By Joe Dowd and Adina Genn
Amazon CEO Jeff Bezos (AP Photo)
The finger pointing and recriminations were as predictable as they were swift.
The decision by Amazon to abandon its proposed headquarters in Long Island City last week sent political shock waves across the region and the nation. Democrats blamed Democrats; Republicans blamed Democrats and some members of both parties singled out a freshman congresswoman with socialist leanings.
In the end, the anger proved of little consequence. Amazon’s HQ2 was gone and it’s not coming back. In fact, it was never here to begin with.
The business community on Long Island was left to shake its collective head and pick up our pieces of the economic rubble. “We all need to take a deep breath, sit back and look at what happened last week,” said Kevin Law, president and CEO of the Long Island Association.
LIBN talked to numerous community leaders and educators in the wake of the Amazon decision. We asked, “What went wrong, and what is the best path forward?”
What went wrong?
Rajib Sanyal, the dean of Adelphi University’s School of Business, likened the arrival of an Amazon to casting a large stone in a placid lake: the waves are sudden, many, and difficult to navigate.
“If the Amazon.com experience tells corporate honchos anything, it is this: In a democratic society where everyone has a voice, support for locating an outsize facility – whether an office, a warehouse, or a factory – must be garnered first at the grassroots level and then leverage it for endorsement up the political food chain.”
Amazon timeline (click to expand)
Amazon timeline (click to expand)
Sept. 7, 2017:Amazon announces it will build its HQ2, bringing with it as many as 50,000 employees who would earn $125,000. The tech giants calls for proposals from cities across the United States that want to woo Amazon to establish its headquarters in their region.
Oct. 19, 2017:This is the deadline to send in proposals. In total, Amazon announced it scored 238 bids from cities that offer tax breaks and other incentives, as they strive to appeal to the online retailer.
Jan. 18, 2018:Amazon proclaimed 20 finalists, among them New York City, Chicago, Los Angeles, Newark, Dallas and Washington, D.C.
Nov. 13, 2018:Amazon declared there would be two winners: Crystal City, Virginia, and Long Island City, where it expected to spend about $2.5 billion in developing its New York headquarters. Real estate values in Long Island City would begin to climb with the expectations that over the next 25 years Amazon would bring 25,000 high-paying jobs, generate about $27 billion in new tax revenue and receive about $3 billion in tax breaks from the city and state.
Nov. 14, 2018:Community organizers, union leaders and some lawmakers begin to speak out, including at City Council meetings, against Amazons plans. These opponents cite future concerns about displaced residents, an already overburdened public transit system, the company’s anti-union standing, and ‘corporate welfare’ for a trillion-dollar tech behemoth.
Feb. 13, 2019:Amazon executive tell state and city officials that the firm will not open a Long Island City headquarters, reportedly after meetings that included discussions about unionization, according to published reports.
Feb. 14, 2019:The tech-giant announces it’s pulling out of the deal. The decision sparked finger pointing from supporters and triumph from opponents. Amazon said despite rejecting the Long Island City headquarters, it would continue to grow its staff of 5,000 in New York.
That’s essentially what Eric Alexander has been preaching for years.
“I see why it happened, and I think it speaks to how we plan regional projects,” said Alexander, executive director of Vision Long Island, a smart-growth advocacy group that had supported the Amazon project. “…The city and the state really didn’t have a role for the local community in planning how it was going to happen. Instead of being involved in the discussion about how to do it, the community was isolated and not engaged in the planning process.”
In November, Amazon selected New York and Northern Virginia as the winners of a secretive, yearlong process in which more than 230 cities across North America bid to become Amazon’s second headquarters.
New York Mayor Bill de Blasio and Gov. Andrew Cuomo heralded the city’s selection as an unprecedented boon to the region’s economy, generating billions of dollars in revenue. The tech giant was promising 25,000 jobs that paid $125,000, over the next 10 years in exchange for $3 billion in state and city tax breaks.
Over a decade, officials said the company would generate some $27 billion in revenue for the state and city, but the optics of the deal would draw immediate objections.
There was no discussion prior to the announcement about infrastructure at a time when New York’s subway system is crumbling, its roads and bridges in deplorable condition and its housing prices skyrocketing. Where would all these highly paid Amazon people live and what would it do to housing costs? How would they get to work? Who would be displaced in the process?
Congresswoman Alexandria Ocasio-Cortez (AP Photo/Kevin Hagen)
Opposition gains momentum
“We knew this was going south from the moment it was announced,” said Thomas Stringer, a site selection adviser for big companies. “If this was done right, all the elected officials would have been out there touting how great it was. When you didn’t see that happen, you knew something was wrong.”
Those questions and concerns about Amazon’s corporate culture, its anti-union stance and penchant for secrecy, sparked instant protests that grew in the very communities that would be most impacted.
That kind of top-down decision making “almost always leads to opposition from the local community – it’s the wrong path,” Alexander said. “Process does matter.”
In fact, it shouldn’t have come as a surprise to New York officials that their constituents would be alarmed and angry.
“These sorts of protests are not uncommon; they are occurring all over the world,” Sanyal said. “It is now happening here and the megaphone being supersized, the cacophony is louder and being echoed more widely.”
