Feeling unwelcome, Amazon ditches plans for New York hub

[February 15, 2019]  By Jonathan Allen and David Shepardson

NEW YORK (Reuters) - Amazon.com Inc abruptly scrapped plans to build a major outpost in New York that could have created 25,000 jobs, blaming opposition from local leaders upset by the nearly $3 billion in incentives promised by state and city politicians.

The company said on Thursday it did not see consistently "positive, collaborative" relationships with state and local officials. Opponents of the project feared congestion and higher rents in the Long Island City neighborhood of Queens, and objected to handing billions in incentives to a company run by Jeff Bezos, the world's richest man.

State Senator Michael Gianaris, who represents Queens and was a vocal critic of the deal, told a news conference on Thursday that the Amazon subsidies were unnecessary.

"This was a shakedown, pure and simple," he said.

Amazon's sudden pullout from New York City prompted finger pointing by Mayor Bill de Blasio and New York state Governor Andrew Cuomo, the politicians who crafted the deal. Cuomo angrily blamed the loss on local politicians while de Blasio blamed Amazon.

Cuomo said in a statement that a small group of politicians had "put their own narrow political interests" above those of New Yorkers.

The year-long search for its so-called HQ2 culminated in Amazon picking Northern Virginia and New York after hundreds of municipalities, from Newark, N.J. to Indianapolis competed for the coveted tax-dollars and high-wage jobs the project promised.

Amazon said it would not conduct a new headquarters search and would focus on growing at other existing and planned offices. The company already has more than 5,000 employees in New York City and plans to continue to hire there, Amazon said on Thursday.

A Siena College Poll conducted earlier this month found 56 percent of registered voters in New York supported the Amazon deal, while 36 percent opposed it.

CITY SHAKEDOWN?

Some New Yorkers mounted protests after the deal was announced, angered by the $2.8 billion in incentives promised to Amazon and fearing further gentrification in a neighborhood once favored by artists looking for cheap studio space.

U.S. Congresswoman Alexandria Ocasio-Cortez, a critic of the project and a self-described democratic socialist whose district spans parts of Queens and the Bronx, cheered the reversal by the world's third most valuable public company.

"Anything is possible: today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world," she wrote on Twitter.

People briefed on the decision said Amazon had made the decision early on Thursday amid rising concerns about the small vocal minority. The people said Amazon will not shift any of the planned jobs to Tennessee where an operations hub is planned or Virginia, but plans to grow its existing network of locations.

Amazon had not acquired land for the project, making it easy to scrap its plans, a person briefed on the matter told Reuters on Friday.

LOST OPPORTUNITY?

In a statement, de Blasio blamed Amazon for failing to address local criticism.

Demonstrators hold signs during a protest against Amazon in the Long Island City section of the Queens borough of New York, U.S., February 14, 2019. REUTERS/Shannon Stapleton

"We gave Amazon the opportunity to be a good neighbor and do business in the greatest city in the world," he said. "Instead of working with the community, Amazon threw away that opportunity."

Some long-time residents in Long Island City, which sits across the East River from midtown Manhattan's skyscrapers, feared being forced out by rising rents and untenable pressure on already overburdened subway and sewage systems. High-rise towers have sprouted across the neighborhood in recent years.

"This is a stunning development, with Amazon essentially giving in to vocal critics," said Mark Hamrick, a senior economic analyst at Bankrate.com. The about-turn could spook other companies thinking about expanding in New York, he added.

Alphabet Inc's Google has avoided competitions between cities for offices, and its growing presence in lower Manhattan has met with little serious blowback.

Google said in December it plans to invest more than $1 billion on a new campus in New York to double its current headcount of more than 7,000 people.

"I think the (Amazon) PR event turned out to be a mistake," said Jason Benowitz, senior portfolio manager at the Roosevelt Investment Group, who owns Amazon shares.

Shares of Amazon fell 1 percent.

'REALLY GOOD POKER PLAYERS'

Hours before the announcement, Amazon officials in New York betrayed no knowledge of the deal's cancellation when they met with local community members on Thursday morning, said Kenny Greenberg, a neon artist and member of Long Island City's community board.

"Either they are really good poker players or they were not aware," Greenberg said of the Amazon representatives. "There was no hint of this at all."

The meeting with Amazon officials had been held to answer concerns from the community about labor conditions for Amazon's warehouse and delivery workers and the company's opposition to labor unions.

U.S. Representative Carolyn Maloney, a Democrat whose district includes the proposed site, lamented the loss of jobs and new revenues.

"This is not the Valentine that NY needed," she wrote, adding that she had been ready to push for changes to the deal to address local concerns.

(Reporting by David Shepardson in Washington and Jonathan Allen in New York; Additional reporting by Dan Trotta and Joseph Ax in New York, Nandita Bose in Washington, Jeffrey Dastin in San Francisco; Editing by Nick Zieminski and Meredith Mazzilli)

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