So does Amazon need New York more than vice versa? The talent is here, but...

As consternation rises about whether Amazon is really threatening to pull out from the tentative deal to establish a campus--half a second "headquarters"--in Long Island City, there's debate from all sides.

One thing to remember is an exchange from the December hearing at City Council.

“Did you need the $3 billion [in incentives] in order to come to New York?” asked Council Member Jimmy Van Bramer.

“Talent was the primary driver for our decision,” said Amazon’s Holly Sullivan. “Incentives were certainly a part of that process."

That's inconclusive, but it certainly suggests a lot of wiggle room. After all, tech companies are expanding in Manhattan without the same subsidy package.

(With Atlantic Yards, did the New Jersey Nets need incentives to become the Brooklyn Nets? Well, it did turn out that everything was more expensive, and less remunerative than they projected, but... the team owners were desperate to move to a major media market and a brand-new arena, with luxury suites. So the city and state could've driven a harder bargain or, at least, asked for some of the upside when the team value rocketed.)

So let's summarize some of the arguments.

NY Mag's Josh Barro: Queens is the issue

In a 2/8/19 article in New York Magazine's Intelligencer,  The Amazon-NYC Deal Can Fall Apart Because New York and Amazon Don’t Need Each Other, Josh Barro wrote:

Unlike some other cities that wrote their HQ2 applications as part of a revitalization strategy, New York doesn’t need to be revitalized. Demand for all kinds of real estate is strong here, the job base is strong, and a strategy to subsidize a large new employer is likely to just bid up rents — for both office space and apartments — rather than raise existing residents’ standards of living.

He's argued that the best justification for the $3 billion in subsidies (most nondiscretionary, with clawbacks) is that it would launch an office core in Queens, and possibly jump-start a high-tech cluster there. But he doesn't think it's worth the subsidies. (There's also an override of zoning, and a seemingly sweet land deal.)

Amazon's already here, as are several tech companies; Barro suggests that, if the subsidy deal falls apart--including $500 million for construction--the company would expand, but more modestly, in Manhattan.

Richard Florida in NY Daily News: Amazon needs New York

Academic and consultant Richard Florida, in a 2/8/19 Daily News op-ed, Amazon needs New York: This is an opportunity for the mega-corporation to broker a new deal with the city and state, suggests:

It would be a disaster for Amazon’s brand to pull out of New York, showing that the analytically minded company not only got it wrong after such a long and protracted process, but confirming what many of its fiercest critics have said all along — that the nearly trillion-dollar company couldn’t care less about the places it does business.

So he said the company should reject the incentives and pay taxes, thus contributing "to affordable housing, workforce development and improving the city’s decaying transit system."

Florida's fighting a dysfunctional system; he describes his failed effort to "organize the mayors of the 20 cities that were on Amazon’s shortlist to declare a mutual nonaggression pact," agreeing to refuse tax breaks and incentives.

He concludes:

The bottom line is this: Amazon needs New York much more than New York needs Amazon. The city has enough momentum, enough talent, enough jobs, enough of a finance sector, enough of a real estate industry, enough of a startup sector, and enough of a media industry to keep on growing and growing, with or without Amazon.

Kenneth Jackson in NY Times: No, NY needs Amazon

In a 2/12/19 New York Times op-ed, New York Needs Amazon, subtitled "History is clear: A city that rejects economic opportunity will lose its status as the center of the business world," Columbia University historian Kenneth T. Jackson--organizer of exhibitions that cast a new glow on Robert Moses--agrees with the critics, to a point.

"It is absurd that any city would agree to such a deal," he writes. "But this is how the game is played."

But if different cities offered subsidy packages of different value, they came from different positions of strength. Jackson thinks that, in the "historical context, New York’s deal for Amazon is not a bad deal at all."

He thinks that the city, having lost "its manufacturing base and its role as the busiest seaport on earth," needs Amazon. (Then again, his citation that "Amazon is expected to pay more than $27 billion in taxes over the next 25 years," is based on self-serving state estimates.)

“They are right about one thing. It is absurd that any city would agree to such a deal. But this is how the game is played.” I mean, come on. The crux of the analysis, insofar as there is any, is: 🤷🏻‍♂️

— Jeremy Levine (@Jeremy_Levine) February 13, 2019

NY Times analysis: what's changed

In a front-page Times article today, published online as Why Amazon Is Caught in an Unexpected Brawl in New York, J. David Goodman suggests that a change in Western Queens politics, notably the rise of leftist Congressional Rep. Alexandria Ocasio-Cortez, has lift anti-Amazon activism, despite support from the top and general sentiment--according to generously worded polls in favor of the deal.