The recent arrival of big corporations in other world capitals, including Dublin, Sydney and Berlin, were all met with protests and extensive debate about corporate responsibility and what role the community was to play in the decision making.
In New York, three people became the face of the opposition: the biggest name was just –elected Congresswoman Alexandria Ocasio-Cortez, a 29-year-old former waitress who had defeated the Democratic machine in a spring primary, ousting 10-term Congressman Joe Crowley.
“Amazon is a billion-dollar company,” she wrote on Twitter. “The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.”
Of course, the economics surrounding such a mega-deal are far more complicated than providing simple tax breaks for Jeff Bezos’ company. That didn’t stop New York state Senator Michael Gianaris and city Councilman Jimmy Van Bramer from condemning it, as well. Both are Democrats representing the Long Island City neighborhood.
“We are witness to a cynical game in which Amazon duped New York into offering unprecedented amounts of tax dollars to one of the wealthiest companies on Earth for a promise of jobs that would represent less than 3 percent of the jobs typically created in our city over a 10 year period,” they wrote in a joint statement.
Opposition grew from union leaders, community groups and other public officials. Meanwhile, Gianaris was appointed to a state panel that had veto power over the project.
The union issue might have been the turning point in Amazon’s decision. In closed-door meetings with Cuomo last week, Amazon officials agreed to a “framework” for unionization at HQ2, Newsday reported. Then, on Feb. 14, Valentine’s Day, Amazon announced it was withdrawing from the deal and leaving New York behind.
Cuomo and others were stunned by the surprise announcement. Others declared victory:
“Today was the day a group of dedicated, everyday New Yorkers and their neighbors defeated Amazon’s corporate greed, its worker exploitation and the power of the richest man in the world,” Ocasio-Cortez wrote on Twitter.
Regardless of one’s political leanings, it is clear a new force in American politics has emerged and flexed its muscle – younger, left of center and motivated. Many experts say addressing the needs of grassroots organizations and common citizens, including an up-and-coming generation, is essential to forge successful economic development projects, whether big or small.
In this Feb. 8, 2019 file photo, Kevin Law speaks at a meeting of the Long Island Association in Woodbury. (Kevin P. Coughlin/Office of Governor Andrew M. Cuomo)
Lessons for next time
“In the short-term, if you look at Long Island and New York City as a regional economy, we’re very connected,” Law said. And “statistically, everything was heading in the right direction.”
Unemployment is low and the post-recession recovery in real estate continues. The Amazon decision, he said, was a blow not so much for the short term but the long term.
Adelphi’s Dean Sanyal said that while the city faces challenges ranging from overburdened transportation, class divisions and a troubled education system, the region, including Long Island, can be more accommodating to opportunities.
“New York City, as a magnet for talent, as the pre-eminent center for global finance, and as the unmatched inviting space for creative pursuits – it will continue to spawn new entrepreneurial ventures,” Sanyal said.
“Providing a welcoming and collaborative environment for business development and tourism attraction for our region is vital for strategic growth and economic advancement,” said Kristen Jarnagin, president and CEO of Discover Long Island, the tourism organization, who described Amazon’s loss as “devastating.”
For Long Island, the fallout leaves a particular challenge.
When people outside of New York hear “Long Island City rejected Amazon, they think it’s Long Island,’ making it “doubly difficult for us,” said Richard Kessel, chairman of Nassau County Industrial Development Agency.
The IDA had begun to make strides towards a plan for workforce housing and enhancing the supply chain into Amazon, he said.
And other tech companies are expanding in the city, and could benefit from the talent here.
“When we don’t market ourselves as a region, we become so Balkanized,” Law said. Future big projects need participation “from the local community. It can’t be directed from Albany and New York City, or even Mineola or Hauppauge…. Otherwise it faces a tough approval process.”
“To compete in a global marketplace, the narrative about our destination – and the place we call home – must strike a positive and inviting tone,” Jarnagin said. “It’s imperative that, moving forward, we are vocal and supportive of developments that enhance the quality of life for current residents as well as future generations.”
For future proposals, the needs of the local community should be addressed upfront, said Rakesh Gupta, an associate professor of business at Adelphi. They include spelling out employment opportunities for residents, rather than “outsiders,” training the workforce for 21st Century jobs, and finding ways to rein in housing costs, he said.
“Businesses that can positively address those concerns would be welcomed into the community,” Gupta said.
Kessel noted that the “days of pushing projects and paying pilot programs are over,” citing an effort to “make ourselves more transparent.”
With future projects, Law said officials would be wise to “bring in regional stakeholders, and educate them, saying ‘Here’s a great project. Here’s what we get. What are your major concerns? Let’s address your concerns.’”
Stringer, a managing director of the consulting firm BDO USA LLP, said city and state officials need to rethink the secrecy with which they approached the negotiations.
“It’s time to hit the reset button and say, ‘What did we do wrong?’” Stringer said. “This is fumbling at the 1-yard line.”
“Our region has been tarnished, but we can overcome it,” Law said.
The Associated Press contributed to this report.