The Daily - How New York Lost Amazon

Episode Date: February 21, 2019

Supporters promised an economic transformation that would benefit generations. Opponents feared a billion-dollar giveaway to one of the world’s richest companies. Here’s how the deal to bring Amazon to New York City fell apart. Guest: J. David Goodman, who covers New York politics for The Times. For more information on today’s episode, visit nytimes.com/thedaily.

From The New York Times, I'm Michael Barbaro. This is The Daily. Today, supporters promised an economic transformation that would benefit generations. Opponents feared a billion-dollar giveaway to one of the world's richest companies. How the deal to bring Amazon to New York City fell apart. It's Thursday, February 21st.

Amazon announced plans today to hire as many as 50,000 people to fill a brand new second corporate headquarters. So in the fall of 2017, Amazon declares publicly that they're going to look for a new headquarters site. The online retail giant, currently based in Seattle, wants to open its $5 billion second home near a North American city. Something that would be of equal size to what they had in Seattle, where they had about 50,000 jobs and sort of taken over whole swaths of the city. And they were going to do this somewhere else.

Now cities and states will be vying for Amazon's attention. And they invited essentially the whole country to court them. David Goodman covers New York politics for The Times. This was really seen by cities large and small across the country as something transformative. A win could transform a city, boosting its economy with tens of thousands of new jobs. I mean, these were not just jobs at a fulfillment center, making sure the packages got to where they needed to go on time. These were going to be high-paying jobs. They said on average $100,000. $100,000 or more for a salary. All of a sudden, people are leaving their jobs to try to go to get Amazon.

Makes sense, right? This would be something that would all of a sudden, it would be a jolt of energy into that economy and not just bring Amazon, but bring all the kinds of businesses that would congregate around a company campus of the size that they were proposing. So you'd have restaurants, you'd have service industries, you'd have other tech companies around it. So the big companies spawn smaller companies. They're magnets. Exactly. Right.

It was like, here's the nation's largest company telling all these cities in the country, all these towns, we may be about to shower gold on you. It's like an Ed McMahon, Publishers Clearinghouse kind of moment, municipally speaking. That's exactly right. So how does this national search play out? I mean, this is almost like an application process to college. You had Amazon put out essentially what they wanted to see from each of the cities. Orlando is home to thinkers and innovators. After all, this is the region that took man to the moon.

You know, the local schools, the local businesses, transit and transportation options. They had a lot of information that they wanted to get. Amazon, you're growing your business and we want to grow with you. That's why we think Frisco, Texas, is the perfect fit for HQ2. And this set off just a frenzy of activity in each of the cities. There is a huge, huge number of young millennials that is flocking to the Tampa Bay area. And not just in a few cities. You had, you know, over 200 different cities competing here. You've probably heard something about Pittsburgh, the city that built America. You know, here's a video of all the different things

that we could show Amazon. Detroit is always growing, always in flight. And they're trying to sort of wet the palate of Amazon's decision makers and get people trying to visit. Congress Georgia wants Amazon to build its second headquarters there so badly that the city council voted that if chosen, they will de-annex a portion of the city and rename it Amazon. And this was something that really you saw no city could pass up.

The mayor of Kansas City tried a different tact, purchasing $1,000 worth of items on Amazon. And so they went sort of all in on this. Tucson, Arizona attempted a more natural approach, sending a 21-foot cactus to the company, which Amazon promptly donated to a desert museum. But the thing that the cities really focused on in terms of their offer to the company was, here's how we can give you financial incentives to come here.

And that can take the form of direct subsidies, where the cities are actually paying Amazon directly to come. But they can also be tax incentives, which are essentially, you don't have to pay taxes for, you know, years. And that's a very common way in economic development projects that companies are enticed to come in. There's also the question of land. Where would you put this? And cities have the power to put together parcels of land that might not be available to a private buyer. So that was another thing that they were looking for. What kinds of land do you have? Where are the places in your city that would be attractive for us to come?

626 and breaking news. Amazon is narrowing its list of candidate cities to be home to a second headquarters. and headquarters. And in early 2018, they come out with a list of essentially 20 finalists. Midwestern cities like Chicago, Indianapolis, and Columbus, Ohio are still in the running.

