Just how much could Amazon reap from Virginia and New York? Good Jobs First, which tracks economic-development subsidies, suggested the company could receive much more than the $2.2 billion it announced Tuesday.
The backlash built Wednesday to taxpayer-funded incentives offered to Amazon by Virginia and New York, with some lawmakers pledging action to block the subsidies.
Amazon, in announcing its second and third headquarters locations Tuesday, outlined some $2.2 billion in expected direct incentives for the initial phases of its expansion, predicated on the creation of 25,000 high-wage jobs in each location. That total includes $102 million related to a 5,000-job operations center in Nashville, Tennessee.
But Good Jobs First, which tracks economic-development subsidies, suggested the company could receive much more, particularly as it avails itself of New York City programs meant to spur job growth in places like the Long Island City neighborhood of Queens.
Greg LeRoy, executive director of the Washington, D.C.-based group, suggested Amazon was trying “to obscure just how lavishly it is being subsidized.”
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Part of the discrepancy between LeRoy’s estimate — of subsidies in excess of $4.6 billion — and Amazon’s stems from what is considered a subsidy. LeRoy counts the $1 billion Virginia Tech pledged to develop a new graduate campus near the company’s Arlington County headquarters location, but presumably the education provided there would benefit students and other employers — not just Amazon.
Other subsidies will directly benefit Amazon, but there are questions about their total value.
New York City projects Amazon could benefit from existing economic-development programs — including one focused on spurring job growth outside of Manhattan — to the tune of $897 million through 2038, though it was not immediately clear what level of employment or investment that projection was tied to. The city, in a news release, said the company could be in line for property-tax abatements related to real-estate development worth $386 million.
Amazon, in a news release announcing its new headquarters Tuesday, said it intends to apply for those incentives, but did not quantify them.
New York state offered $1.2 billion in tax credits through a program called Excelsior, tied to the creation of at least 25,000 new jobs and $2.3 billion in Amazon investment. A further $505 million capital grant was offered should Amazon grow to 40,000 new employees there over 15 years.
New York City cites economic-impact studies suggesting Amazon’s expansion there will generate more than $27.5 billion in new city and state tax revenue over 25 years.
Amazon has sought to downplay the importance of incentives to its headquarters-expansion process, saying that access to a talented workforce was paramount — a position it reiterated in a statement Wednesday when asked about the discrepancies between its own estimates of taxpayer incentives and the numbers provided by New York City and cited by Good Jobs First.
Amazon notes that the incentives are performance-based, meaning they only materialize if the company creates the jobs and makes the investments.
That’s providing little shield from critics, including New York state legislators, who decried the incentive packages as unnecessary corporate welfare, bashing the state’s Democratic Gov. Andrew Cuomo for negotiating the secretive deal.
Ron Kim, a Democratic state assemblyman representing a legislative district a few miles east of Long Island City, said he will introduce legislation that would block the state’s Amazon subsidies, though the exact mechanism to do this was unclear. Other lawmakers, including New York state Sen. Michael Gianaris, raised the prospect of legal action to undo the deal.
U.S. Sen. Kirsten Gillibrand, Democrat of New York, also raised concerns about “the lack of community input and the incentives that Amazon received to persuade them to bring these jobs to New York.
“One of the wealthiest companies in history should not be receiving financial assistance from the taxpayers while too many New York families struggle to make ends meet,” said Gillibrand, who said last week she is contemplating a 2020 presidential run.
One close watcher of Amazon’s HQ2 process and the broader landscape of corporate-location strategy said the mounting scrutiny around incentives has the potential to weigh on the company’s brand.
“Amazon is a consumer company. It depends on the allegiance of its customers. Its brand is everything,” Richard Florida, an influential professor of urban studies, currently at the University of Toronto, said on Twitter. He added, “Amazon’s top leadership needs to wake up and see the damage this is doing, and simply say no to incentives.”
That seems unlikely. While the subsidies Amazon is poised to collect in New York and Virginia are large, they are nowhere near the largest extracted from public coffers, nor were they the largest offered to the company by other locations competing to win its next headquarters.
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