Amazon HQ2 Update
Interesting piece from Bloomberg today. Pretty much confirming what I thought a year ago, that Amazon completely screwed up the whole process by not recognizing that the optics of demanding anything from New York City, a hyper-liberal thriving economy, was bound to blow up in their face.
And for those who criticized the opposition to Amazon, this is further proof that the whole process was handled badly by the City and State as well. Whether or not you agree with the reasoning behind asking Amazon for further negotiation surrounding their incentive package (and mind you, that was all it was, Amazon just couldn't deal with not being seen as an unalloyed good thing), the fact that local electeds were kept out of the loop pretty much guaranteed everything would go sideways, and with good reason.
While it's always tough to know how much to trust anonymous sources, this seems pretty legit.
"Jeff Bezos Was Jealous of Elon Musk" is such a fantastic headline
the funniest thing is that jeff could just buyout tesla if he wanted to
that's not true at all anymore, the stock has reached an inflection point and it will continue to grow. In
DC is a also a hyper-liberal thriving economy, so...
Sure, but NoVA is also far more business friendly than NYC.
Corporatist. Northern Virginia is corporatist and getting worse.
Crystal City not looking like post meltdown Chernobyl is worth it.
It may be the ugliest collective office submarket in the country.
My issue with HQ2 is that the government used tax payer dollars to pick a winner at the expense of a bunch of smaller companies that are already in a vicious battle for talent. The government transferred their tax money to a larger competitor (competitor for talent). And now we find out in recent articles that HQ2 exists largely so that Amazon could extract monetary concessions from governments.
I detest this kind of corporatism. I can't think of anything I hate more about our politics than this sh*t. The upside, of course, is that Crystal City will become less Soviet-looking.
I want to join you in the anti-corporate America narrative, but they did go to Crystal City - not Hill East or Tyson's which was originally the rumor. Had they gone there, maybe. They completely revitalized Crystal City which was left for dead after BRAC. That being the entry point to the city after flying into DCA - sad. Unless you live in the DMV, you'll never understand how big of a drop off you witnessed crossing the 14th street bridge back into VA.
All I know is, I'm a DC resident so I didn't pay for it, every building is under rent control so I'm paying the same regardless, and the price of coffee is just as egregious as it was before. What company were they going to help instead, Northrop? The worst of the worst death science companies are the only people taking office around the Pentagon, and they're getting enough gov't assistance.
The tax payers became JBG's kingmanker. Instead of letting a private company figure out how to utilize its own property, they made JBG's owners rich. That's not how the market is supposed to work.
And yes, as a D.C. resident, you ARE paying for it if you have a company that competes for talent; the tax payers of Virginia just undercut your business with their corporate welfare to Amazon, making it harder for you to compete.
As for the rest of us residents in Arlington, property listings have collapsed as no one wants to depart with their house in order to speculate, making it even more difficult for us to buy houses and again making a narrow group of people rich at the expense of others.
JBG is public - and the vacancy in Crystal was a rounding error over there.
We're not going to agree on this, as your argument just underscores mine - things are better over there now.
The EZ-Pass lane is extending to Stafford, might be time to get outside the belt.
Not relevant. Investors are owners. That's accounting 101.
I'm not sure I understand your point. If this wasn't relevant to JBG then why did they lobby so hard to win the deal? Obviously, someone at JBG got a huge bonus to take my money. Talk about a wealth transfer
We're not going to agree on this because you don't care about the principles. You say, "Meh, this is one deal. Not a big deal. If you don't like it move to Stafford" The reality is that corporate welfare--socialized risk, privatized gains--are common in our economy. It creates no organic wealth; it just robs from Peter to pay Paul. This is so common in our economy that it feels commonplace, but the Amazon deal was so grotesquely public that it finally sparked outrage. I can't stand AOC, but a broken clock is right twice a day.
As far as Crystal City goes, it could have been great with or without Amazon. Local leadership spent more time debating changing the names of high schools and street names to stick it to the Confederacy than working with local property owners to improve infrastructure and land entitlements. Arlington didn't need to engage in cronyism and corporate socialism to fix Crystal City; that's what Arlington chose.
NoVa is really nice but it just feels completely soulless. No character, no culture, just identical upscale conods and wegmanns and lululemons and starbucks everywhere.
They're not in DC. They're in Northern Virginia, for one thing.
Trust me, if Amazon had wanted to go to Albany or Syracuse or even Yonkers/White Plains, there would have been 99% less outcry.