That includes cities from all over the country, from Columbus, Ohio to Nashville. Los Angeles is still in the running. You had Los Angeles. Austin and Denver also on the list. Washington, D.C. A lot of large American cities

and then Toronto as well. And New York, where city officials actually had picked not one but four different sites across the city in lower Manhattan, in Midtown on the west side,

in central Brooklyn, and in Long Island City, Queens. So New York actually submitted four different applications. That sounds incredibly New York. Oh, yeah. They couldn't decide which was the best, so they thought all these four would be the best. And so how does Amazon vet these 20 finalist sites?

So they have a team that's going to each of the sites, and they're looking at, you know, meeting with officials, meeting with the business groups, meeting with education leaders to see what sorts of offerings there are in each place. And they're also getting a sense of what the amenities are, what the sort of fun things to do are in the city. When they came to New York, some of the things they did were ride around on city bikes and take a sunset cruise on the city's new ferry system. And this was a way for city officials to not just show them here are the raw numbers of what is going to benefit you, but here's how you would integrate into this community. Here's how, you know, Amazon would sort of live

if it chose to locate its headquarters here. And I mean, at this point, it really does start to feel like a sort of bachelor dating program where you would have, you know, Amazon as sort of the person who all these cities are trying to court and bring in. And Amazon is letting itself be courted in each city

and sort of, let's try this one out. Let's see how it would be to spend some time here. How would it be to spend some time over here? And is there any indication from Amazon of which city they're going to choose? Which city is going to get the rose? For a long time, there was absolutely no indication. But I don't think many people, especially in New York City, considered it. You know, New York City is crowded. New York City doesn't necessarily need a lot of jobs. New York City needs more affordable housing and better subway system improvements.

And so there was a sense that they might like us, but, you know, they're going to go somewhere else that needs this infusion more than we do. And so suddenly there was word that Amazon wasn't going to go to just one place, that they were going to split their headquarters in two. Why? Well, they really realized, it seems at the end, that there was no one place they wanted to be that would accommodate 50,000 people. And part of their desire here in finding a new headquarters was to get access to talent pools that they didn't have access to in Seattle. And being in two places gave them access to twice as many people. Right, right, right. And so then what happens? So we hear that one of the spots is going to be outside of Washington, D.C., but there was mystery

around what that second spot was going to be. And through our reporting, we were able to confirm that it was, in fact, New York City, to everyone's surprise. And in fact, it was going to be Long Island City, Queens, an area that for most of the country was probably the first time they'd ever heard of this area. So after this year-long search, the two winners are a suburb of Washington, D.C. Along search, the two winners are a suburb of Washington, D.C. and the Long Island City area of Queens. How do these two cities respond to being chosen? So in the suburbs of D.C. and Virginia, they're thrilled.

In New York City, it's a little more complicated. Questions on anything? Marcia? You saw at a press conference right out of the gate tough questions for the Amazon executive. So in Seattle, there was a discussion over the, you know, a couple years ago about how big tech companies

like Amazon are driving up the property value and how that is worsening the homelessness crisis over there. Did that come up in the discussions

about what kind of... And you saw the governor have to jump in and try and sort of deflect some of these questions. New York press court, nothing like it. You can either do this or you can go to the dentist with no anesthesia. And you saw opponents taking to the streets almost immediately and organizing a rally in opposition. And what exactly is the basis for this immediate opposition?

The opposition is coming from three different directions. There are unions that are opposed to Amazon for their labor practices, not just in New York City, but around the country and really around the world. And they see Amazon's coming to New York as an opportunity to make the point that this is a vast workforce of more than a half million people and there are no unionized labor. And so that's one bucket. The second bucket consists of local groups that looked at this arrival of Amazon not as a boon, but as a burden, that this was really going to hurt the community that it was coming to. It was going to increase cost of living, increase housing prices. It was going to burden the 7 train. The 7 train being the local subway that goes out to Long Island City.

