Amazon has named New York City and Crystal City, Virginia, as the locations for its second and third headquarters. While the move will bring billions of dollars to these areas, locals fear spiralling rents and displacement.
The online retail giant made the announcement on Tuesday, putting an end to a year of competition between more than 230 cities, who sought to lure the megacorporation with tax breaks and promises of infrastructural development. Each of the locations can now expect to take a share of 50,000 jobs and $5 billion in investment.
New York Mayor Bill de Blasio was ecstatic when discussing the then-unfinalized move on Monday night. “We’re talking about the single biggest economic development deal in the history of New York City,” he said.
During the solicitation process, New York Governor Andrew Cuomo was equally giddy at the prospect of landing Amazon. "I am doing everything I can" he told reporters last week. “I’ll change my name to Amazon Cuomo if that’s what it takes."
According to Amazon, New York will give the company over $1.5 billion in direct incentives. This includes $1.2 billion in tax credits over ten years, or $48,000 per job. Amazon will also receive a cash grant of $325 million towards its headquarters building. What's more, the company can also avail of city’s Relocation and Employment Assistance Program, which grants employers $3,000 in tax credits per year to locate in the outer boroughs. With a workforce of 25,000, Amazon could snatch close to an extra $1 billion in savings.
Driving gentrification
Locals in Long Island City – the proposed location for the HQ – aren’t exactly thrilled. The area has seen rents skyrocket in recent years, a problem that they fear Amazon’s arrival will exacerbate. More rental units have been added here between 2010 and 2016 than in any other neighborhood nationwide, many of them luxury condos and high-rise apartments. Prices in this area have climbed almost ten percent since rumors of Amazon’s decision began circulating earlier this month.
Local realtor Patrick Smith told CNN that “buyers are asking if they can make an offer without seeing the apartment.”
Newly-minted congresswoman Alexandria Ocasio-Cortez, a self-described socialist, said that Amazon’s move will price the area’s long-term working class residents out of the area. She said that many of these residents have contacted her with their concerns.
“Displacement is not community development. Investing in luxury condos is not the same thing as investing in people and families,” she said on Monday. “Shuffling working class people out of a community does not improve their quality of life.”
“Amazon is a billion-dollar company,” she continued. “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.”
New York’s decaying subway system has been a bone of contention between authorities and residents for decades. Governor Cuomo promised in 2017 to overhaul the system, but one year on, delays are still commonplace and the system’s centuries-old tunnels are crumbling. Fixing the system would take ten years, cost $37 billion, and necessitate station closures and reroutes, a New York Transit Authority report claims.
Ocasio-Cortez has been joined by Queens Councillor Jimmy Van Bramer and New York State Senator Michael Gianaris in opposing the headquarters deal.
“Offering massive corporate welfare from scarce public resources to one of the wealthiest corporations in the world at a time of great need in our state is just wrong,” read a joint statement from the pair. “We were not elected to serve as Amazon drones.”
In Crystal City, Virginia, Amazon is moving into a different environment. Located just outside Washington, DC, the site was chosen for its glut of office space, closeness to Reagan National Airport, and no doubt appealing for CEO Jeff Bezos, its proximity to political power.
Bezos already owns the Washington Post, and the city’s most expensive residence. In Washington, criticism of Bezos hasn’t come from a young socialist like Ocasio-Cortez, but from President Trump. The president has attacked Bezos for driving small retailers out of business and has accused Amazon of avoiding taxes and ripping off the US Postal Service.
Residents near Crystal City share New Yorkers’ fears that Amazon could drive their rents skyward though. Already, realtors there have been holding on to their properties in anticipation of Amazon’s arrival, and search interest in property there has spiked 345 percent since the beginning of this month.
Cities overlooked
Amazon’s choice to locate in two well-established coastal metro areas has also been criticized. Other cities on the company’s shortlist included run-down Newark, New Jersey, and the once-great rust-belt manufacturing cities of Pittsburgh, Pennsylvania and Columbus, Ohio.
An influx of investment could revitalize these areas, as happened in Charleston, South Carolina, in the 1990s when BMW opened its first US plant there. Lured in by incentives, the plant was a shot in the arm for a state that had seen its textile industry decline. It created 2,000 jobs, and over time was joined by plants from Volvo, Boeing, Honda and Mercedes-Benz, and by a host of other businesses that sprung up to service the plants and their employees.
“Before BMW, the world saw us in a particular light,” South Carolina Commerce Secretary Bobby Hitt told the Post and Courier. “We were not seen as a can-do state. We were not seen as a sophisticated or complex state. The beginning of that change was BMW.”
By locating in two already gentrified and saturated cities, Amazon might have missed a golden opportunity to land a PR win. Bringing transformative growth could have dispelled the notion that the tech industry benefits only the wealthy coastal regions, while neglecting middle America.
Wherever companies like Amazon locate, the debate is the same. To what extent should government prioritize development over residents?
“We need to focus on good healthcare, living wages, affordable rent. Corporations that offer none of those things should be met w/ skepticism,” Ocasio-Cortez tweeted. “It’s possible to establish economic partnerships w/ real opportunities for working families, instead of a race-to-the-bottom competition.”
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