Amazon Backs Off Building HQ2 in LIC NYC
Have the Opponents of the Deal Lost by Winning the Battle?
February 14, 2019 / Long Island City Neighborhood NYC / Queens Business NYC / Queens Buzz NYC.
Amazon, one of the world's largest and most successful companies, has withdrew its plans to locate a second headquarters in the Long Island City neighborhood of Queens. The giant retailer / technology company said it would continue with its other development plans in Nashville, Tennessee and in Arlington, Virginia - but was withdrawing from its plans to set up a second headquarters in New York City at this time.
Queens & NYC Residents Favor Amazon's Plan for HQ2 in NYC
According to a Quinnipiac Poll in December of 2018, 60% of Queens residents and 57% of NYC residents favored the arrival of Amazon HQ2. The reasons for favoring Amazon's move to New York include:
1) The promise of 25,000 new jobs.
2) Pricing pressure to lift rents and real estate prices [beneficial to property owners].
3) Higher tax revenue for the government because of economic growth. The arrival of Amazon HQ2 would increase the NYS / NYC taxable base by billion(s) in annual wages and commercial sales, although some of this would likely have come at the expense of existing businesses.
4) The promise of a tech / business eco-system.
But a Sizeable & Vocal Minority Oppose Amazon's Arrival
But a sizeable and vocal minority opposed the plan. The Quinnipiac poll indicated that 39% of Queens residents opposed the tax incentives [versus 55% who supported them], while majorities in Manhattan and Brooklyn opposed them, and majorities in Bronx and on Staten Island favored them.
Opponents cited the following rationales for opposition to the Amazon move.
1) The $3 billion in NYS and NYC tax breaks.
2) Opposition to unionization by Amazon.
3) The expected inflationary impact on local rents and real estate prices [negative impact for tenants / prospective home buyers].
4) The ground terms of the deal were secretly negotiated by the Governor & the Mayor without legislative input.
The Opposition by Local Pols Was Cited as Squelching the Deal
Amazon issued a statement citing opposition by local pols as its reason for withdrawing from its plans at this time, while simultaneously thanking NYS Governor Cuomo and NYC Mayor de Blasio. Here are a few excerpts from a statement issued by Amazon.
“... we’ve decided not to move forward with our plans to build a headquarters for Amazon in Long Island City, Queens. For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term ... While polls show that 70% [Editor's Note: the percent favoring the move differs from the independent Quinnipiac poll taken in December 2018] 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 ... We are deeply grateful to Governor Cuomo, Mayor de Blasio, and their staffs, who so enthusiastically and graciously invited us to build in New York City and supported us during the process ... We do not intend to reopen the HQ2 search at this time. We hope to have future chances to collaborate as we continue to build our presence in New York over time.”
I added the bold on the last couple of lines, because it seems to indicate that Amazon is still interested in expanding here. As of just before 11 am today, only an hour or two before the announcement was made [lunchtime EST], Amazon's ads pitching the community continued airing on the New York Times website - see graphic above right.
So what's next? Dunno, and I am not sure anyone else does either. Perhaps nothing for a while.
But I conjecture that Amazon, like Google and Facebook who preceded them, will grow its footprint in New York City, even without the special tax incentives. Why? Because New York City is one of the few places equipped to provide a diverse, well-educated, sophisticated workforce to accommodate large and rapid corporate growth. It's worth mentioning that only a couple of months ago, in November 2018, Google announced that it would proceed with a $1 billion expansion in New York City without any special tax incentives.
Meanwhile, remember to do something nice for your loved one and yourself, for Valentine's Day. Life goes on.
- CLICK here to read the rest of our reporting on Amazon's plans to move HQ2 to Long Island City Queens and then Amazon drops plans to move to LIC Qns.
The Times They are a Changing
Amazon Coming to LIC w/ Sites Secured
New Jobs, Tax Incentives, Real Estate & Housing Impacts & Dissent
November 13, 2018 / Long Island City Neighborhood / Long Island City Real Estate / Queens Buzz NYC.