That's exactly right. And so folks were concerned what this would actually do to the neighborhood that it was going to land in. And then you had a third group that was worried that the tax incentives and the other sorts of subsidies that were being given to this company should not be given, because this is the most valuable company in the world, run by the richest person in the world, and they don't need billions of dollars of city and state money. And how big is the package of tax incentives? What does it consist of? And what is the logic of the tax incentives? So the total package was nearly $3 billion for creating these 25 to 40,000 jobs. The one sort of direct subsidy was a cash grant to Amazon for constructing their headquarters.

It was going to be $500 million. And the rest of it was going to come in the form of tax credits. And these were going to be given to Amazon in exchange for creating jobs. And so if they created a job, they got the tax break. And if they didn't create the job, they didn't get the tax break. And so the mayor was very adamant that these were the kinds, at least on the city side, these were the kinds of breaks that any company that moved to that particular area of Queens was entitled to. The fact that Amazon was promising to bring so many jobs meant that the tax break was going to be huge.

So the opposition is stemming, in summary, from unions who fear what Amazon will do to the future of work and organized labor in New York. People who are worried about being priced out of this neighborhood in Queens, where the headquarters will be located, and objections to the size of this tax deal to lure the company. That's right. And to some degree, that was entirely expected by the political leaders in New York City and New York State. It was common for this sort of deal to see that kind of opposition, you know, in a city like New York. But what no one could have anticipated was a political chain reaction that was going to be set off when a young, sort of out-of-nowhere candidate who was progressive, who was liberal, who had been a bartender, Alexandria Ocasio-Cortez, who ousted one of the most powerful people in Congress

from the district just adjacent to where Amazon was thinking of locating its headquarters. And what that did was essentially embolden Democrats in general to think that they could take on some of the entrenched powers within the party and outside it. And so what you saw then in November was not only victories in New York flipping the state Senate into Democratic hands, but you saw all these House races going to young, much more left-of-center candidates. So suddenly when Amazon announces that they're coming to Queens a few days after the election in November, they're now facing a sort of rejuvenated left who were energized and who had organizing infrastructure, the lists that they had, the supporters. And they used that to fan out across this area of Queens and be very visible. And so the opponents were the loudest voices, and they were on the streets really hustling to say, this is not good for us. It took Amazon and the city sort of a while to

realize that this opposition had any kind of legs to it. Then you had the first city council hearing in December of last year, and nothing in the agreement needed Amazon to appear there. But we don't see this just as an investment. We've made specific commitments already, and we will be joining with our neighbors to advocate for the future of Long Island City. But they were counseled and agreed that, you know, in order to smooth the sort of political rough patches, it would be good to appear in public and talk about the deal. And they felt they could sell it. And it was a big disaster. Hey, please, everyone, please. I'm going to give one more warning. The first city council hearing was a room packed with opponents who hurled slogans,

chanted at them in some profane language. Folks, I'm going to drop the banner. What did the banner say? who hurled slogans, chanted at them in some profane language. G-T-S-O, Amazon! Folks, I'm going to get one. Dropped a banner. What did the banner say? The banner had what was sort of a canny repurposing of the Amazon logo, which is normally a smiley face, and they took it, and in the exact same sort of design, made it a frowny face, and it looked quite angry.

And the Amazon executives weren't ready for this. They seemed shaken, and... Amazon is a $ ready for this. They seemed shaken. And Amazon is a $1 trillion company. Is that accurate? They had no supporters among the city council members who were questioning them. Close to that. So why should we give you this money? So these incentives, and they left in a huff after that. And then there's a second meeting a month later, and it doesn't go much better for Amazon. And in fact, they say on the record during this hearing, something that is horrible to unions and most elected officials here. Would you agree to neutrality if workers at Amazon wanted to unionize? No, sir. We respect employees.

You wouldn't agree to that? Correct, sir. We would not. They're going to actively work to prevent unionization in New York City. So after that, you have a series of events culminating in the state Senate, which has recently gone into Democratic hands in the last election, delivering a win for opponents. They select a vocal critic in Queens to an essential board that had the power to veto this whole deal.

