Political, business dynamics prompt ‘stunning reversal’ on Amazon NYC headquarters

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• Judy Woodruff:

  Today, Amazon announced that it was canceling plans for a new headquarters in New York City, after fierce local opposition there.

  Our economics correspondent, Paul Solman, has more on the story.

  It's part of our weekly series, Making Sense.

• Paul Solman:

  Amazon's decision was a stunning reversal, announced in a matter-of-fact press release that said it was scrapping plans for the second headquarters in New York because — quote — "A number of state and local politicians have made it clear that they oppose our presence."

  Local politicians like New York City Councillor Jimmy Van Bramer.

• Jimmy Van Bramer:

  The mayor and the governor caved to the richest man on Earth, and then handed the bill to each and every New Yorker.

• Paul Solman:

  It was just a year ago when more than 230 regions were bidding for Amazon HQ2 with quirky promo videos.

• Man:

  Hey, Alexa, where should Amazon locate HQ2?

• Woman:

  In Frisco, Texas.

• Paul Solman:

  And with lavish tax breaks.

  In November, Amazon announced the prize. Its second headquarters would be split between Northern Virginia and New York, which offered nearly $3 billion in tax breaks.

• Gov. Andrew Cuomo, D-N.Y.:

  This is the largest economic development initiative that has ever been done by the city or the state.

• Protesters:

  Amazon has got to go!

• Paul Solman:

  But residents feared soaring rents. And New York's successful bid drew the ire of labor groups and liberal politicians, including Congresswoman Alexandria Ocasio-Cortez.

  Earlier this month, Governor Cuomo warned opponents that their protests would not result in better terms, but in Amazon pulling the plug.

• Gov. Andrew Cuomo, D-N.Y.:

  For the state Senate to oppose Amazon was governmental malpractice. And if they stop Amazon from coming to New York, they're going to have the people of New York state to explain it to.

• Paul Solman:

  State Senator Michael Gianaris, in whose district the new Amazon facility would have been located, was one of those who opposed. But, today, his ire was redirected to Amazon.

• Sen. Michael Gianaris, D-N.Y.:

  What it looks like to me is, Amazon couldn't get its way. And when it couldn't get exactly what it wanted exactly how it wanted, it left, because Amazon believes it's more important than the governments of this country.

• Paul Solman:

  Amazon said today it does not plan to start a new search process, it will continue to build a major facility in Northern Virginia, and expand its operations in Nashville, Tennessee.

  For the "PBS NewsHour," this is economics correspondent Paul Solman.

• Judy Woodruff:

  And let's take a closer look at why this deal fell apart over corporate subsidies and incentives, anger over gentrification in housing, and the politics around it.

  J. David Goodman of The New York Times has been covering this for months. And he joins me from The Times newsroom.

  So, David Goodman, welcome to the "NewsHour."

  What was the main opposition there in New York to what Amazon was trying to do?

• J. David Goodman:

  Well, it's interesting.

  The opposition never really coalesced around one set of issues. I mean, you had opponents who were union members who said — and union leaders — who said the anti-union posture of Amazon in general was offensive to New Yorkers.

  You had local activists in Queens who were saying that this was going to ruin the character of Queens, it was going to gentrify that area more rapidly. And then you had a lot of people that were skeptical of the size of the subsidy that was going to the richest man in the world and one of the most powerful companies in the world.

  And so all of that sort of fueled an opposition that, while the goals were different among different members of that group, they did sort of come together to say, you know, we don't like this deal, we weren't made a part of it early on, and we'd rather see it either remade or nixed.

• Judy Woodruff:

  So, when you put those different sources of opposition together, how do you think the — Amazon's proposal create all that opposition? How did it force it to bubble to the surface?

• J. David Goodman:

  It's really interesting.

  I mean, when Amazon started their search for a second headquarters in late 2017, the political landscape in Western Queens, where they ultimately ended up going, was completely different.

