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Amazon Cancels Plans to Build a Headquarters in NYC

By NexChange
Financial Services

Three months after it tapped Northern Virginia and New York City as the locations for its second headquarters, Amazon has announced that it is canceling its plans for the Big Apple in response to vociferous opposition from local political and community leaders.

After the e-commerce giant announced plans in 2017 to open a second massive headquarters – dubbed HQ2 – it received more than 200 proposals from cities across North America. Having originally indicated that it would select one city for HQ2, Amazon decided on two locations, saying that it would invest $5 billion and create 25,000 new jobs in each location.

However, Amazon’s plans to build a sprawling campus in Long Island City – located in the borough of Queens and a short subway ride to midtown Manhattan – was met by fierce backlash, mainly focused on the $3 billion in government-backed financial incentives the company would be receiving from the city and state to build its new headquarters in New York City.

“For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term,” the company said in a statement. “While polls show that 70% of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City.”

Amazon noted in a blog post announcing its picks for HQ2 that it would “receive performance-based direct incentives of $1.525 billion based on the company creating 25,000 jobs in Long Island City,” as well as “a refundable tax credit through New York State’s Excelsior Program of up to $1.2 billion calculated as a percentage of the salaries Amazon expects to pay employees over the next 10 years, which equates to $48,000 per job for 25,000 jobs with an average wage of over $150,000; and a cash grant from Empire State Development of $325 million based on the square footage of buildings occupied in the next 10 years.”

These tax incentives used to entice billion-dollar corporations to relocate to new municipalities have become increasingly controversial in the U.S., with cities debating whether the economic payoff is actually worth it. Alexandria Ocasio-Cortez, a Democratic-Socialist who is a rising star in the U.S. Congress and represents a portion of Queens, criticized the deal on Twitter at the time.

“Amazon is a billion-dollar company,” Ocasio-Cortez added. “The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.”

No doubt looking to temper the expected backlash, Amazon said it had “agreed to donate space on its campus for a tech startup incubator and for use by artists and industrial businesses, and Amazon will donate a site for a new primary or intermediary public school” in Long Island City. It noted that it would “also invest in infrastructure improvements and new green spaces.”

Both New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio supported Amazon’s plans for New York City.

Amazon said in a statement that it had no plans at this time to reopen its HQ2 search. Its plans for Northern Virginia will go forward.

Photo: Getty iStock




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