Gotham Gazette https://www.gothamgazette.com/component/tags/tag/2346 Fri, 21 Feb 2020 04:30:28 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) The Amazon Delivery We Still Need: Invest in Public Infrastructure, Not Corporate Welfare https://www.gothamgazette.com/130-opinion/9138-the-amazon-delivery-we-still-need-invest-in-public-infrastructure-not-corporate-welfare https://www.gothamgazette.com/130-opinion/9138-the-amazon-delivery-we-still-need-invest-in-public-infrastructure-not-corporate-welfare gov cuomo mayor amazon queens

(photo: Kevin P. Coughlin/Office of Governor Andrew M. Cuomo)


This week marks the one-year anniversary of the cancellation of the Amazon ‘HQ2’ Queens deal, which presents an opportunity for New Yorkers to reflect. That these types of destructive corporate welfare deals are still possible and that Amazon is still coming to New York City, albeit in a smaller footprint with fewer public subsidies involved, shows there is a lot still to be discussed around what - and who - our government prioritizes.

With the quick success last year of community groups, unions, and local elected officials assembled to fight the deal, opponents didn’t get the chance to make the bigger argument against the failed economic development ideas ‘HQ2’ represents.

The ‘HQ2’ deal was bad for New York City. Amazon dangled the promise of 25,000 jobs -- without committing to it -- in order to get what it wanted, which was public land quickly, cheaply, and with minimal public oversight. Why would our elected officials give well over $3 billion in subsidies and land to one of the largest, most profitable corporations on earth for an office they were already going to build and could easily afford, without requiring Amazon to make tangible commitments to the public good?

Simply by asking this question, opponents were labeled as naive anti-development radicals. Nevermind that we are backed by 40 years of research linking runaway economic and social inequality in America to neoliberal policies that shower public wealth on corporations, fail to deliver promised public benefits, and take money away from investing in public services. Economists across the political spectrum from the American Prospect to the Cato Institute all oppose corporate welfare.

However, the establishment’s consensus on economic development limited the ‘HQ2’ debate to the terms of the deal after the fact, not whether the deal should be made in the first place. Many Democratic officials still lazily point to decontextualized polls that claim to show that ‘HQ2’ was “popular” as though they came close to explaining its consequences. 

This mindset has been disastrous for our city. While HQ2 failed, Atlantic Yards, Hudson Yards (where Amazon is heading), and even Ground Zero have all followed the same neoliberal model -- give away public wealth to private profiteers in exchange for vanishingly small public benefits.

As glass towers, a new sports stadium, or a mall disguised as a transit hub rise around our city, critical public institutions like NYCHA, CUNY, and the MTA crumble. Yet the media largely gives cover to the establishment by treating these as separate universes divorced from the interconnected decisions that they make about where to invest our public wealth.

No one in our political establishment is called “radical” for giving billions of dollars of public money and land to developers, corporations, and billionaires while over 90,000 New Yorkers are unhoused. No one is called “naive” for still arguing, despite all empirical data, that subsidizing luxury development will trickle down. No one has paid a political price for when these expected public benefits don’t materialize.

Opponents of the Amazon ‘HQ2’ deal were also falsely accused of not having an alternative vision for growth. The real issue is what value “growth” has in the late capitalism era of rising income inequality, racial injustice, and climate disaster. Given these challenges, we must rethink our economic priorities. If the 2010s can be summed up as “move fast and break things” the 2020s should be “slow down and fix things.” The practical solution is obvious: public investment in public infrastructure.

We’ve done this successfully in the past. Look no further than Amazon’s decision to open an office in New York City without public assistance. It wasn’t attracted to New York City because of tax incentives (though it will benefit from the incentives Hudson Yards received). It was attracted because of generations of public investment -- the city’s density, lubricated by public transportation; its workforce, nurtured by public education and housing; and its amenities, grounded around public parks, libraries, and the arts. These upfront investments created the shared public wealth that attracts individual ambition and innovation.

Instead of investing our wealth in growing these public institutions, the political establishment has been co-opted by big developers, corporate monopolies, and extremist billionaires that funnel it out of our city into offshore bank accounts. Instead of fighting against economic inequality, racial injustice, and climate disaster, this system fuels all three. We can no longer tolerate this.

Amazon has exploited this system skillfully and ruthlessly, which is why many of us still protest its presence in our city a year later. I’m running for Congress -- to represent the district Amazon ‘HQ2’ was going to call home until we stopped it -- because we have the chance to hold this failed system up to public scrutiny and to hold our elected leaders responsible for giving away our public wealth for nothing. We might not be able to kick Amazon out of New York City altogether, but we can rid ourselves of this system along with the establishment that defends it, and replace it with one that works for every New Yorker.

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Peter Harrison is a Democratic candidate for U.S. Congress (NY-12) and an adjunct lecturer at Baruch College. He lives in Stuyvesant Town. On Twitter @PeteHarrisonNYC.

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The Amazon Delivery We Still Need: Invest in Public Infrastructure, Not Corporate Welfare Thu, 13 Feb 2020 05:00:00 +0000
Lessons from Amazon 'HQ2': Corporate Tax Incentives and Affordable Housing Need to be a Package Deal https://www.gothamgazette.com/130-opinion/9132-lessons-from-amazon-hq2-corporate-tax-incentives-and-affordable-housing-need-package-deal-new-york https://www.gothamgazette.com/130-opinion/9132-lessons-from-amazon-hq2-corporate-tax-incentives-and-affordable-housing-need-package-deal-new-york corporate establish hq

The planned Amazon site (photo: Kevin P. Coughlin/Governor's Office)


This week marks the one-year anniversary of Amazon’s contentious withdrawal from its Long Island City plans. Meanwhile, the construction of 'HQ2’ is making steady progress in Arlington County, Virginia, and residents are preparing to welcome thousands of new Amazon employees to their neighborhoods. With its close proximity to Washington D.C., established infrastructure, and educated workforce, Arlington County was a natural choice for Amazon and has been an attractive market for years, with median sales prices steadily increasing between 5-8% annually. Since the announcement, however, housing prices have spiked by 12.6%, and many residents are blaming ‘HQ2’ for throwing the housing market into a frenzy.