According to a November 13, 2018 Washington Post report, yesterday Amazon, NYC and NYS made public, that half of the second headquarters for Amazon would be erected in Long Island City. The other half is going to Crystal City in Arlington, Virginia; and there was a third award - not of headquarters - but rather a new operations center which is to be erected in Nashville, Tennessee which is expected to create 5,000 additional new jobs there.
The photo at right shows Hunters Point Park South along the East River in LIC. This park is just south of and adjacent to Anable Basin, one of Amazon's new HQ2 sites, and only a ten minute walk from the other one on Jackson Avenue near Citibank.
New High Paying Jobs?
The announcement included that the two new HQ2 units would eventually create 25,000 new jobs - EACH [Long Island City, NY & Arlington, Va]. In Long Island City it was expected that 3,000 new jobs would be added over the next three years, with the remaining 22,000 coming roughly over the course of the coming decade [ending 2030]. The hiring for the new locations will begin in 2019.
The NY Times in a November 12, 2018 report indicated that many of the salaries paid to the people working at the new HQ2 would make upwards of $100,000*, which they contrasted to the median income of those living in the nearby Queensbridge Housing projects where the median income is $15,000. They noted in that report that many local citizens are leery of the change, feeling rents and the cost of real estate will rise forcing many residents to move. We've heard this anecdotally as well.
HQ2 Near Low Income Queensbridge Housing Projects
The same NY Times report also stated that Amazon said it would spend $5 million on jobs training programs and resume workshops to assist Queensbridge Housing project residents. They also said they would provide incubator space for artists and tech start ups.
The November 13, 2018 Washington Post report included some indication of the upside / downside in the real estate market stating,
"Amazon’s growth is also likely to put new strains on housing. Since Amazon’s arrival, Seattle has become one of the most expensive places in the United States to live, forcing lower-income residents to move to far-off suburbs. The city and surrounding King County declared a state of emergency in 2015 over homelessness."
At right is a photo of one of the Queensbridge Housing projects in LIC a couple of years ago. The Queensbridge Housing projects have been the recipient of government investments in recent years, including significant roof repairs. Queensbridge Houses are located about a half mile north of the old downtown LIC by 50th Avenue and Vernon Blvd [St Mary's Church is the landmark] and only a stones throw from Queens Plaza.
Amazon Founder Pledges $2 Billion to Address National Housing Crisis
The report went on to include some heartening news for those feeling threatened stating,
"Since beginning the headquarters search, Bezos and the company have made several announcements that could soften Amazon’s image as it moves to open its second hub. Bezos announced in September that he would donate $2 billion of his own money to support groups battling homelessness in America and to create a network of preschools in underserved communities. In October — after bearing months of criticism from Sen. Bernie Sanders (I-Vt.) over its treatment of workers — Amazon announced that it would raise its minimum wage for all employees to $15 per hour."
The photo at right shows Sunnyside Yards, for which a development plan is in the process of being drafted. Sunnyside Yard is on the eastern border of LIC and it is a large swath of over 192 acres of land that separates Long Island City from the rest of Queens. An NYEDC [New York Economic Development Corporation] spokesperson told me that a study indicated that 180 of the acres are potential development property.
Click here to view a special report series on the Sunnyside Yard.
Market Turbulence: LIC Real Estate Market Supply, Demand & Prices
But real estate speculation appears about to begin, as the November 13, 2018 report by CNN noted,
"The real estate listing website Redfin found searches in the first six days of November grew 345% from the same period last year in Crystal City and 659% in Long Island City."
This has roiled the real estate markets, with sellers ratching up their asking prices, or deciding to rent instead of sell. A memorable quote by developer Tien Vominh in the CNN report was,
"everything's kind of cloudy ... I think it'll settle down once people realize that those 25,000 people are not on a plane headed in this direction."
