Talking Amazon.
Amazon has certainly been dominating the news cycle lately, and for more reasons than one. The main concern we’ve heard repeated by clients and friends centers around the ramifications of Amazon’s pulling out of the Long Island City deal, and more specifically, what’s this mean and why did it happen? The answer will depend on who you speak with about it. We asked two prominent in-the-know locals the same sets of Amazon questions, and we present their post-mortem thoughts for you here and free of editorial. Naturally, we have our own opinions. Hopefully what you read below will help you formulate or affirm your own.
Adam Good is the Chief Operating Officer of Largavista Companies, where his responsibilities include overseeing Largavista’s real estate portfolio, managing tenant relationships and exploring alternate uses for existing assets, including new development opportunities. Largavista has owned multiple properties in Long Island City since the 1980s.
Doug Schneider is in his first term as the Democratic District Leader for Brooklyn’s 44th Assembly District representing parts of Park Slope, Windsor Terrace, Kensington, Borough Park, Victorian Flatbush, Ditmas Park, and Midwood. He is a longtime community leader and attorney and has been active in Democratic politics for over 20 years.
What do you think the real life and immediate merits of Amazon moving here were?
AG: It would have been an immediate boost to the local and state economy. Services in Long Island City would have improved that much faster because the city would have had to prepare for this large influx of new people both on the residential and commercial side. And in fact, this had already started to happen. In October, shortly before the Amazon announcement, the city announced the Long Island City Investment Strategy where $180mm was to be invested for infrastructure improvements etc.
In Long Island City itself, existing local business would have thrived with the addition of thousands upon thousands of new employees every year. In addition, there would be entrepreneurs choosing to open their businesses in Long Island City because of the knowledge that Amazon was coming to town. Another important point to keep in mind is that New York City has historically relied on the finance industry. And while we are growing other industries, specifically in the tech world, the addition of Amazon would have diversified New York City immediately in a way that is not otherwise achievable. As New Yorkers, we all benefit when there are more jobs, a greater tax base, and therefore the ability to make the expenditures that are necessary to carry our city through the 21st century. A huge opportunity was lost.
DS: I would phrase the question the other way around. The question is, what were the problems with Amazon moving here? I think first and foremost New York City has to act like New York City, and stop pretending we have to offer businesses incentives in order to be where they want to be in the first place. I don’t think you can talk about the positives and negatives without first talking about 5 billion dollars in tax incentives, of which 3 billion are coming from New York City. That is the context. If you take that piece away, the conversation is different.
The second part is that Amazon’s entire business model is to not pay its fair share, to NOT pay taxes and to oppose workers attempts to unionize. And the third part is Amazon’s cooperation with ICE and it’s intent to sell ICE on its facial recognition software. So you can’t take Amazon and that 5 billion dollars out of the conversation. The other argument has to do with the jobs Amazon is creating. It’s not creating jobs! It’s moving jobs. To the extent that it’s creating jobs, it’s creating tech jobs that already exist in the city, which other companies are competing for, and does nothing to address the job prospects of the local unemployed. And it does absolutely nothing to help affordable housing. When high-income people move in, any real estate development that takes place in LIC will be pitched to the high-income individual at the expense of the folks that live there and have lived there for decades, and they will see very little benefit — I don’t want to say “no benefit” — but there’s very little benefit for them to Amazon coming there.
What were the opponents to this deal upset about?
AG: When you drown out the noise, the opponents were upset that they were not brought into the process when the initial “deal” was being struck. Looking back, could there have been more engagement of local politicians? Sure. And maybe that will be one of the lessons taken from this debacle but that shouldn’t have been the reason that this opportunity slipped away. Everyone understood that States and municipalities throughout the country were putting their best foot forward to convince Amazon to come to their city. One of the main gripes revolved around the fact that the State has the ability to avoid the normal city land use process (ULURP) and use what’s called GPP (General Project Plan). This is the exact fact pattern where the use of that program makes sense. The executives, in this case, Governor Cuomo and Mayor DeBlasio did exactly what the chief executives of a city and a state should do. They utilized the tools at their disposal and made the case for New York. And it worked. It was such an amazing benefit to Long Island City and all New Yorkers that they could not have imagined it would get derailed by a small but very loud group of voices. Unfortunately, we live in a world of tweets and instant headlines which oftentimes obfuscates the facts. The argument that one kept hearing over and over was that this was a huge giveaway to one of the largest companies in the U.S. The truth is that a large part of the subsidy offered to Amazon, i.e. REAP, ICAP etc., are all as of right programs that are available to any business or developer that is either relocating jobs to Long Island City or redeveloping an under-utilized property. And the State Excelsior program, while discretionary, exists for exactly this purpose. And that is to incentivize business to come to New York and create jobs. To the extent there was subsidy that was not as of right, the payback on those investments was phenomenal — through tax revenue etc. And it should be noted that much of the subsidy was directly tied to job creation, so this is not a situation where you give somebody a check and cross your fingers that they do the right thing.