Given the fact that the State of Virginia pledged $750 million in subsidies to attract Amazon to Arlington County, it is fair to consider the possibility that taxpayers may have financed their own affordable housing crunch. The most obvious solution to this problem would be to build more housing - yet Arlington is subject to restrictive zoning laws that prohibit multi-family zoning in most of the county. Public officials in Arlington and beyond need to recognize that large corporate tax incentives must be paired with zoning and permitting policies that allow cities to respond to their housing supply and affordability gaps.

The ‘HQ2’ bidding process showed that municipalities looking to revitalize their communities are eager to offer tax incentives in exchange for the promise of new jobs – a competitive bidding practice that has become increasingly popular. Supporters claim that these incentives are a net positive for cities, with tax expenditures offset by the increased revenue generated by economic growth and related "spillover" effects. Yet this analysis ignores an important part of the equation: the increased strain on infrastructure, public services, and affordable housing. 

In anticipation of Amazon’s arrival, Arlington County has started making infrastructure improvements such as updating its public transit systems and roadways. Yet, its to-do list fails to include the construction of new housing - largely because less than 12% of the city is zoned for multifamily development, like apartment buildings. Those restrictions stand in stark contrast to Long Island City, which by some estimates added almost 20,000 units of high-rise housing between 2010 and 2020, one of the highest absolute growth rates of any neighborhood in the nation.

Ironically, the very construction boom that made Long Island City such a competitive candidate for an Amazon campus may have spurred the opposition that ultimately torpedoed the deal. Still, local governments that offer tax incentives to attract large corporations would do well to mimic the LIC landscape by lifting the ban on housing types that can accommodate a growing, economically-diverse population.

That said, many recipients of economic development incentives are starting to grapple more seriously with the disruptive effects they have on local housing markets, which ultimately hamper their ability to attract talent. Tech giants like Google (which received a 22-year tax break) and Apple (a $10 million tax break) are blamed for making San Francisco one of the most expensive housing markets in the country. In 2019, both companies made headlines for their respective pledges to finance housing initiatives in California, with the hope of mitigating the housing shortages they contributed to creating. But unless cities reduce the regulatory barriers to creating more housing for a wide range of households, these generous donations will fall far short of their ambitious goals.

Given the political motivation for elected officials to create jobs for the cities and states they represent, it is safe to say that we can expect more of these incentives in this upcoming election cycle, notwithstanding the high-profile breakup between Amazon and New York. Research on the actual costs and benefits of these incentives is still inconclusive and highly contested. However, looking at Seattle, San Francisco, and now Arlington County, one thing is quite clear. Economic development incentives must be paired with more housing construction to foster diverse and inclusive cities.

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Brittany Mazzurco Muscato is a Graduate Researcher at the NYU Furman Center and a Master of Public Administration candidate specializing in Public Policy Analysis at NYU’s Robert F. Wagner Graduate School of Public Service. On Twitter @bamazzur.

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Lessons from Amazon 'HQ2': Corporate Tax Incentives and Affordable Housing Need to be a Package Deal Thu, 13 Feb 2020 05:00:00 +0000
Replacing Unsuccessful ‘Community Benefits Agreements’ with Neighborhood Stock Ownership Plans https://www.gothamgazette.com/130-opinion/8737-replacing-unsuccessful-community-benefits-agreements-with-neighborhood-stock-ownership-plans https://www.gothamgazette.com/130-opinion/8737-replacing-unsuccessful-community-benefits-agreements-with-neighborhood-stock-ownership-plans yankees nycfc stadium

(photo: Michael Appleton/Mayoral Photography Office)


When Jeff Bezos, the world’s wealthiest man, and Amazon sought to locate a major campus in New York City, they ran into a buzzsaw of opposition that derailed the project. Despite the promise of tens of thousands of jobs and millions of dollars in local investments, members of the community reacted to the company’s planned arrival with fear and fire. Rallies against the tech giant occurred weekly. Elected officials orchestrated public hearings where they criticized the corporation. Lots of bad press accompanied the news that Bezos would have his own helipad.

Neither Governor Cuomo nor Mayor de Blasio could put this Humpty Dumpty deal together again. After months of disgrace, Amazon withdrew.

Now, the world’s third-wealthiest man, Mansour bin Zayed, owner of the New York City Football Club, wants to build a soccer stadium in The Bronx. And, like Bezos in Queens, he’s likely to run into a storm of opposition from that community. What can be learned from the Amazon issue that can help both the neighborhood and the stadium project?

The collapse of the Amazon move into Long Island City signaled the end of the era of the “Community Benefits Agreement” (CBA). The benefits agreement strategy has been used by neighborhoods for decades to confront gargantuan development projects like sports arenas or corporate expansions. But decades of unfulfilled promises made by corporations and government officials to communities have sullied the reputation of CBAs. New York City neighborhoods have become suspicious of agreements that can be (and have been) ignored by behemoths like Amazon, Forest City Ratner, and politicians.

The Barclays Center was created with a CBA. The new Yankee Stadium came with a CBA. And, the current talk about a Bronx professional soccer stadium includes conversations focused on perks promised to the host neighborhood, like jobs and housing for local residents. But the promise of perks never convinced Queens that the Amazonian tech giant and the world’s wealthiest man were worthy of their support.