In recent years LIC has seen the largest residential unit growth of any neighborhood - not just in NYC - but in the nation as well, according to a September 2017 report in the National Intelligencer. Prices for LIC rentals had been languishing the last year or so because of the rapid growth in residential unit supply. There have been reports / rumors of generous incentives being offered to potential tenants, and LIC residential unit sales prices have reportedly been softening. Continued demand, rapidly growing supply and ongoing price fluctuations seem likely in the coming years, as Amazon begins hiring in 2019, while many more residential units are scheduled to come online over the next couple of years. And there's the big unknown regarding the development of most of the 192 acre site of Sunnyside Yard.
In the photo at right is the Anable Basin during the summer time. The Anable Basin is located just north of, and adjacent to Gantry State Park along the East River in LIC. According to the LIC Post, this is where part of Amazon's HQ2 will be located using a combination of public and private land. I hear that the site deals have already been secured.
Dissent: Pros / Cons of Governor Cuomo's Generous Incentives
A November 13, 2018 NY Times report also said that NYS Governor Cuomo pledged up to $1.5 billion** in tax incentives / credits through its Excelsior discretionary fund. And NYS Governor Cuomo offerred up to $500 million in a capital grant to aid Amazon in erecting new buildings. Traditional local and state tax incentives will also be made available to the retailing giant.
In a November 9, 2018 Op Ed in the NY Times former gubernatorial and NYS Attorney General candidate, Zephyr Teachout, and NYS Assemblyman Ron Kim of Flushing / Whitestone / College Point / Murray Hill, took a strong stance against the deal, stating the NYS return on incentives given to businesses is the second worst in the nation [based on a study by the Citizens Budget Committee NY a non-profit watchdog] and that the incentives given by NYS represent 77% of the total tax dollars paid by businesses.
In a November 14, 2018 Democracy Now interview, Queens Assemblyman Ron Kim also accused Governor Cuomo of bypassing the legislature in order to allocate billion(s) of taxpayer funds, to a company controlled by the wealthiest man in the world, to subsidize expansion plans that likely would have occurred with or without the subsidies.
The map at right shows approximately where the Amazon sites are being developed. The Sunnyside Yard, just east of them, represents over 192 acres of a mix of federal, state and municipally controlled land [per Wikipedia] of which 180 of the acres are currently in the planning process for potential future development [NYEDC spokesperson]. A mix of affordable housing has been mentioned as one of the top contenders for site development, but it should be noted that the Administration of former Mayor Michael Bloomberg labeled apartments that rented for over $48,000 per year in Hunters Point South - affordable.
Amazon Cites Economic Impact Using Seattle as Example
According to the LIC Post, One Court Square West [aka the Citibank Building] is where one of the Amazon HQ2 buildings will be located. An NYEDC spokesperson said that Amazon has rented some of the floors in the Citibank Building on Jackson Avenue, but that he was not familiar with any of those details as they were part of a private transaction. In the photo at right you can see the Citibank Building where Amazon will begin working / hiring in 2019.
Winners & Losers of Amazon Arrival
On November 13, 2018 CNN reported that Amazon said that from 2010 to 2016 it added $38 billion to the economy of the city of Seattle - its current headquarters. In a November 11, 2018 report CNN also said that employees who work in Seattle will have an opportunity to relocate.
Lastly, there was a second report in the Washington Post on November 13, 2018 - which by the way is owned by Amazon founder Jeff Bezos, so the Washington Post ought to know - that outlined who it expected to be the winners and losers. The winners are property owners and developers and highly skilled workers, while the losers will be renters, low income residents, commuters due to increased transit volume, some small businesses and rival tech companies.
* The incomes reported by Governor Cuomo have been higher than those reported by news outlets [I heard $150,000 in one report]. This may possibly be due to Governor Cuomo's use of 'average' income versus a more fair metric of 'median' income. Using average income can significantly distort the picture - as by averaging in one or a few very high income earners - the average amount can rise significantly, making up for a lot of lower earning jobs. While median income means that half of the people are earning more than the median amount and half the people are earning less than the median amount. Hence median income is generally considered a more fair metric, as a few big wage earners' incomes won't distort this measure.
** The tax incentives / government subsidy numbers reported / estimated by Amazon and government officials - appear to lower than those reported / estimated by opponents - by totals ranging from $600 million to more than $1 billion.