I don't quite buy this:

Gov. Andrew M. Cuomo and Mayor Bill de Blasio, famous antagonists, had promised executives they could smooth the road in a city that has never been afraid to turn down big projects, from a highway down the West Side of Manhattan in 1985, to an Olympic stadium in 2005.

Two projects in the last 34 years represent anomalies, not a trend. After all, Westway was defeated in court, despite overwhelming sentiment from the powers that be, and the Olympic stadium was nixed by one man, Assembly Speaker Sheldon Silver, who thought the project would damage his Lower Manhattan neighborhood.

Now that state Sen. Michael Gianaris, is on the Public Authorities Control Board--from which Silver killed the stadium--concerns have risen that Amazon's plans would go to naught when they face a vote next year. The article notes that Gianaris, unlike some opponents who want to kill the deal (and others who want it to accept unions or revise the terms), remains cagey.

Meanwhile, Amazon is building public support, planning to announce a hiring plan, and helping organize rallies in support.

The article ends, dubiously in my mind, with a quote from Tyquana Rivers, a Democratic political consultant--um, lobbyist--who blames gentrifiers for criticizing the plan. “You have moved into a neighborhood that was already moving upwards in rent,” she said. “You’re complaining about something you’ve done. The hypocrisy is deafening.”

Public reaction to @Amazon #HQ2 deja vu for #AtlanticYards veterans: citywide support, local opposition; local fight portrayed as schism between long-time residents and new arrivals. Moves focus away from question of economic equity. https://t.co/FExwdhOSTT

— Gib Veconi (@GibVeconi) February 13, 2019

Are the tax breaks worth it

Timely is a 2/12/19  Gothamist article from Neil deMause, How A Useless $400 Million Tax Break For NYC Developers Chugged Along For 20 Years, which notes that no city or state official "has attempted to evaluate what kind of bang—in job creation, new tax revenues, or new development—the public is getting for all its bucks."

The article cites a New York City Independent Budget Office report last November as the first attempt to do so, which warned that the evaluation "did not show CRP [Commercial Revitalization Program] or CEP [Commercial Expansions Program] to be effective in these regards." (Note: these are not the programs that Amazon would take advantage of, but the concept is similar.)

deMause cites state Sen. Franz Leichter as criticizing the lack of a market study, while his colleague, bill sponsor Sen. Martin Connor, declared that the real estate industry believed it would work. (Note: studies aren't always accurate, either.)

The article notes that the programs being offered to Amazon, such as the Relocation and Employment Assistance Program (REAP), are also up for scrutiny, and could be trimmed.

CBC: rethinking subsidies

Also timely is a February 2019 policy brief from the Citizens Budget Commission, 10 Billion Reasons to Rethink Economic Development in New York, which updates two previous analyses of the cost of New York’s state and local economic development programs. The CBC notes:

Although spending growth continues, important reforms to improve transparency and accountability have not been made.2 In the 2018 session, the State Senate passed three bills to create a database of economic development deals, establish a unified economic development budget, and reform procurement by restoring the State Comptroller’s oversight of contracts made by the State University of New York, City University of New York, or the state’s Office of General Services, which previously had been eliminated.
Both a database of deals and procurement reform were included in the Governor’s book of proposals released with the State of the State, and the Executive Budget includes an appropriation to fund the creation of a database. However, these proposals are not included in the Article VII bills accompanying the Executive Budget, so they would not have the strength of law. These reforms should be codified in statute and passed by the legislature in this session. In addition, further reforms are needed: a unified economic development budget that includes information on the costs of all economic development programs for the coming fiscal year; standardization of metrics across programs to allow for comparability of results; and program design improvements so that benefits follow private sector investment, eligibility is standardized, and results are evaluated regularly.

Some AY triumphalism

And we shouldn't neglect this Real Estate Weekly article today, headlined Amazon uproar causes deja vu for building boss, which cites New York Building Congress President Carlos Scissura:

According to Scissura, who delivered his comments as part of a panel convened to discuss how Amazon’s Long Island City-slated HQ2 and New York’s infrastructure fit together, he has the benefit of hindsight when it comes to controversy of the deal.
“As someone who lived through the Atlantic Yards fight for a decade, I always tell the story about the opening night of Barclay’s [Center], my former boss, Marty Markowitz and I went… and we saw so many of the opponents enjoying a Nets game,” said Scissura. “I was maybe a little shyer then, but [Markowitz] of course was not and he advised them what he thought of them being at the game after opposing it.
“I’m not able to repeat that language in an audience like this, but let’s just say it wasn’t pretty.”

Many of the opponents there the first night? News to me. And do note this 2013 debate over similar told-you-so claims.