Civic groups in Queens like those in the Bronx and Brooklyn have become disillusioned because these benefits agreements lack enforcement. At Yankee Stadium, members of the community board who opposed the new ballpark and its CBAs were removed from the board. In Brooklyn, small businesses feel ripped off by the developer whose community benefits promises lacked the force of law and transparency. In Queens, local elected officials were left out of the negotiations by the mayor and the governor.

New York City neighborhoods need a new strategy to safeguard their integrity and create a partnership among residents, local businesses, nonprofits, government, and developers.

I propose a new approach, a Neighborhood Stock Ownership Plan (NSOP), modelled after employee stock ownership plans (ESOPs).

ESOPs have been around since 1956. Across the country, there are nearly 7,000 ESOP companies covering more than 14 million participants. In ESOPs the workers earn the right to buy shares in the company at a discount rate based on the number of years they have worked there. These worker-shareholders have a seat on the company’s board. Profits are shared with employees through dividends and increases in the stock price. Transparency abounds, and so does workplace satisfaction.

The ESOP model can be modified to reflect and reinforce lots of different stakeholders, not just employees. It can become a mechanism by which residents, local businesses, employees, and civic organizations become partners with, not opponents of, a developer.

This is how a Neighborhood Stock Ownership Plan could work: those who live, work, or own a business in the development area will be given stock options based on the length of time they’ve lived, worked, or operated a business in the project district. Nonprofits in the vicinity would also be gifted shares based on their membership. Instead of agitating, NSOP members will be aggregating money, based on the revenues of the company and its stock price.

This NSOP will protect communities from having to settle for corporate hand-outs. It will tie the community and the corporation together so that revenue for the company automatically means money for the community.

If a soccer stadium were built in the Bronx, for example, an NSOP would mean that broadcast fees, stadium naming rights, and merchandising deals benefit those whose transportation, trash, and tranquility will be impacted by the sports venue. Using an NSOP framework would give neighbors and newcomers a common ground to discuss corporate policies and procedures. With an NSOP, the dynamics of patron and patronage that created hostile environments for Amazon, Barclays, and likely a new soccer stadium could be avoided.

Whatever is good for the community will be good for the corporation and vice versa.

Will the stadium developer, the team owners, the mayor and the governor have the foresight to reject the old “community benefits” strategy and try a new approach? Will they see the soccer stadium project as a chance for social innovation and community support? Seems to me like a good goal (pun intended) for everyone.

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Dr. Cary Goodman is executive director of the 161st Street Business Improvement District at Yankee Stadium.

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Replacing Unsuccessful ‘Community Benefits Agreements’ with Neighborhood Stock Ownership Plans Thu, 22 Aug 2019 23:27:03 +0000
Experts Point to Anxiety, Short-Sightedness and Political Climate in Amazon Deal Demise https://www.gothamgazette.com/city/8525-experts-point-to-anxiety-short-sightedness-and-political-climate-in-amazon-deal-demise https://www.gothamgazette.com/city/8525-experts-point-to-anxiety-short-sightedness-and-political-climate-in-amazon-deal-demise Amazon deal New York announcement

Announcing the Amazon deal that later fell apart (photo: Ed Reed/Mayor's Office)


Current and former city officials and veteran city planners met Monday night to discuss the interplay of politics and policy in the notorious demise of the plan to site an Amazon campus in Long Island City.

A central theme of the panel discussion, hosted by the Urban Land Institute in midtown Manhattan, was the balance the city must strike between articulating and acting on its long-term need for growth and the experiences of people immediately impacted by development.

How the dynamics of those relationships played out in the lifecycle of the Amazon deal was the source of regret and reflection amongst the panel participants, all of whom presented views in support of the tech giant’s migration to New York.

Entitled “Does Amazon Signal the End of a Pro-Growth Political Climate in NYC?,” the discussion occurred before an audience of many urbanists, developers, and architects; and featured James Patchett, president and CEO of the city’s Economic Development Corporation; Carl Weisbrod, former chair of the City Planning Commission; Vishaan Chakrabarti, an architect who oversaw the Manhattan office of the Department of City Planning in the early 2000s; and Kathryn Wylde, president and CEO of the Partnership for New York City, who served as moderator.

The conversation had an air of familiarity -- the result, for the most part, of decades working at the center of New York City development efforts. While all four participants agreed that continued growth is a necessity and the Amazon campus was a lost opportunity, there were nuanced opinions on whether growth is inevitable in a city as big and diverse as New York, and what the political climate has to do with it.

As they agreed on the need for growth, the panelists also agreed populist opposition to economic development projects around the city has shown that the city needs to do a better job communicating the benefits of those projects to the city as a whole.

“We do have a process problem,” Chakrabarti said. “Process is important and I think that people needed to feel like things weren’t happening in some backroom deal.”

Shortly before Amazon announced its plan to move to Queens last November, Crain’s reported that the state intended to circumvent the city’s land use review process, which gives deference to local City Council members and incorporates a lengthy public process. Days later, Amazon announced it would come to New York, triggering a backlash to the project, expressed largely by a core of progressive politicians and advocates expressing a range of criticisms about Amazon as a company, as well as the deal and the process that led to it.

“I think it's less what we -- we meaning the city and state governments -- did wrong than the times that we are in, in New York,” said Weisbrod, who after decades mostly in city government is now a consultant. “And I do think we all know we're in a period, on one hand, of extraordinary success in New York, and at the same time that success has created a lot of anxiety among a lot of people.”

Patchett, who was intimately involved in wooing Amazon to the city, expanded on the idea of an emerging psychology of anxiety around growth as opposed to stagnation, remarking that the city is experiencing “a moment in time when we're having a lot of growth -- we're not in a recession. So it feels like what we have today, we don't need to be as worried about what we might have tomorrow.”

