TL;DR – Amazon would have chosen New York City subsidies or not.
This week, Amazon formally announced that it would split its HQ2 between Crystal City, Virginia and Long Island City (LIC), Queens, confirming a leak reported previously by the Wall Street Journal. After a 14 month long courting process during which hundreds of American and Canadian cities vied for Amazon’s affections, HQ2 landed in two places that had been widely predicted. Amazon, which is headquartered in Seattle, was long expected to establish a presence on the opposite coast. Crystal City, located adjacent to Washington National airport, offers Amazon and Jeff Bezos close proximity to the Federal government and agencies such as the Department of Defense. LIC is of course located at the heart of the most economically powerful city in the world, New York City, with its large and well educated population.
Together, NY City and State proposed four landing spots for Amazon in their bid: Downtown Brooklyn, Hudson Yards, Lower Manhattan and the eventual winner LIC. The Queens neighborhood located at the borough’s southwest corner, which offers a one-stop subway ride to Midtown Manhattan, is the city’s fastest growing neighborhood. More residential units have been built there in recent years that in other development hotspots like Downtown Brooklyn and Williamsburg. However, the neighborhood remains transitional, an amalgam of gleaming high rises, older row houses, warehouses, transportation infrastructure and the largest public housing project in the United States. This housing project, the Queensboro Houses, sits just a half mile from Anable basin, the largest of the proposed sites of Amazon’s HQ2. This proximity highlights one of the main tensions and criticisms of the multi-billion dollar deal to bring the tech giant to New York City.
The median income for a household in the 26 buildings that comprise the Queensbridge houses is $15,843. The advertised median income for jobs at Amazon’s new headquarters is $100,000. The New York City Housing Authority or NYCHA, which owns the Queensbridge Houses runs a $77 million deficit every year and is facing a $17 billion repairs backlog. Families all across New York City in NYCHA homes are forced to grapple with leaks, broken elevators, persistent crime, untreated asbestos and spotty heat in the winter. Rather than spend $3 billion of city and state money on taking a chunk out of the maintenance backlog, that money is instead headed to Amazon as part of the sweetheart incentive package agreed on to bring the company to LIC. Though Amazon has pledged to build a new school, a tech incubator, invest in infrastructure and run career training for Queensbridge residents, most of the benefit for New York City will come more from a more trickle down theory.
To be clear, I am in favor of Amazon setting up shop in New York City. 25,000 new jobs with salaries that can support the city’s expensive lifestyle, thousands of other related jobs for service workers and the establishment of New York City as the East Coast’s leading tech hub are all good things. But, even without huge subsidies from the state and city, its presence could be disruptive to the lives of millions. I do not mean to sound like a NIMBY here. Rather, I am supportive of Amazon’s HQ2 in general but with some important caveats. For one, they must provide money to improve transportation and other infrastructure in Queens that will be further taxed by thousands of new workers and residents. Amazon must also take mitigative measures to prevent rent hikes that lead to displacement, which are inevitable when thousands of new high income people move in. Other actions must be taken to blunt the impact of Amazon’s arrival, all of which would have been possible if the Governor, the Mayor and corporate officials had not gone behind local officials’ backs to shake on this deal.
Any demands on Amazon to improve LIC to mitigate any negative impacts of its arrival must adhere to two landmark pieces of legislation, Nollan and Dolan, which assert that there must be nexus and proportionality to any community benefits asked of a developer. If these demands are deemed to be unrelated to or disproportionate in scale to the impact of that development, then it could constitute an exaction. Reaching an agreement on a reasonable package of benefits for a community is possible under New York City’s land use statutes, which were evaded by Amazon.
Under New York State’s General Project Plan (GPP), New York City’s extensive local review process for projects that trigger a rezoning known as the Uniform Land Use Review Procedure (ULURP) are effectively nullified. By design, there was no opportunity for the city council, community boards or for local residents to sound off on this proposal. There is the possibility that these groups would have moved to block Amazon’s arrival subsidies or not. But, it is unfair to New York City residents that their taxpayer dollars will go towards subsidizing the richest man in the world, while the package of goods they receive in return is small and not necessarily what they wanted or needed. Is there nexus and proportionality for New Yorkers whose tax dollars are subsidizing Amazon? Will what Amazon gives back be enough or what Queens residents need? So far there is not and it is not, therefore this action may constitute an exaction.
There are plenty of reasons why state and city leaders would want Amazon to set up shop in New York City. More than the tens of thousands of jobs it will create, it establishes New York City as the East Coast’s leading tech hub and highlights the economic and cultural prowess of America’s largest city. But, it is because of New York’s status as the “Greatest City in the World” that I would argue companies like Amazon should be competing to set up shop there, not the other way around as has occurred. Scholars and writers on the emergence of global superstar cities, which command the flow of capital, such as Saskia Sassen and Richard Florida posit that there are world cities that exist on a separate plane from their domestic and international peers. New York, along with London, Paris, Tokyo and Hong Kong are among those cities that attract the lion’s share of the smartest people, the biggest companies and the most renowned cultural institutions. New York will continue to get bigger, richer and smarter, while second tier cities scrum for whatever is left. Amazon, one of the world’s largest companies, run by the world’s richest man was always going to come to New York. The mistake of our elected officials was to believe that there was ever really a contest that could be won in part by forking over billions of dollars in taxpayer subsidies.
New York City is not lucky to have been chosen by Amazon for its HQ2 location. Amazon should consider itself lucky that it will have them. Corporations should compete for land in New York, New York should not have to compete with corporations. According to Florida, rich and powerful cities like New York become more so, their gravitational pull of educated people and big companies growing stronger with each new addition. Amazon was always going to pick New York because it is New York, one of only a few super star cities, which positions the company at the control desk of global capital flows. Amazon already knew what a headquarters in New York could do for it. But, before New York City signs off on a deal, Amazon must show New York residents and business owners what it can do for them.