  You had, in the span of a few months, the election — the primary election of Alexandria Ocasio-Cortez, unseating a very powerful local party boss and a representative in Joe Crowley. And then, a few months later, you had the state Senate in New York state turn to Democratic hands.

  And those two political developments really energized an activist base and scared a lot of local elected officials and others who thought maybe the neighborhoods were shifting under their feet, and they didn't quite understand their voters.

  And then you had the state Senate now in Democratic hands, and they had the ability to appoint to a key board a person who could actually veto this plan. And so all that happens in the span of a few months. And then the deal is announced right after — a few days after Election Day.

  So it's almost as if the landscape or the ground changed under Amazon's feet. They weren't prepared for it. And, even on some level, the governor and the mayor didn't seem to fully appreciate how much things were sort of fluid and changing in that corner of Queens.

• Judy Woodruff:

  And this was enough opposition to override the fact that — what, that public opinion polls were showing a large majority of people were in favor.

• J. David Goodman:

  That's right.

  I mean, that's what was amazing about this decision today and what made it so unexpected, that, even though you had had opposition that was growing in strength and seemed to have scored a win last week, when one of the main opponents in the local — or in the state Senate, a local state senator, was put on a board that actually had veto power over this deal, even though you had that, you still had the sense that the governor, who was very much in favor of it, and the mayor of New York City were going to find a way through the political impasse, that it wasn't too big a hurdle.

  And you have seen — land use deals in New York City are often fraught and take a long time to get through, and have vocal opposition, loud protests.

  But Amazon, as the people that I have spoken to today have said, the executives were not expecting this kind of negativity. They felt they were invited to New York, and they wanted to be welcomed here, and that they weren't prepared to wait a full year before the deal actually finally got approved at the state level, and sort of endure this negativity and this — these attacks for that time.

  And so they decided late last night, we're told, to pull the plug. And then they called the governor and the mayor this morning, and said, we're not going to come there after all.

• Judy Woodruff:

  And I hear you saying that Amazon was really not prepared to do what it was going to take to turn around, to satisfy this opposition.

• J. David Goodman:

  Yes.

  I mean, they felt that they had been invited here by the governor and by the mayor, and, you know, in fact, that the city was competing. It was one of many cities that were competing around the country to try and win this sort of prize of 25,000 to 40,000 jobs.

  Actually, at the time, people thought it was 50,000, before they split it. And so they felt like that's what they were bringing to New York. And they didn't understand, once the announcement happened, that they would have to do anything else.

  And, in fact, they were very resistant to doing that. They made a couple of small concessions here and there, but they really weren't willing to negotiate. Their posture was that the deal was the deal that we negotiated with the governor and the mayor, and that, if we're not going to get that deal, if we're going to be made to renegotiate it with state senators or others in New York City, we will just pack up our bags and go somewhere else.

• Judy Woodruff:

  What is the loss of that — I mean, is there agreement on what the loss of these 25,000 potential jobs is going to mean for New York?

• J. David Goodman:

  Well, the governor and the mayor both — but particularly the governor — highlighted the fact that the $3 billion in incentives that were almost all, as of right — tax subsidies for actually having created the jobs, would have brought in some nine times the amount in tax revenue to the area.

  They said about $27 billion. So we won't see that, presumably. But New York City is a big place, and it adds many more — or at least in recent years, it's added more than the number of jobs that Amazon would be bringing to its economy. And so while the area of Queens will be affected, and it's not clear what will go there now, the city as a whole won't see a direct effect.

  But the — what the business community has been saying in response to this is that it sets of horrible precedent for New York City that a major company can't come here and can't sort of count on the promises and the deals that are being made at the economic development level.

  It really calls into question that whole practice, at least in the state.

• Judy Woodruff:

  Really surprising developments today in New York.

  J. David Goodman of The New York Times, thank you very much.

• J. David Goodman:

  Thanks for having me.