“We have a youngish population who has experienced brutal housing prices and a congested subway system, who really have no memory or inkling of a time when this city was against the ropes,” added Chakrabarti, who helped lead post-9/11 economic recovery efforts, a bit later in the program. “And it's really hard to explain to people that that could and will happen again, probably at some point for some shock we don't know about sitting here today, and that those 25,000 jobs and the multiplier effects it would have had would help insulate us against that future shock.”

For Weisbrod, who has been a fixture in New York City urban development projects since the 1970s, this represents a “fundamental change” in the conversation. “We've always been a city that has, irrespective of political ideology, sort of implicitly if not explicitly recognized that we have to grow, not only for growth's sake, but because we are a city that provides more in the way of social benefits to our residents than any other city in the country.”

Because of the particularities of New York City -- it’s incorporation of five counties rather than being a part of a single one, its commitment to providing broad social services, and the lack of federal contributions to the tax base -- “we are increasingly dependent on our own ability to generate revenue,” Weisbrod added.

Another shift in the public dialogue, revealed by opposition to Amazon moving to a so-called outer borough, has to do with location.

“For 50 years at least...the city has had an economic development strategy of diversifying and dispersing jobs outside of the Manhattan core,” said Weisbrod. “And the irony is that this resistance to 25,000 jobs, however narrow-minded that resistance was, is the kind of resistance that took place because this was an effort to further the city's economic development policy, not simply in terms of tech, but also in terms of geography.”

Wylde challenged the panel to consider whether the problem had as much to do with the city’s approach to the deal -- especially its ability to engage with community stakeholders -- as the evening’s conversation suggested.

“Do we really think that this would have happened if it wasn't the biggest corporation, run by the richest man in the world, after the 2018 primary election?” she asked, with apparent reference to Alexandria Ocasio-Cortez’s upset victory over Joe Crowley in last year’s congressional primary, representing a Queens and Bronx district.

For Chakrabarti, it is a combination of the political moment’s hostility toward “big corporate” and local anxieties Weisbrod referred to. “It's really hard to extricate that because people were taking advantage of those anxieties in order to make their political point,” he said.

During a question-and-answer session, one audience member disagreed with the thrust of the conversation. The spectator told the panel, “I'm a little disturbed by the attitude that I hear from the EDC and also the Mayor that the primary problems involved in this were around communication, Amazon not being willing to work with the city, the national climate, and not really lending a lot of credence to people's opposition, that either for a large number of people this would negatively impact their lives or at very least they have very few mechanisms for pushing back at the way the city is transforming around them.”

According to Patchett, of the EDC, two-thirds of New Yorkers thought the Amazon deal would be good for the city, including more than 70 percent of Queens residents. “But that is not to undermine the very legitimate concerns that people had about this case” and about growth in general, he told the audience. “That's not just a feeling, that's a reality for a lot of people.”

But for the panel of city planners and economic development experts with pro-growth lenses, the look back at the Amazon deal was more of a post-mortem than an assessment of local concerns.

“I sort of have a sense like I’m at a memorial service here,” Weisbrod said at the outset.

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by Ethan Geringer-Sameth, reporter, Gotham Gazette
     

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Experts Point to Anxiety, Short-Sightedness and Political Climate in Amazon Deal Demise Tue, 14 May 2019 04:00:00 +0000
What's The [Data] Point? 5, with former Deputy Mayor Alicia Glen https://www.gothamgazette.com/city/8386-what-s-the-data-point-5-with-former-deputy-mayor-alicia-glen https://www.gothamgazette.com/city/8386-what-s-the-data-point-5-with-former-deputy-mayor-alicia-glen whats the data point


What's The [Data] Point? Episode 69 -- 5, with former Deputy Mayor Alicia Glen [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes]

wtdp alica glen deputy mayorAlicia Glen was Deputy Mayor for Housing and Economic Development under Mayor Bill de Blasio for more than five years, until she recently left the administration after being the chief architect of its signature affordable housing plan, a broad variety of economic development initiatives, and more. Glen joined the podcast (for the second time) for an "exit interview" on her legacy as deputy mayor, key issues facing the city and where the city is headed, the city's overall economic competitiveness, the Amazon deal that was undone, NYCHA, whether she would ever run for elected office herself, and other topics.

Listen to the conversation and let us know what you think: Ben Max of GG (@TweetBenMax), Maria Doulis of CBC (@MariaDoulis). Listen below or download wherever you get your podcasts!

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by Ben Max, Gotham Gazette
     

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What's The [Data] Point? 5, with former Deputy Mayor Alicia Glen Tue, 26 Mar 2019 04:00:00 +0000
Negotiation Lessons from the Amazon Deal Blow-Up https://www.gothamgazette.com/130-opinion/8343-negotiation-lessons-from-the-amazon-deal-blow-up https://www.gothamgazette.com/130-opinion/8343-negotiation-lessons-from-the-amazon-deal-blow-up may bill gov cuomo hq

Announcing the Amazon deal (photo: Ed Reed/Mayoral Photography Office)


Amazon’s decision to abandon its planned construction of a major campus in Long Island City has revealed deep fissures among New Yorkers. Typical of news coverage and commentary in these highly-polarized times, discussion of the issue has been framed in largely win/lose terms, both from the perspective of politics (progressives versus pragmatics) and the impact on the New York economy and lifestyle (“more jobs is always better” versus “union-busting vulture capitalist billionaires don’t deserve tax breaks”). As with most stories framed in win/lose terms, the narrative unfolds with heroes, villains, victims, and victors.

Governor Cuomo has said he’s trying to revive the deal. In the context of future conversations between New York State and Amazon, as well as other companies, it is worth exploring some of the common and avoidable negotiation errors that were made the first time around.

