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Amazon Pulls Out of Headquarters Deal in New York City

This Dec. 12, 2018 file photo shows State Assemblyman Ron Kim, center, as he speaks at a rally opposing New York's deal with Amazon, on the steps of New York's City Hall.

This Dec. 12, 2018 file photo shows State Assemblyman Ron Kim, center, as he speaks at a rally opposing New York's deal with Amazon, on the steps of New York's City Hall. AP Photo

 

Connecting state and local government leaders

But the company won't reopen the search for a new location.

After months of criticism from elected officials in New York unhappy about the incentives offered to Amazon to establish a new campus in Queens, the online retail giant announced Thursday it is scrapping its plans. 

In recent days, officials across the country—from nearby locations like Newark and Connecticut to Chicago—have publicly suggested the company should instead pivot to their areas. But Amazon attempted to tamp down those efforts Thursday, saying in its statement that the company does not "intend to re-open the HQ2 search at this time."

"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," according to the company's statement

Amazon in November announced its decision about where to establish its coveted second headquarters, which over a year had spurred cities and states to offer massive incentive packages.

In a twist, instead of just a second HQ, the company announced it would build two more big campuses: one in northern Virginia outside Washington, D.C., and the other in the Long Island City neighborhood located in Queens in New York City. Each of these new headquarters eventually would have at least 25,000 employees, the company said. At the same time, Amazon said it would establish a smaller operations facility in Nashville, Tennessee, which would deal with transportation and supply chain activities.  

The incentive package Amazon would have received in New York was much larger than the deal Virginia offered. In January, Virginia lawmakers approved up to $750 million in subsidies, while a local county will vote on $23 million in incentives in March. News reports have estimated the local and state package in New York approached $3 billion. 

Almost immediately after the New York deal was announced, local lawmakers criticized the arrangement, saying the company was getting too much and the impacts on local infrastructure would be enormous. At the same time, they said the influx of 25,000 new workers into Queens would deepen the affordable housing crisis in the city.

But as recently as this week, Mayor Bill de Blasio and Gov. Andrew Cuomo, both Democrats, have defended the proposals, saying Amazon's campus would have brought high-paying jobs.

In its statement, Amazon said that most New Yorkers supported the idea of its campus in the city, but they would not move forward without political support. 

"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," the statement read. "We are disappointed to have reached this conclusion—we love New York, its incomparable dynamism, people, and culture—and particularly the community of Long Island City, where we have gotten to know so many optimistic, forward-leaning community leaders, small business owners, and residents."

Although Amazon said it will not re-open the HQ2 bidding war, cities and states are still reaching out to the company, suggesting they give them another look. The Chicago Tribune reported that Mayor Rahm Emanuel and Illinois Gov. JB Pritzker sent a letter to the company Thursday describing progress that has been made on property Amazon selection team members visited last year. Maryland Gov. Larry Hogan told the Washington Post that the state had already "had preliminary discussions" with the company.

Virginia officials told reporters that they didn't expect any change in their deal with Amazon. The company is slated to receive $550 million in incentives for hiring 25,000 workers and can get another $200 million if that number is increased to 37,850 by 2038, WAMU reported

In New York, some critics of Amazon's heavily subsidized move into Queens said the company should have engaged with their arguments instead of just withdrawing. “Amazon showed its true colors today and every American should be outraged. Jeff Bezos had the opportunity to listen to the voices of working families and support the good-paying jobs New Yorkers deserve," said United Food and Commercial Workers International Union President Marc Perrone. 

Cuomo in a statement blasted " a small group of politicians" for killing the Amazon deal, saying it had been an opportunity to diversify the city's economy away from Wall Street and real estate. "The New York State Senate has done tremendous damage. They should be held accountable for this lost economic opportunity," he said. 

As City Lab reported on Thursday, some of these elected officials want to keep pressing forward on efforts to squash incentive packages like the one offered Amazon, with two lawmakers introducing legislation to limit the state's ability to offer project-specific subsidies.

Laura Maggi is Managing Editor at Route Fifty and is based in Washington, D.C.

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