Hmm. So things are definitively not going great for Amazon New York. That's right. But still, nobody really thinks that this is going to fall apart. I mean, you still had the powerful governor of New York on the side of Amazon and the mayor of New York, who's a self-described progressive backing it and making the argument for it from that perspective. And so there's a feeling that this would be some rough waters, but that they would get through it. And then what happens? So I'm on my way to work last Thursday, and I get a call from someone who tells me about a union meeting that's happened between Amazon officials orchestrated by the governor. And it seems as if

there's actually progress towards some kind of deal that they're going to maybe not make concessions, but have some terms where they could talk to the unions. And this seemed like, oh, this is how the supporters are going to get through this. So I arrive at work. I think this is my story for the day. I'm going to figure, you know,

write how the supporters are actually gaining an edge here. And then I get a phone call and it's someone who has direct knowledge of what's going on in the Amazon deal. And they say, I can't believe I'm a phone call and it's someone who has direct knowledge of what's going on in the Amazon deal. And they say, I can't believe I'm saying this, but it's over. It's off. They're leaving. And it was a complete shock to me. It was probably the most shocking call I've gotten in my journalistic life. And so I just got up with the cell phone still in my ear and I walked over to our Metro editor, Cliff Levy, and I said, they're pulling out, Amazon's leaving.

And he was also shocked. And everyone starts in motion. At this point, we haven't confirmed it, but this is a person who I had immense confidence in, who I'd been dealing with. And then I get back to my desk and I get a second call from someone else who thought they were actually bringing me the story. And they were very disappointed to know they were the second source on the story. And so within a few minutes, I heard from Amazon and it was true. They were backing out of New York. And it was as if a bomb had gone off in the political world of New York City and across the country. It was something that no one expected. Everyone was in total shock. We'll be right back.

So, David, what exactly happened here? How did this deal that didn't seem like it was in jeopardy suddenly fall through? Well, from Amazon's perspective, they saw themselves in years of political fighting. It had become an issue in local races. It was an issue for the city council. I mean, they didn't imagine themselves getting dragged before hostile legislators periodically to justify whatever they were doing in New York. They just saw lots and lots of trouble ahead. And their core business was being brought into it as well. Their union posture was being threatened by some of the questioning that was coming from New York City. And for them, it appeared the costs were becoming higher than they were willing to bear. What about the perspective of the opponents of this project? In their minds, how does this fall apart? For the opponents, they looked at what Amazon did,

and it looked completely arbitrary and impulsive, like a child. And the favorite expression was that they took their ball and went home. Right. And so there was all kinds of theories about why they would do so, but they all came back to this idea that Amazon really didn't want to talk to New Yorkers and hear their concerns and address them in some meaningful way. Maybe they went to a city council hearing, but they didn't come back with any kind of offers. And then when things got tough for them politically, they didn't try and negotiate and find a way out. They simply left.

And that was offensive to most people in New York City who are used to and expect some level of dialogue. All along, opponents felt like New York City didn't need Amazon as much as Amazon needed New York City. And that was their argument for saying, these incentives are too much. We're not getting enough from the company. And in the end, it turned out that Amazon said to New York, we don't really need you as much as you think we do. And they left. So ultimately, what are the consequences of a project of this scale in a place like New York

collapsing? Strangely, it won't be that big a deal on the economic front. Now, obviously, losing 25,000 jobs is something that has an effect. But New York is a place where tens of thousands of jobs are generated in the span of a few months routinely. But with those jobs, there was going to be tax revenue that came. And in fact, the state had estimated that if all the jobs they proposed had come, the city would have given up $3 billion in incentives in this grant and would have gotten $27 billion back in revenue. And so this is a nine to one equation is what policymakers said. And that's not an insignificant amount of money. It could go a long way to fixing up the subway system and a

myriad of other needs that the city has. But the bigger impact of this decision is around the kind of deal that happened here. This is an economic development deal that was bigger than the ones that we've seen before, but was essentially something that was familiar to people. The company comes in, promises to do something. Politicians are glad to have the company come in and everyone goes home happy. And the fact that not only were people unhappy here, but the unhappy folks won the day says something about where this country is right now in terms of our relationship with corporations, our ability to effect change through grassroots organizing. For businesses like Amazon, this means that they can't any longer assume

that they're going to be welcomed with open arms in especially the big cities that they come to. And with giant tax packages. That's exactly right. I mean, they may have to make concessions and be open to conversations that they really don't want to have and don't expect to have and don't expect to have right now. But what seems to be the bigger effect of this is on the political side.