First, don’t overestimate your leverage. Amazon’s process for selecting a city for its “second headquarters” seemed to be a picture of its leverage. It used something called a “modified auction,” whereby it set up an obnoxious beauty pageant where contestants could come forward with their goods and where the mega-company was at once judge, jury, and rule-maker.  

City and state governments were invited to make their best offer to the behemoth, complete with outrageous tax incentives, promises of infrastructure improvements for Amazon’s benefit, and even pledges to re-name their city. Amazon then sat back, politely said, “Thanks for your entry” and narrowed the playing field to invite a second round of final “bids.” Only then did Amazon actually sit down for a real negotiation with a few finalists urging them to “sweeten the deal” even further before announcing the pageant winners.

On the surface, the process for Amazon sounds great, if you’re Amazon. But Amazon miscalculated the ill-will that the process itself would engender. First, pitting cities against each other, and then, once in New York, bypassing the local City Council’s approval process, had consequences. This was not a one-off auction for the sale of a Picasso at Sotheby’s. Instead, it was a process about who was going to be Amazon’s next-door neighbor, essential to its business, for the next ten, twenty, fifty years. Amazon’s approach galvanized opposition that might not have existed if it had not used such a power/leverage-based approach to the negotiation.  

Second, don’t forget to manage your “behind-the-table” constituency. Many New Yorkers viewed it as nothing short of miraculous that Mayor Bill de Blasio and Governor Andrew Cuomo, two deeply competitive leaders, came together, joining forces to win Amazon and crush the competing offers. It was equally surprising how these two New York powerbrokers, finally united, could possibly lose the deal. Confident of their ability to deliver and caught-up in the competition between themselves and other bidders, the governor and mayor failed to deliver the “behind-the-table” constituencies on their own side who might seek to block or tank the deal.

Great negotiators are simultaneously negotiating across the table while artfully working to build and maintain supporting coalitions behind the table. They are always seeking to build deals that meet their own interests very well, the interests of the other side at least reasonably well, and the interests of third parties who may not be at the negotiating table but who may have interests in the outcome and power to tank the deal at least well enough to ensure the deal would be durable.

Despite its flaws, the city’s formal and cumbersome land use procedure -- which Amazon sought to avoid -- tends to afford that level of engagement to various groups, and to give them a space to challenge and refine a project rather than to tank it. It’s unclear whether the governor and mayor underestimated the organizing power or will of those who might be upset with the deal, or simply forgot this basic negotiation principle. But in failing to work constructively with various stakeholders who might not have had a seat at the negotiation table but who, when organized, had considerable power to stop the deal’s implementation, the negotiating parties unwittingly turned skeptics into spoilers.

Finally, define “success” based on your away-from-the-table alternative. On the one hand, Amazon’s sudden decision to pull out of the New York deal could be seen as victory for local Queens leaders who opposed it. And certainly, they celebrated its defeat and cheered the power of the people to “take their city back.”

At least in the short term, the leaders may have protected themselves among the most reliable Democratic primary electorate. But in negotiation, it’s important to measure “success” not based on the ephemeral, emotional feel of a “win” in the heat-of-battle, but rather based on whether what you are getting is better than what you are leaving behind. If a deal on the table advances your interests (broadly construed) better than no deal at all, then walking away from the deal is not a good outcome, even if it makes you feel good in the moment or if you believe it may help you in the next election.

In this case, the deal was far from perfect for New York or its workers. The city and state had offered $3 billion in tax and other incentives, plus a helipad, to a huge company whose owner is one of the richest men in the world and bypassed the City Council’s entire land use process while doing so. The company refused to provide guarantees around not opposing union organizing, and would have created a significant burden on local transportation, schooling, and other infrastructure.

Could a better deal have possibly been negotiated? Yes. However, it is also the case that the deal that was negotiated would have likely brought in $27.5 billion in tax revenue to New York over 25 years and approximately 25,000 new jobs in the first ten years alone. Of course, these are estimates, but even if they are remotely accurate, the upsides of this deal seem to outweigh no deal by a wide margin, especially since there is no immediate back-up plan to generate revenue or jobs at anywhere near this scale.

While it is clear that individual elected officials believed there was significant political upside to derailing the deal, it’s hard to see how Amazon’s abrupt withdrawal is a win for the people of New York, at least vis-à-vis the no-deal alternative. And yet, parties often reject deals that are better than their no-deal alternative because they allow emotions to escalate, and do not measure success in relation to what no deal would get them.

Not all negotiation errors are avoidable. But these were. When leaders focus on leverage, ignore the creation of possible blocking coalitions, and let emotions get the best of them, even seasoned and sophisticated negotiators will end up with less-than-optimal outcomes. Because the entities in play are one of the world’s greatest cities and one of the most prosperous and growing companies in the world, all involved will survive, even thrive, over time. But from a negotiation perspective, it’s hard for us to look at the outcome as anything but a loss and a missed opportunity for all.

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Robert C. Bordone is the Thaddeus R. Beal Clinical Professor of Law at Harvard Law School, and Daniel R. Garodnick is a former New York City Council member, where he chaired the Economic Development Committee. On Twitter @bobbordone & @DanGarodnick.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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Negotiation Lessons from the Amazon Deal Blow-Up Fri, 08 Mar 2019 05:00:00 +0000
Amazon Was Never Going to Create 25,000 Jobs in Queens https://www.gothamgazette.com/130-opinion/8327-amazon-was-never-going-to-create-25-000-jobs-in-queens https://www.gothamgazette.com/130-opinion/8327-amazon-was-never-going-to-create-25-000-jobs-in-queens gov mayor lic

(photo: Kevin P. Coughlin/Office of Governor Andrew M. Cuomo)


Now that Governor Amazon Cuomo is grovelling for Amazon to come back to New York, it’s important to remember that the original sin of the “HQ2” deal is still true: Amazon was never going to bring 25,000 jobs to Long Island City.

