It’s Not You, It’s Your Officials: Amazon Cancels HQ Plan for NYC

Xconomy New York — 

[Updated, 02/15/19, 8:50 CT] After a whirlwind courtship and brief engagement, Amazon has broken off its plans to establish another headquarters in New York’s Long Island City neighborhood.

Amazon (NASDAQ: AMZN) rationalized its Valentine’s Day breakup with the Big Apple by saying that the problem was state and local officials, not New Yorkers themselves. A number of these officials made it clear to the Seattle-based company they oppose its plans to drastically expand its presence in New York, and they will not build the type of relationships the headquarters project requires, Amazon said in a statement Thursday.

Despite having scrapped plans for an undertaking that would have created an estimated 25,000 jobs in the city, Amazon told the spurned New Yorkers that it wants to remain friends. It has 5,000 employees in Brooklyn, Manhattan, and Staten Island, and plans to grow that presence, the company said in the statement.

“We are disappointed to have reached this conclusion—we love New York, its incomparable dynamism, people, and culture,” Amazon said in the statement.

Amazon’s about-face represents a blow to New York Mayor Bill de Blasio and Gov. Andrew Cuomo, both of whom championed the project over the past year-plus. Meanwhile, State Sen. Michael Gianaris, who has been an outspoken opponent of Amazon’s development plans in the city, is among those being cheered by critics of Amazon for standing up to the company.

[Updated with new reaction to Amazon’s decision.] But some in New York, who welcomed the Seattle company’s move to the Big Apple, now feel left at the altar. One of them, Sam Musovic, who owns apartments in the Queens neighborhood of Long Island City, said he invested over a million dollars into his facility anticipating new tenants, only to have Amazon “leave him with nothing but the bill and a broken heart,” according to a press release Friday morning.

Musovic says he and other property owners will protest outside of the Amazon Books location Friday afternoon and are considering legal action, the prepared statement said.

Amazon announced in November it would pick New York City and Arlington, VA’s Crystal City neighborhood as the two locations for new headquarters after a year-long search. It had previously indicated it would pick only one new location for its so-called HQ2, and instead selected those two locations from a list of 20 finalist cities.

The e-commerce and Internet giant said it would invest $5 billion to build the two new headquarters, which would together have had about 50,000 employees. But Amazon didn’t want a one-sided relationship. Amazon was in line to receive around $1.53 billion in state tax credits and other incentives from New York, and around $573 million from Virginia.

That likely contributed to some of the tension Amazon is saying caused the breakup. The New York Times wrote in a headline, “Amazon’s HQ2 Will Benefit From New York City. But What Does New York Get?” and CNBC followed up with, “All the things New Yorkers fear about Amazon’s HQ2 (and a little optimism).” Those fears include lack of local input, congestion, exacerbating existing housing affordability and cost-of-living concerns, economic inequality, an increase in homelessness—even as Amazon allegedly pays a strikingly low federal tax rate, according to the Institute of Taxation and Economic Policy.

“Rather than addressing the legitimate concerns that have been raised by many New Yorkers Amazon says you do it our way or not at all, we will not even consider the concerns of New Yorkers—that’s not what a responsible business would do,” said Chelsea Connor, director of communications for the local Retail, Wholesale and Department Store Union, after Amazon’s decision to cancel its plans to expand in New York.

Amazon didn’t say who the “officials” were that caused it’s decision, but local centers and union leaders voiced numerous concerns about the rationale behind offering a large corporation such sweeping benefits. Amazon did make it clear Thursday that it was not Cuomo or de Blasio. In the brief 360-word statement released online, Amazon thanked the state’s two most prominent officials for their grace and enthusiasm—twice.

A Quinnipiac University poll released in December found 57 percent of registered New York City voters supported Amazon’s plans to build a headquarters there, while 26 percent of them disapproved of the company’s plans. However, respondents were nearly evenly split when asked if they were in favor of the economic incentives offered to Amazon; 46 percent of voters said they approved of the incentives, while 44 percent said they did not, according to a news report.

Meanwhile, Amazon indicated in its statement that the problem isn’t necessarily that three’s a crowd. Amazon did say that it does not plan to reopen its HQ2 search, adding that it will proceed as planned in Northern Virginia—and in Nashville, where Amazon said also in November it would add 5,000 corporate jobs. Speculation has already started about whether Amazon may upgrade Nashville’s HQ relationship status, though local officials said not to expect any changes.