I think it's incredible. I mean, it shows that everyday Americans still have the power to organize and fight for their communities. And they can have more say in this country than the richest man in the world. Where you have some Democrats, and most prominently, Alexandria Ocasio-Cortez, hearing Amazon backing out as a win. And that creates, for Republicans, a ready-made talking point. I mean, this is the message that they've wanted to deliver to attack Democrats for a long time. These are job killers. These are people who don't support business and will undermine the efforts to help communities grow.

For Democrats, it's much more split and hard to know how to go forward. How do you mean? forward. How do you mean? Because it's hard to argue in the middle of the country where places are hungering for jobs that opposing corporations who want to bring jobs to a place is the right message for a 2020 candidate. At the same time, the energized part of the base in urban areas where the Democratic Party is strongest are voters who feel that the cost of living is too high, corporations have too much power, and we shouldn't just be handing over the keys to cities to different corporations and the wealthy that want to play there. And so I think the argument for Democrats is going to be much more difficult to make than Republicans. And it's going to be very difficult for Democrats to make outside of the urban centers and the coasts.

So this could end up coming back to haunt the Democrats, perhaps not right away, but maybe in 2020, at the presidential level, maybe beyond. That's right. David, what is Amazon going to do now that the second half of this second headquarters is not going to be in New York? One thing they've said they're not going to do is start a new search. They're done with the public nationwide searching. Kind of bruised by the experience. That's right. It didn't go well for them, at least in New York. One thing they've said they're not going to do is start a new search. They're done with the public nationwide searching. Kind of bruised by the experience.

That's right. It didn't go well for them, at least in New York City. And they've said instead that they're going to grow in the places that they already are. And that means the suburbs of Virginia, the Nashville and Seattle.

And also they're in New York City. They have about 5,000 employees who already work here. And they vowed to grow that number. And so you can imagine that over the course of a few years, they'll have 10,000 already work here. And they vowed to grow that number. And so you can imagine that over the course of a few years, they'll have 10,000 people working here. Maybe one day they'll have 15,000 people. Maybe they'll even get up to 25,000 people at some point. The same number that they would have dropped into Long Island City in this deal put together

by the company and elected officials here. That's right. And they won't have gotten a dime of tax incentive to do that. David, thank you very much. Thanks for having me on here. Here's what else you need to know today. The White House is planning to assess whether climate change constitutes a national security threat, something federal intelligence agencies have already determined to be the case. According to an internal White House memo, the question will be tackled by a presidential panel that will include a government physicist, William Happer, who has previously said

that carbon dioxide, which is responsible for global warming, is not a pollutant and, in fact, is a benefit to the planet. The demonization of carbon dioxide is just like the demonization of the poor Jews under Hitler. Carbon dioxide is actually a benefit to the world, and so were the Jews. Given the president's open skepticism of climate science, critics fear the panel is actually designed to cast doubt on whether climate change is a national security threat. Especially since the memo itself claims that prior intelligence reports on the matter quote, have not undergone a rigorous, independent, and adversarial peer review.

And... Hi, I'm Bernie Sanders. I'm running for president. On Wednesday, 24 hours after announcing his presidential bid, Senator Bernie Sanders said he had already raised $6 million, a figure that far surpasses what any of his Democratic rivals have raised since entering the campaign. For comparison, look at the fundraising figures for others who have announced their candidacy. Senator Kamala Harris, $1.5 million in the first 24 hours. Senator Amy Klobuchar, $1 million, that over 48 hours.

But Senator Sanders is really dwarfing that. The fundraising stands out for the number of donors who contributed to Sanders, more than 225,000, and the small size of their donations, on average $27, which suggests that Sanders is quickly recreating the fundraising model he pursued in 2016 and is becoming an early Democratic frontrunner in the 2020 race. That's it for The Daily. I'm Michael Barbaro. See you tomorrow.