That might surprise people, particularly since that number and its related economic activity have been the central arguments used to defend the deal. But to be clear, Amazon never actually promised to bring 25,000 jobs. Period. Go look for it.

Supporters point out that Amazon would get the full package of tax incentives, which are available to any company, only if it created the 25,000 jobs. That's absolutely true, but it proves the point. It shows that Amazon didn't need or really want the job incentives. Instead, it played off our failed economic development policies to get what it actually wanted.

What Amazon did care about, what it wanted more than anything, and what it would have gotten in the deal was a shiny new East River campus quickly, quietly, and cheaply.

First, Amazon didn't want to engage with the community or be a good neighbor. All of this would have taken a lot of time, but the real issue was that it would have involved making promises to the community that Amazon had no intention of ever making. The minimal promises it did make were entirely on its terms (and changed only slightly after pushback before Amazon finally walked).

Second, Amazon didn't want to pay the full cost of acquiring the choice land that it wanted to build its campus or go through the city’s land use review process (ULURP). That would have involved stringing together multiple lots at fair market value and convincing the city to sell public land. That would have meant more engagement with the public (and the City Council) and more commitments.

Third, Amazon knew it had to hire union labor for constructing and servicing the campus, but didn’t want to pay for it. More importantly, it didn’t want that to be a backdoor to unionizing its own larger workforce, especially in distribution centers. As much as some supporters have pointed to the construction and building-service jobs as evidence that Amazon was willing to work with unions, it was a political necessity to do so and had the added bonus of splitting the labor movement in New York. Amazon was never going to allow unionization in its Staten Island or other distribution centers as part of the deal.

By “promising” 25,000 jobs, Amazon got everything it wanted in the Memorandum of Understanding with the city and the state. It bypassed the City Council and real public review when the governor deemed “HQ2” a General Project Plan. It got its riverside campus when the mayor effectively turned over public land on a sweetheart lease (unquestionably saving Amazon hundreds of millions of dollars that weren’t and haven’t been included in the cost of incentives) while also killing a private development that included affordable housing and was going through the proper land-use channels. And Amazon got a flat out cash transfer of $325 million (with a possibility of up to $500 million) to cover costs of using union labor on construction.

Still, Amazon never had to deliver the jobs. To be sure, it was going to have a large workforce in Long Island City by consolidating several thousand employees already in New York and transferring more from Seattle. There is also no doubt that it would have hired some new employees locally. But there were no real promises of how many, at what salary, or from what communities. That just means we were going to give a competitive edge to Amazon by subsidizing an abstract total of jobs at a time when job growth is fine in the city.

As we've seen with Foxconn in Wisconsin, General Electric in Massachusetts, and just about every development project Governor Cuomo has produced (and his Economic Development Corporation has justified), the promised jobs and economic activity from these incentives rarely materialize, whether the companies get all of them or not. However, the public is always on the hook and companies almost never are.

Amazon exploits these policies all the time with its distribution centers (see Florida, Texas, California). They promise direct and indirect job creation that never happens. Amazon knew it wasn’t going to deliver 25,000 jobs and would never be held accountable for failing to. Amazon wanted its New York campus and simply took the flawed logic of our economic development policies to their extreme to get it.

Let’s not forget the bad faith Amazon showed when it originally announced the "contest" in September 2017. Remember, back then it wasn’t for 25,000 jobs -- it was for 50,000 jobs. Amazon and the media moved on quickly from that bait and switch, but we shouldn’t.

Amazon prides itself on being data-driven and strategic (yet: counterpoint), which means it’s safe to assume that the D.C. area and New York City had already been selected - making the whole idea of a “second headquarters” bogus from the beginning.

But why not announce a “contest” saying you’re going to create 50,000 jobs and have every city and state fall over themselves to compete for it? Amazon got a year’s worth of free advertising. It got reams of data from cities for future expansion and whatever else it may attempt. It forced New York and Virginia to offer billions for something it was already going to do and could easily afford.

Most importantly, Amazon got New York and Virgina to turn over land for campuses quickly and with no public review.

Back in December, I wrote about how I thought the Amazon deal was in trouble. Then, as now, it was clear that the deal was negotiated in bad faith from the beginning, that it would not actually do what the mayor, the governor, and Amazon said it would do, and it would not hold Amazon accountable for when it inevitably failed to live up to its vague end of the bargain. That is all still true.

Amazon is incapable of being a good partner. Everybody knows that now. Everybody knows how it treats its workers, its home city, and who it does business for. If it really needed a home for 25,000 jobs in New York City, it would have negotiated in good faith and worked through the concerns of the community it was moving into.

Instead, it wanted an insulated campus apart from the community paid for by the community, and bailed when it wasn’t served on a platter. Activists and a few steadfast local politicians accomplished a great public service by showing the real face of Amazon.  

More importantly, the “HQ2” ordeal shows the fatal flaws in our economic development policies that Amazon so cleverly exploited. Taxpayers spend $90 billion a year pitting cities against each other for unsubstantiated job numbers, which only works out for corporations and their shareholders.

This is done instead of solving the cities’ actual problems like the lack of affordable housing, overcrowded schools, a crumbling transportation system, and skyrocketing child- and health-care costs. It goes without saying that investing in this public infrastructure would also lead to new, bottom-up job creation -- many more than 25,000 -- for all kinds of New Yorkers, new residents, and new businesses.

As his recent grovelling has proven, Governor Amazon Cuomo has been guilty of this more than anyone. He values the optics of a ribbon-cutting ceremony on the East River with Jeff Bezos over the hard work that it takes to create actual jobs. Let’s hope Amazon’s bad faith trumps the governor’s and they stay gone.

