is right here – Amazon planned to add only 700 jobs in Long Island City in 2019. But according to the company’s projections (when the deal for HQ2 was still on), that number was set to reach 2,900 over the course of 2020. That’s about double what the new space in Hudson Yards will house.
Myth: There were no strings tied to the $3 billion-plus in tax incentives and subsidies that were offered to Amazon to build HQ2.
Anyone who argued that Amazon was set to receive $3 billion in tax incentives without any strings attached might have felt their nose grow a bit, because New York’s Excelsior Jobs tax credits do, in fact, act as strings.
The oft-quoted $3 billion figure came from a variety of city and state incentives and grants. Amazon would get $897 million from New York City’s Relocation and Employment Assistance Program and $386 million from the Industrial & Commercial Abatement Program – both as-of-right city expenditures for the construction of new or modernized buildings and businesses relocating in Upper Manhattan or the outer boroughs. In other words, they weren’t special gifts to Amazon in particular.
One chunk of the $3 billion figure was a cash grant – $505 million – but it was in scheduled disbursements through 2033 and tied to job creation and investment requirements. In the first year, for example, if Amazon didn’t create a certain number of jobs and reach a promised level of investment, the company wouldn’t receive all of that year’s disbursement.
Also, $1.2 billion of the tax credits came from the state’s Excelsior Jobs Program, first introduced in 2010, which includes a direct subsidy of 6.85% of wages for every new job created, and a 2 percent tax credit for eligible investments. The $1.2 billion number was based on Amazon’s promise of 25,000 jobs, so if the company didn’t follow through, they wouldn’t get all of this after-the-fact credit.
Myth: The fact that Amazon has plans to expand in New York is a new revelation.
When a headline or mobile push alert reads something like “Amazon opening new office and adding 1,000-plus jobs in New York City,” it’s an easy jump to read that as a stunning reversal of Bezos’ rebuke of New York City and its pesky progressives earlier this year. But it really shouldn’t be.
When Amazon announced in February that it would pull out of HQ2 plans, it explicitly stated that it would continue to increase its existing workforce in New York City. “There are currently over 5,000 Amazon employees in Brooklyn, Manhattan, and Staten Island, and we plan to continue growing these teams,” a company statement read. Adding space for 1,500 new jobs – if they are all, indeed, new – is not insignificant, but it shouldn’t be considered a total surprise or indication that Amazon has had a change of heart about needing to grow its workforce in New York City.
Myth: Opponents of HQ2 aren’t doing anything to change the corporate welfare system they railed against.
This one may be only partly myth, but as some have criticized Amazon opponents for railing against the tax incentives offered to the company without doing anything to change how they work, it’s important to note that lawmakers, including Gianaris, have introduced several pieces of legislation inspired by what they think went wrong in the Amazon HQ2 process.
The Daily News editorial board, for example, asked why, if Amazon opponents were angry about the tax incentives, they aren’t trying to fix the existing as-of-right tax incentive programs that would have given the company a roughly $1.3 billion break. Gianaris may not be tackling REAP or ICAP at the moment, but he has introduced legislation that would prohibit non-disclosure and confidentiality terms in certain government contracts. The contest that Amazon set up for localities from all over to compete for its new headquarters – which New York and Virginia jointly won – included a stipulation in its request for proposals that certain aspects of the project had to remain confidential.
Another bill, introduced by state Sen. Julia Salazar and Assemblyman Ron Kim, would create an interstate compact prohibiting company-specific subsidies, so that companies like Amazon would have less to gain from the so-called “bidding war” it set up to determine the location of its new headquarters. These bills haven’t progressed in the Legislature, though Gianaris has said that they will be among his priorities next session.
Myth: When Amazon pulled out of HQ2 in February, it risked the future of tech growth in New York City.
Big Tech is not as popular as it once used to be, as evidenced by various federal and state investigations into antitrust questions and advertising practices of companies like Facebook, and yes, Amazon. So in the immediate aftermath of Amazon pulling out of HQ2 in New York City, some expressed fear that the fight progressive New Yorkers put up against Amazon – and the gentrification and increased housing prices they argued it would bring – would discourage other tech companies from locating or expanding in New York, fearing similar criticism.
It’s hard to tell whether this is a bustable myth just a year since the HQ2 debacle, but so far, it appears that at least when it comes to big tech companies, New York City is still attractive. Several companies, including Facebook, Google and Netflix have announced expansions in New York City, and there may be more yet to come. Just prior to the report that Amazon would lease new space in Hudson Yards, it was also reported that Facebook is considering leasing new space that would add capacity for 14,000 jobs – on top of a previous lease for 1.5 million square feet at Hudson Yards.
But as some have pointed out, much of the growth happening has been located in Manhattan, and proponents of HQ2 always emphasized the fact that the deal would bring major growth to Queens. Over time, it will be crucial to look to whether growth in tech jobs continues in the outer boroughs as well.
Correction: An earlier version of this post incorrectly stated that a $505 million capital grant came without strings attached. It would have been tied to job creation and investment requirements. This post also has been updated to reflect that no special incentives were offered for Amazon’s new Manhattan office.