What will NYC lose after Amazon HQ2 deal crumbles?

Here are the commitments Amazon is taking with it

In a stunning reversal, Amazon
has pulled out
of bringing half of its second North American
headquarters to New York City.

After four months of vocal opposition, the e-commerce giant has
decided its had its fill of
the tongue-lashing
the company has taken from elected
officials, labor leaders, and residents on a deal that would bring
25,000 jobs and $27 billion in tax revenue to New York. In a
Thursday afternoon
blog post
the company announced that it is cancelling plans to
bring a new campus to Long Island City, Queens—leaving a $3
billion incentive package on the table.

“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,” the
post reads.

The hotly contested project triggered transparency concerns when
officials opted for the deal to go through a General Project Plan
(GPP) in lieu of the traditional Uniform Land Use Review Procedure
(ULURP) that would require a lengthy review and vote by the New
York City Council. Political opponents were swift to praise
Amazon’s change of heart, including Council Speaker Corey
Johnson, who grilled Amazon executives in a pair of fiery Council
hearings.

“I look forward to working with companies that understand that
if you’re willing to engage with New Yorkers and work through
challenging issues New York City is the world’s best place to do
business,” Johnson said in a statement.

“I hope this is the start of a conversation about vulture
capitalism and where our tax dollars are best spent. I know I’d
choose mass transit over helipads any day,” Johnson added,
referring to the private helipad Amazon had planned for executive
joyrides.

While
critics challenged the deal
and argued Amazon wasn’t
delivering its fair share of incentives,
others praised it as an economic boon
for the city with not
only an influx of jobs and tax revenue heading to city and state
coffers, but also infrastructure upgrades including new school
seats, parkland, and other improvements that are sorely needed in
the booming neighborhood.

For many, Amazon HQ2 stoked fear over how it could irrevocably
change the city. Now that the online retailer has pulled out of the
deal, here’s a look at some of the major things Amazon is taking
with it.

Jobs

Amazon would have reportedly generated $27.5 billion in state
and city revenue over 25 years—a 9:1 ratio of revenue to
subsidies. This arrangement was predicated on Amazon creating at
least 25,000 jobs over the next decade—and up to 40,000—with an
average salary of $150,000. Another 1,300 jobs were in the pipeline
for construction and some 107,000 in total direct and indirect jobs
were anticipated, according to state estimates.

Amazon, the city, and state initially planned to commit $5
million each toward workforce development. The deal also planned
for a local nonprofit to open a training center on the HQ2 campus
to mentor and recruit Long Island City locals, according to the
city. A $10 million expansion of the city’s JobsPlus program into
the Queensbridge Houses—the largest public housing complex in the
country—was set to take shape. Additionally, the city planned to
launch a $3-5 million program geared toward training NYCHA
residents for careers in IT, cybersecurity, and web
development.

Infrastructure

To fund local infrastructure—streets, sidewalks, open space
and the like—Amazon planned to utilize the city’s Payment In
Lieu of Taxes (PILOT) program, estimated by former Deputy Mayor
Alicia Glen at $600 to $650 million over four decades. Amazon would
have also built a 600-seat school and 3.5 acres of public open
space along the waterfront at
Anable Basin
.

When the deal first landed, transit advocates and elected
leaders promptly called on Amazon to beef up transportation
infrastructure in Long Island City, worrying that existing options
weren’t enough to serve the rapidly growing neighborhood.
Advocates pointed to the ongoing bus and subway crisis plaguing the
city and packed train cars that run on the 7 and G lines through
the area.

HQ2 was also piggybacking off of city infrastructure investments
that were already in the works, or in the midst of being proposed,
including $46 million for sewer and water-main upgrades, $60
million for a new school and a new Long Island Rail Road stop, and
$180 million in new spending for overall improvements to Long
Island City.

Economic Impact

As part of the contested
incentives package
, Amazon was to receive nearly $3 billion in
tax breaks, abatements, and grants. The state was committing up to
$1.7 billion in Excelsior Tax Credits and capital grants—again,
based on Amazon’s delivery of job and investment commitments. On
the city side of things, the Industrial Commercial Abatement
Program (ICAP) would have abated approximately $386 million in
property taxes, while the Relocation and Employment Assistance
Program (REAP) would have been worth $897 million. Incentives
aside, the state would have earned $14 billion in tax returns, and
the city would have received more than $13.5 billion in tax
revenue.

But officials revealed
at a January City Council hearing
that the price tag to bring
Amazon to Long Island City could have cost $987 million more than
the city previously claimed because city estimates only accounted
for the minimum job and infrastructure investments that Amazon was
expected to make, according to a report from the Council’s
Finance Committee.

Real Estate

Long Island City
transformed from a buyer’s to a seller’s market
practically
overnight after Amazon’s HQ2 announcement. The change came after
a slump that in October saw 13 percent of the area’s listings
slash their prices. Real estate experts speculated that Amazon’s
move to Long Island City could pave the way for other large
companies to move into the neighborhood. Amazon’s sudden reversal
will undoubtedly lead to “whiplash,” as one StreetEasy expert
put it in a statement.

The HQ2 cancellation has sent some developers scrambling, namely
family-run plastics company Plaxall that was initially due to rent
4 million square feet of Long Island City land to Amazon for its
headquarters.

Amazon said Thursday that it does not plan on restarting its
search for another location. The company still plans to move
forward with its HQ2 location in
Crystal City, Virginia,
and a smaller operations center in

Nashville, Tennessee
.

Source: FS – All – Real Estate News 1
What will NYC lose after Amazon HQ2 deal crumbles?