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Peter Harrison is a member of NYC-DSA and CEO/Co-founder of homeBody, a public benefit startup. On Twitter @PeteHarrisonNYC.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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Amazon Was Never Going to Create 25,000 Jobs in Queens Tue, 05 Mar 2019 05:00:00 +0000
What's The [Data] Point? 25,000, The Amazon Deal That Vanished and What It Means https://www.gothamgazette.com/city/8298-what-s-the-data-point-25-000-the-amazon-deal-that-vanished https://www.gothamgazette.com/city/8298-what-s-the-data-point-25-000-the-amazon-deal-that-vanished whats the data point


What's The [Data] Point? Episode 66 -- 25,000, the Amazon Deal That Vanished and What It Means, with Vishaan Chakrabarti [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes]

vc amzn150Amazon was coming to Queens with 25,000 jobs and now it's not -- the mega-deal fell apart and the company backed out amid significant pushback from some local elected officials, community activists, and labor unions. Vishaan Chakrabarti, an architect and urban planner who helped lead the Bloomberg administration's Manhattan planning efforts after 9/11, was a proponent of the Amazon deal and believes New York will rue the day the deal fell apart. He joined the podcast to discuss it all, and what comes next.

Listen to the conversation and let us know what you think: Ben Max of GG (@TweetBenMax), Maria Doulis of CBC (@MariaDoulis). Listen below or download wherever you get your podcasts!

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by Ben Max, Gotham Gazette
     

Read more by this writer.

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What's The [Data] Point? 25,000, The Amazon Deal That Vanished and What It Means Thu, 21 Feb 2019 05:00:00 +0000
After Amazon: Establishing Our Local Pipeline for Future Opportunities https://www.gothamgazette.com/130-opinion/8301-after-amazon-establishing-our-local-pipeline-for-future-opportunities https://www.gothamgazette.com/130-opinion/8301-after-amazon-establishing-our-local-pipeline-for-future-opportunities general lagcc 600

(photo: LaGuardia Community College, CUNY)


With Amazon’s pronouncement to put the brakes on its plan to bring part of its new headquarters to Long Island City, it’s time to make lemonade out of the many lemons left in the wake.

Amazon’s decision to locate here centered on our city’s ability to get the company the talent it needs to grow. It’s what every company, large and small, needs to thrive.

When Amazon first announced it was coming, one of the first questions raised was: who will benefit? Would the 25,000 jobs help our local community, including the residents of Queensbridge Houses, the nation’s largest public housing complex, and LaGuardia Community College, where more than 70% of students come from households with incomes of less than $30,000? What kinds of jobs would be open to someone with just a high school diploma, an associate’s, a bachelor’s? Would it be New Yorkers who benefitted, or people recruited from elsewhere in the country and the world?

In my engagement with City, State, and Amazon representatives, it became clear to me that New York (and conceivably many localities) needs a stronger, integrated system that links private and public spheres to educate future employees. Amazon’s proposed campus in Long Island City highlighted the need for that more robust, sustained development of talent pipelines in the fundamental field of tech, especially for people in low-income communities.

The first step is more employers willing to establish long-term partnerships with local colleges and universities so there’s clear understanding of the technical, intellectual, and practical skills needed for job-openings. Without strong employer partnerships, we can’t be certain that our students will be job-ready upon graduation.

We need more companies, especially tech companies, willing to invest in developing local talent by providing paid internships and mentorship opportunities for nontraditional and traditional students alike. We need more collaborations to create job-specific training programs, like one we have with Google to provide training in IT support.

Without far-reaching programs that connect students who are older, poor, or speak English less than well, tech employers will continue relying on the same private and elite-college networks for hiring.

Fledgling progress was being made with Amazon to create pathways to jobs. At the end of January, Amazon announced a collaboration with LaGuardia Community College, CUNY, and SUNY to create a program to train people (with at least a high school diploma) for jobs in cloud computing.

But more than programs, public officials, employers, and educators must convene and nurture the building of an ecosystem that connects the many assets a community can use to establish a collaborative approach. If a community can encircle a potential employee with support and education, and companies can create bona fide paths to employment, there is no limit to the amount of social mobility and community vibrancy that can be created.

LaGuardia Community College knows how well employer-education partnerships can work when it all comes together. Queens resident Matt O’Connor was working full-time packing boxes at a nearby delivery service when he came to LaGuardia to channel his passion for coding. He was offered internship opportunities that grounded his classroom work. Matt first interned at the tech accelerator Entrepreneurs Roundtable Accelerator, where he worked with small tech start-ups. His next paid software development internship was at Place Pixel, a company that creates next-generation mapping experiences. It went so well that he was offered a full-time job with an equity share in the company. Matt said it felt miraculous when he was able to quit the package delivery company. Today, he’s a full-time software engineer at the company SevenFifty.

But with better and more targeted resources, we can do even more. We need elected officials to step up and increase the investment in our public colleges: to give us the resources to re-imagine what and how we teach. We need to be able to hire and support full-time faculty who can effectively teach complex material, particularly to a diverse student body. We need the funding to support the collaboration across organizational silos. It’s not just the funding for expanding holistic support like child care, and philanthropy to support transportation, emergency funds, and an on-campus food pantry. It’s also dedicated funding to link the path from the housing projects to training, and from training to college.

Over the coming weeks and months, there will be much analysis of what went right or wrong with the Amazon deal. No matter who declares victory, what Long Island City is left with does little for the low-income and aspiring New Yorkers who remain on the sidelines. Let’s not lose a moment in getting our talent prepared for whatever happens next, whether it’s the next Amazon wanting to locate here or the start-up just beginning to get launched.

Whether you are cheering or bemoaning the crumbling of the agreement, we can all agree those who’ve been historically locked out of job opportunities in the fastest growing industries need more pathways to these good, steady jobs that enable them to provide for themselves and their families.

