It's not like NYC is paying Amazon to come to NYC. NYC would still make huge tax revenues from additional sales, real estate, income taxes, and corporate taxes.
Now they're turning that all away. It's such an irrational decision that if I were Amazon, it would raise a big red flag for me as well.
No need to open in a community that doesn't want your money.
"that otherwise wouldn't be paid at all"
The opposite is true, 100% of those taxes will be paid by some other business. Maybe you could make your argument about the New York City of the 1970s, but you sure as heck can not make that argument about the New York City of 2019. New York City is not starving for investment, rather, its biggest challenge nowadays is managing its fast growth. Other businesses will move into those buildings, and hire those workers, and they will pay normal taxes, which is a lot more than what Amazon offered.
And would the employees of these businesses earn on average equal to or greater than the average NYC Amazon employee?
These aren't rhetorical questions, and I don't know enough about Long Island City to have a confident guess at the answers but when evaluating whether Amazon HQ is economically a net positive, these are important to know.
Does it matter? If they earn enough to live and spend locally then isn't that good enough?
Some Amazon employee giving a developer an extra 1000 bucks a month for a luxury apartment and getting their food delivered instead of going to the store isn't exactly an amazing economic benefit.
Obviously not all 25000 employees would get an extra 1k, but the point being...these things can scale significantly when you're talking about Amazon. It's not a trivial thing for SMBs to fill the void that Amazon is leaving.
Can you explain this some more? Are you suggesting that governments establish a target figure and adjust that year's tax policy to make sure it's met?
The existence of budget deficits suggests otherwise.
They are just suggesting that the site that Amazon would have occupied will be rented by some other business. Probably, that business will not have gotten all the tax-breaks that Amazon did. Therefore, the tax collected by NYC on that space will be larger with Amazon gone.
Also, pretty crappy to get downvoted for an honest question.
That being said, businesses, like people, should have equal protection under the law. I amazon gets a sweetheart deal, every other business should too.
But mostly, it's obvious growth that looks good for politicians who can say, "look, I brought jobs!" People notice it when a high profile company arrives whereas if your local chain expands, that's not even a news story.
Much of the political aspect of economics is due to the relative visibility of various events in the media.
This is New York City. There will be other businesses—ones that don't need to be lured by special deals.
https://www.nytimes.com/2018/11/13/business/economy/amazon-h...
NYC was basically offering the same thing to Amazon: "hey come live in our city, we will give you a temporary tax reduction, in exchange for a TON of money over the next X years".
Overall the city wouldn't have lost money, it would have gained many billions of dollars of additional money in the future in exchange for an initial 2 billion reduction.
- Come next year, the default position is "you get a 10% rent hike by just paying the number on the lease."
- if you leave after a year, I've got price history at $4000 a month and can use that as an anchor for negotiations with the next tenant
There's nothing that says I have to start from fair market value and take a month off either. Say I call the apartment price 12/11ths of market value, but then advertise the net number and each month your great deal lets you pay only 11/11ths of FMV.
Bloomberg had something about this today[1] - something like 45% of leases in NYC have similar concessions.
[1]: https://www.bloomberg.com/news/articles/2019-02-14/manhattan...
A 5 second Google search shows hundreds of results for 1 month free rent in apartment listings.
What exactly are you contributing to the discussion?
NY is a shell of what it was in 2005/2006. Yes, there are more tech firms, but the 500,000 or so jobs lost after the financial collapse in 2008 have not been made up for. I welcome Amazon bringing in well-paid positions, because as a New Yorker, I'd like the city to support a middle class, not just wealthy foreigners parking money into LLCd condos staying empty.
Much of the gentrification could be due to the free money and ZIRP policy in the US -- it is cheap to borrow and thus people, especially wealthy people/corps, borrow heavily and raise prices and rents. There is little correlation between actual income and rents in NYC because of this external booster.
Wouldn't it be better if the source of rent increases in NYC be the presence of lots of well paying jobs?
However, I think we can do better than giving massive tax breaks to megacorporations with bad records on labor relations and what has seemed to be an adversarial relationship to government and public services. I have no interest in seeing a replay of what’s happened to SF in NYC.