Not arguing against your point, just making the point that a very left leaning community got it through.
And anything of scale in NoVa, DC, or Maryland is contemplated on all of those levels. No one from amazon is living in Crystal City.
Are you picking Yonkers/Albany/Syracuse/White Plains because you think those are places that represent the same distance from NYC that NoVa is from DC? I feel like a closer comparison would be Brooklyn.
The deal didn't get done because there is a financial literacy issue, as (liberal) commentator Andrew Ross Sorkin explains:
https://twitter.com/andrewrsorkin/status/1096169799074398208?lang=en
This isn't entirely true and Mr Sorkin is misrepresenting most, if not all, of the relevant issues.
First off, enforcement of these kinds of a programs is extremely difficult; Amazon gets the tax breaks and isn't necessarily held to any sort of enforceable standard in terms of fulfilling it's end of the bargain (see: Foxconn). So while he is correct that no one is handing Jeff Bezos big sacks of cash, it's also not entirely wrong to state that Amazon is receiving a large tax benefit today for maybe providing some tax revenue in the future.
Second, it completely ignores the concept behind the tax abatement programs in NYS. Those benefits are designed to bring jobs to economically blighted areas; Rochester, Buffalo, etc. Or at the very least, the Bronx or Eastern Brooklyn. Not the thriving, rapidly gentrifying areas like Long Island City. While those benefits may have been in large part (but not entirely) "as of right," stripping them of the policy goals they're associated with is misrepresenting the facts, too.
Third, lets not let Amazon off the hook here. No one was pulling their benefits. No one was telling them they weren't wanted. What was said, and what people were against, was the fact that these negotiations took place without the input of local stakeholders, and there was anger surrounding that. Did Amazon make the slightest effort to explain, or give the city/state time to? No, they pulled out immediately. The absolute pettiness of it underscores how something about the whole process was off. Amazon was clearly more interested in being welcomed to their new second home with a ticker tape parade and an outpouring of love, than in any of the inherent benefits of working in NYC, or else they would have made a slight effort to stay. I won't even touch on the various ways in which Amazon was a net negative for many of those same local stakeholders.
Finally, it's worth noting that the city/state is getting many of the same benefits anyway. Amazon is taking hundreds of thousands, if not millions in aggregate, of square feet of space, which means thousands of jobs. And yes, they'll get the benefit of some abatement programs. But the argument against Amazon was always that the State should have made a concerted effort to get Amazon in an area that isn't one of the most economically vibrant areas in the country, and instead they seem to have folded like a wet blanket and told Amazon to pick whatever piece of real estate caught their eye.
Or, you know, developers sitting on unsold/unleased inventory in western Queens promised Cuomo a ton of campaign money if they brought enough new people to the area to save their bleeding projects.
EDIT: Forgot to mention that contrary to Mr Sorkin's tweet, there were $500mm+ in grant money associated with the overall package. So a substantial portion of the subsidy being awarded was, in fact, an opportunity cost to other projects.
Do local stakeholders deserve a say beyond the fact that they already live in a democracy where they get a vote like everyone else?
I think the implied here that amazon is somewhat bothered or hurt by this is completely idiotic. It would have been great for NYC jobs wise, don’t think it is something amazon is super bothered over. Don’t see why they would be
Then why did they decide not to stay in NYC? Your argument is demonstrably false, because Amazon did care and did get bothered over. There wasn't even an attempt at renegotiation. It's obvious that the bad press clearly blindsided Amazon, and that they abandoned LIC because of it.
Moreover, on a general note, these kinds of tax incentive programs almost never deliver the benefits they promise, so wanting additional investigation into those conditions is perfectly reasonable. Government doesn't exist to make it easier for Amazon to come into a high talent, high quality of life city at a reasonable price.
I currently work in crystal city....this area is way overdue for revitalization and amazon coming has already kickstarted that. This area had one of the highest office vacancy rates and low rents to attract people but even that wasn’t enough half the time. My building was built in 1960 and it’s about to be demolished. The restaurants generally suck, the apartments generally aren’t that nice for what you pay, etc. I’m excited that this side of Arlington is getting a facelift as are so many other people. Say what you will about “the amazon effect” but houses are already overpriced so at this point who really cares...they just get rid of these old ugly rundown houses from the 1950s that start at $600k for a fixer upper and build some new condos in those lots for the same GD price. That is all.
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