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Gail O. Mellow is President of LaGuardia Community College. On Twitter @LaGuardiaCC.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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After Amazon: Establishing Our Local Pipeline for Future Opportunities Thu, 21 Feb 2019 05:00:00 +0000
‘So Poisoned and So Full of Misinformation’: City Economic Development Chief on How the Amazon Deal Fell Apart https://www.gothamgazette.com/city/8303-so-poisoned-and-so-full-of-misinformation-city-economic-development-chief-on-how-the-amazon-deal-fell-apart https://www.gothamgazette.com/city/8303-so-poisoned-and-so-full-of-misinformation-city-economic-development-chief-on-how-the-amazon-deal-fell-apart mabdblasio gov and cuomo qus

(photo: Ed Reed/Mayoral Photography Office)


James Patchett, CEO of New York City’s Economic Development Corporation, spoke to a packed room on Thursday morning about the reasons behind Amazon’s cancellation of its planned Long Island City “HQ2” campus, in what was a joke-laden and rueful conversation of what could have been and what went wrong.

Recounting that he learned of Amazon’s reversal a week ago, on Valentine’s Day, while watching Tom Hanks in “Cast Away” – “the one about a lonely capitalist who gets lost at sea,” he said – Patchett brought the joke home with an image of “Wilson,” the volleyball in the movie, sporting an Amazon-symbol sad face instead of his bloody handprint, eliciting laughter from the room.

Amazon announced its plan for a New York campus in November, a result of stiff competition among cities and states around the country for the economic growth all but guaranteed by the company’s large-scale presence. According to Patchett, Amazon would later tell him the 300-page New York proposal was the best they received during the bidding process. Had the Queens campus opened for business, projections from Amazon, the city, and the state said it would create 25,000 to 40,000 jobs and $30 billion in tax revenue over 10 to 15 years.

Patchett helped negotiate the Memorandum of Understanding (MOU) agreement along with other city officials, state officials, and the company’s representatives. That agreement was announced by Mayor Bill de Blasio, who appointed Patchett to his job at EDC, Governor Andrew Cuomo, and Amazon’s John Schoettler, among others, on November 13, 2018.

After significant pushback to the deal from several local elected officials, community groups, and labor unions, Amazon decided to abandon the New York plan in a surprising announcement on last week, coinciding with Valentine’s Day. De Blasio immediately blamed the company for jumping ship without further negotiations, while Cuomo took on State Senate Democrats, especially lead Amazon critic Senator Michael Gianaris of Queens.

Preparing New Yorkers and the five boroughs for the jobs and companies of the future was the overarching theme of Patchett’s Crain’s appearance, which had been scheduled before Amazon pulled out of the deal. Patchett should have been reveling in the success of architecting the Amazon deal. But, as one moderator noted, “Instead of a coronation, you had a coronary.”

Patchett said fundamental misunderstanding of the deal between New York and the Seattle-based tech behemoth was to blame. “If you were reading the media, you would have thought that I was having drinks with some of my best friends, and they said ‘Why did you write them a check for $3 billion?’” he said. Many, including members of the media and regular citizens, “believed it was literally a cash transfer from the outset,” said Patchett. Instead, “Nothing was actually promised to the company,” Patchett said, in apparent reference to the roughly $2.5 billion in tax breaks involved, but ignoring the $500 million cash capital grant the company was to receive from the state. “What [the subsidies] were is a representation of existing state law which has long-sought to incentivize outer-borough commercial growth,” he said.

Patchett also cited other reasons he sees for the deal’s demise: Amazon’s lack of preparation to react to opposition to the announced Queens campus, the company’s representatives’ not performing “particularly well at their public hearings” (where they sat next to Patchett for questioning), and Amazon “never hired a single New Yorker to work for them, to talk to New Yorkers, and never really connected with people in the city”-- though the company did hire several city-based lobbyists.

The event, held by Crain’s New York Business, included remarks by Patchett followed by a question-and-answer session moderated by Crain’s assistant managing editor Erik Enquist and Spectrum News’ Michael Herzenberg. They waited only a few minutes to ask about the Alexandria Ocasio-Cortez effect on defeating the deal, referring to the Congressional representative from Queens and the Bronx by her nickname and Twitter handle, “AOC.”

“Politics is obviously not my expertise, nor am I going to pretend it is,” said Patchett. “But I think it’s important to talk to local elected leaders. I don’t think the rollout here went as smoothly as it could have, I think that’s clear.” But he added, “I don’t think [the rollout] was a fatal flaw to the project.”

Moving to the larger economic outlook for the city, Patchett used cybersecurity as an example of a growing sector. Although it’s an industry with opportunities, New York is catching up to its growth potential through an EDC initiative, he said. “It has the real potential to be a win by protecting our current employers from cyber threats, and at the same time, growing a whole new crop of businesses,” Patchett explained. Cybersecurity sector growth is a key aspect of the mayor’s jobs plan he announced in June 2017 at a press conference at a cybersecurity firm in Manhattan.

He also stressed the need for expanding job growth outside of the central business district of Manhattan, something that has been a key priority for the city for years, and is at the heart of some of the tax breaks at play in the Amazon deal, which were designed broadly, not specifically for Amazon.

But when it came to “HQ2,” set for Queens, “Not enough people could see themselves in [Amazon’s] jobs,” said Patchett. “People like the idea of jobs, but until you make them real for people, they don’t associate with them. We need to do a better job of making people not just hear about jobs, but believe those would be the jobs that they would get.”

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‘So Poisoned and So Full of Misinformation’: City Economic Development Chief on How the Amazon Deal Fell Apart Thu, 21 Feb 2019 05:00:00 +0000