Amazon.com Inc was chased out of New York by politicians and media coverage that inaccurately described the government incentives underlying the deal, according to a city official who played a key role in forging the agreement that fell apart last week.
James Patchett, president of the city’s Economic Development Corp, made clear that he was still smarting from the deal’s collapse while speaking to business executives Feb 21 at a Crain’s Magazine breakfast forum.
He laughingly agreed with an interviewer’s observation that his speaking invitation “was supposed to have been a coronation but instead was more like a coronary”. Yet, he said the deal showed New York’s value to potential employers, with its skilled workforce that includes 2.3 million college graduates.
“I remain incredibly proud of the work we all did together,” Patchett said. “I was not surprised that New York was chosen.”
The deal fell apart, Patchett said, because Amazon wasn’t prepared to respond to questions about how it would operate in the city. “This is New York, after all, where the only thing we can agree on is that it’s hard to be a Knicks fan,” he said.
In November, Amazon chose Long Island City, just across the East River from Manhattan, and Arlington, Virginia, over 200 other competing locations for two satellite headquarters in an expansion to its home in Seattle. The deal, reached after a year’s search, held out the promise of 25,000 to 40,000 new jobs for New York, and in return the city and state offered as much as US$3bil (RM12.22bil) in tax breaks and grants.
“Anyone familiar with the facts knows there was no US$3 billion,” Patchett said. That number, he said, was a projection of how much local tax money the company might not have to pay, plus more than US$1bil (RM4.07bil) in discretionary state grants, if it fulfilled its promise to create 25,000 jobs over 10 years. “The dialogue was poisoned by this misinformation,” he added.
“How do we cut through this misinformation and confusion and create a path forward?” Patchett said. “For our future to be successful we have no option but to continue building our tech sector; if we don’t keep going all in, one of our competitors will.”
The city and state would have reaped as much as US$27.5bil (RM112.05bil) in revenue from the deal, according to Governor Andrew Cuomo. Yet opponents in the City Council and state Senate objected to a deal that was hashed out in secrecy and used tax dollars to lure a company worth almost US$800bil (RM3.25tril) and run by Jeff Bezos, the world’s wealthiest individual.
The company’s hostile stance toward unionidation provoked more opposition in a city where organised labour retains political clout. And it didn’t help that in congested New York, with crowded, underfunded and crumbling subways, Amazon would get its own heliport so executives could fly in over the traffic.
The unravelling of the deal gathered momentum with the Feb 4 appointment of state Senator Michael Gianaris, a fierce critic of the deal, to a state board that gave each member veto power over it. Even though Cuomo could have rejected him, he took no action. A Feb 8 report that Amazon was reconsidering its move further emboldened its opponents, including a City Council majority and US Representative Alexandria Ocasio-Cortez. Amazon withdrew on Feb 15.
“There’s no question that the company was not prepared for what happened in New York City,” Patchett said. “They were not prepared frankly in the way they reacted. They didn’t perform well in the public City Council hearings. They didn’t hire local consultants. I think you have to recognise what New York is like. People who are successful here succeed in that environment.”
In the end, Patchett said, “what it came down to is that not enough people could see themselves in those jobs. People were not as passionately positive about it because they couldn’t see themselves in those jobs.” – Bloomberg