DS: Same three things I mentioned before are the leading things. The fact that other tech companies who are as big or almost as big as Amazon exist in the city and we didn’t have to pay them a penny. Amazon’s race to the bottom tactics, some have called it their “Hunger Games” tactics to try to extract as much as possible — is offensive. New York City needs to stand on the fact that it’s New York City. If Amazon were talking about going to areas of New York that were really struggling, upstate New York, then I can understand tax incentives. But to give tax incentives to come to New York City doesn’t make any sense to me. So that’s the first part. The second part is, what do you get for those tax incentives? Well, you’d like to think that it will go toward the tax base. But Amazon doesn’t pay taxes! So this promise of tremendous impact is minimal.
And the fact the government signed an NDA with Amazon is really troubling because they did this deal without input, and they kept it from scrutiny until it was done. And I think that will be the last time that happens. I know that Councilman Brad Lander has a bill to prevent these types of NDAs, which I think is a really good idea.
I hope as other cities attempt to do these deals that they look and see that they have the political power to stand a little bit firmer in their negotiations.
Does Amazon’s consideration of LIC as a corporate home open the door for other start-ups and companies to give it a try? Or will this turn of events be a deterrent for companies to consider NYC in the future?
AG: Long Island City is already the fastest growing city in all of the country and that’s without Amazon. What the Amazon process accomplished was that the rest of the country, and indeed the world, has now gotten to see what Long Island City has to offer. Having one of the largest companies in the world choose Long Island City as its first choice to locate one of its new headquarters solidifies Long Island City as a viable option for any company looking to plant its flag. And to that end, Long Island City is already drawing many other businesses to the area with its exceptional live/work offering. Long Island City will thrive and New York City will thrive because companies flock to talent, and New York City as a whole has the talent. With that said, this is certainly a setback because there will be doubt that as a city and a state we can deliver on our promises.
DS: There is NOT an anti-development sentiment here, that’s not what was driving the opposition, it’s not that we don’t want business to come to New York or Long Island City. Just because Amazon and this deal wasn’t the right fit doesn’t mean that no one will ever be the right fit. It was just this particular deal.
There’s this belief that New York, I think I read in Forbes, that we were sending out this anti-corporate message to other companies and I just want to reiterate I don’t think that’s true at all. Plenty of tech companies exist in New York. They want to come to New York because we have tremendous talent and innovation and they want to be close to sources of investment, they want access to the Northeastern markets, and just because Amazon isn’t coming to Long Island City doesn’t mean the next company with a different approach and different policies wouldn’t be completely embraced by New York City and some of us Progressive folk.
In your mind, could an agreement have been reached that would have pleased both camps?
AG: I’m really not sure because it’s not clear to me what those against Amazon’s HQ2 really wanted. I think most were grossly uninformed. And those that weren’t, were upset they were not included in the process from the beginning. This will be remembered as an epic failure where the tyranny of the minority won out against the majority of New Yorkers.
DS: The lawyer in me believes that two sides should almost often be able to mediate a dispute. If Amazon had committed to being good neighbors, to paying their fair share, to allowing their employees to organize for fair wages then it’s a completely different conversation. So do I think a deal could’ve been worked out? Yes, I think a deal could’ve been worked out. Would it have been a deal that Amazon would have signed? Probably not, because when you move from theory to reality, any palatable deal would have required a fundamental change in their corporate strategy of not paying taxes and not allowing employees to organize and agitate for better working conditions.
How do you think this will affect local businesses in LIC that were gearing up for the Amazon influx?
AG: When you’re anticipating the addition of 25,000 to 40,000 new employees and their friends and families that would have been living, working, shopping and dining in Long Island City and the surrounding areas and now those folks are not coming, that’s obviously a negative. With that said, Long Island City is thriving and there are other new businesses and developments coming to LIC that will benefit the community and in particular local business. From Life Science development to the tenancy of Bloomingdales at the Jacx and all of the tagalong businesses that will follow, LIC is headed in the right direction. Despite the fact that Long Island City was deprived of one of the largest economic development projects in New York’s history, it’s future is bright.
DS: I think it depends on what local business you’re talking about. I think Amazon as an online company is ultimately harmful to local business and I’m not sure that their physical presence makes that much difference compared to their business model which we know is having a tremendous effect on small local business.