I think it’s important for cities to stand up for the interests of all their citizens, not just software developers and product managers (etc) in negotiations with increasingly powerful tech companies.
I believe OP is right that the month's free rent offered on an apartment is recouped by the landlord: in the form higher rents, which have become a real problem for many people born and raised in the city and which would likely only be exacerbated by Amazon's setting up shop here, especially under the conditions offered by the city.
Over the past 20 years New York has experienced an influx of wealth without commensurate investment in public services. The MTA is dying, urban blight is spreading and many of the new professional class moving here don't seem bothered by it.
Another piece of "anecdata": walking down Bedford Ave. in Williamsburg a few years back, I heard one wealthy newcomer say to another that she couldn't wait for the local pharmacy across the street from the new Duane Reade to close. Maybe this anecdote doesn't have the force of a "real data" but it may help some people on here understand why New Yorkers aren't thrilled by the prospect of a building a big Amazon campus and welcoming them with a handout.
https://harpers.org/archive/2018/07/the-death-of-new-york-ci... Unlike the author of this article, I'm not averse to my city changing, but I'd like to imagine something other than the change we've been seeing...
I'm not gonna lie, I'm part of the gentrification problem over the last five years, but to be fair New York gentrified me at the same time that I helped gentrify the neighborhood. I only made about 30k a year before I moved to New York and I lived in a trailer home back then. After moving to New York I got a few different tech jobs and now I live in one of those over-priced one month free buildings.
I share my story just to say that in my perspective gentrification is a complicated system, and like you I also have a personal stake in all this. In my experience working in tech in New York has been a huge opportunity to improve my life. Amazon would have offered roughly another 25k people such an opportunity, some of them would have been newcomers, and some hopefully long term NYC residents. I can't lie, some people might not have benefited as much as others, but at least those 25k would have been able to get the same opportunity I did when I moved here.
You should also recognize that many people would be actively harmed by it, not just "not benefiting as much as others".
Whether the benefits outweigh the harm is a question I can't answer, but even if they do, it's still true that people are hurt.
None of these issues are easy or clear.
I live in that part of Seattle. It's the same part where people want to ban all cars because they never have to go anywhere that isn't walking distance, and their dog loves walking.
"One month free" is one of the oldest tricks in the NY real estate book, along with "preferential" rating.
[1] https://www.duluthnewstribune.com/business/technology/430953... (The estimated recoup time is 25 years, which means the plant will be obsolete before the state sees a dime of net revenue.)
That is fallacy of excluded other possibilities. Especially for a place like NYC.
I generally like AMZN, nevertheless I'm happy just on sheer principle that the bullying behavior by the 800lb gorilla didnt succeed this time.
It is exactly like a pushy customer demanding a discount on their groceries, saying: "Well, if I don't buy them you won't get any money at all!"
If you are confident you can sell enough groceries at the regular price, the economically correct decision is say "I don't need YOUR money" and laugh in their face.
Guaranteed sale is nice, but if I think I can clear out those cars pretty easily without a discount I'm gonna be a lot less inclined to do it.
And schemes like these exist in most countries out there, it's not just a US thing.
In your original example, the only reason why it would ever make sense is if the Saudi prince in question can somehow produce more wealth for the public than they'd pay in taxes. In that scenario, it's exactly the same in the end, once you balance everything - you have sold them citizenship for money.
And if they don't pledge to earn you more than you'd save, then why would you even consider such a deal?
What's irrational is not following up by banning every single deal of this type. Every single one.
The US and NYC specifically is approaching historic levels of inequality. If you want to reverse that you have to say no to giving one of the most powerful companies in the world a sweetheart tax deal. If NYC doesn't say no then who will? The scuttling of this plan doesn't reflect a lack of rationality. It reflects different priorities than you have. The more powerful Amazon gets thanks to these sweetheart deals the more leverage they will have and that can mean negative consequences for the populace.
Why even pick NYC in first place ? That place, and other 1st tier cities, are red tape hell. Amazon should have known this.
If you can get high-tech companies who are willing massively expand to create lots of GOOD JOBS without have to short $3 billion from the state budget, that might mean that the $3 billion dollars was a total waste and boondoogle....
No they aren't. They're expanding by about 7000.