Facing opposition, Amazon reconsiders NY headquarters site, two officials say

Amazon.com is reconsidering its plan to bring 25,000 jobs to a new campus in New York City following a wave of opposition from local politicians, according to two people familiar with the company's thinking.

The company has not leased or purchased office space for the HQ2 project, making it easy to withdraw its commitment. Unlike in Virginia—where elected leaders quickly passed an incentive package for a separate headquarters facility—final approval from New York state is not expected until 2020.

Tennessee officials have also embraced Amazon's plans to bring 5,000 jobs to Nashville, which this week approved $15.2 million in road, sewer and other improvements related to that project.

The Indianapolis region bid for the HQ2 project and made a list of 20 finalists. Local officials said it's likely central Indiana did not have the tech talent needed to fill thousands of jobs that are to be created by the projects.

Amazon executives have had internal discussions recently to reassess the situation in New York and explore alternatives, said the two people, who spoke on the condition of anonymity to speak candidly about the company's perspective.

"The question is whether it's worth it if the politicians in New York don't want the project, especially with how people in Virginia and Nashville have been so welcoming," said one person familiar with the company's plans.

Hailed as an economic triumph when it was announced by Gov. Andrew Cuomo and Mayor Bill de Blasio, both Democrats, the project in the Long Island City neighborhood of Queens now faces withering criticism from some politicians and advocacy groups appalled at the prospect of giving giant subsidies to the world's most valuable company, led by its richest man. (Amazon founder and chief executive Jeff Bezos also owns The Washington Post.)

In the past two weeks, the state Senate nominated an outspoken Amazon critic to a board where he could potentially veto the deal. City Council members for the second time aggressively challenged company executives at a hearing where activists booed and unfurled anti-Amazon banners.

Key officials, including freshman U.S. Rep. Alexandria Ocasio-Cortez, D-N.Y., whose district borders the proposed Amazon site, have rallied against the project. And opponents went door-to-door to warn people in Queens of looming rent hikes and displacement, much as Seattle experienced during the company's explosive growth there.

No specific plans to abandon New York have been made. And it is possible that Amazon would try to use a threat to withdraw to put pressure on New York officials. But with a meeting of the state's Public Authorities Control Board and a third City Council hearing expected later this month, Amazon executives may be reaching an inflection point, the people said.

"I think now is the time for Amazon to make a decision because it has to start hiring," said one person. "At some point, the project starts to fall behind."

The resistance in New York contrasts with the warm welcome Amazon has received in Virginia, where Gov. Ralph Northam, a Democrat, signed a law on Tuesday authorizing up to $750 million in state subsidies for the Arlington headquarters.

Northam and Virginia's other top two state officials, Lt. Gov. Justin Fairfax and Attorney General Mark Herring, all Democrats, have been engulfed in recent days by scandals involving years-old behavior. But the two people familiar with Amazon's plans said company leadership is not concerned those controversies will hamper their project.

It's unclear what Amazon might consider as a Plan B if the New York project falls through. It could forgo the incentive package and hire employees on a smaller scale, as competitors including Google are already doing. Or Amazon could search for another jurisdiction to get some or all of the jobs originally slated for New York.

"We always welcome more great jobs to the commonwealth," said Stephen Moret, chief executive of the Virginia Economic Development Partnership and the state's top Amazon negotiator.

Amazon has hired a lobbying firm and a public relations firm in New York and recently advertised for a "senior community affairs manager" to "focus on developing a positive partnership with local stakeholders, community groups and nonprofits."

Asked to comment on the possibility that the New York deal might founder, Amazon spokeswoman Jodi Seth said: "We're focused on engaging with our new neighbors—small business owners, educators, and community leaders. Whether it's building a pipeline of local jobs through workforce training or funding computer science classes for thousands of New York City students, we are working hard to demonstrate what kind of neighbor we will be."

New York state and city officials have played down the chances that the deal will fall through. They pointed to opinion polls showing strong public support for the project and said Cuomo and de Blasio will fight hard for it.

"The Amazon transaction was probably the greatest economic transaction in 50 years in this state," Cuomo said in a recent radio interview. "We don't get a business to come with 25,000 jobs anymore. I spend hours and days trying to get 100 jobs, 200 jobs."

But the resistance is well organized and energetic, based in unions and community groups. In addition to Ocasio-Cortez, opponents include City Council Speaker Corey Johnson, Deputy Leader of the City Council James Van Bramer and state Sen. Michael Gianaris, who is deputy majority leader in the Senate.

Some officials who previously supported luring Amazon to the city have changed their position, partly because they were unhappy that the deal was structured to bypass City Council approval. Amazon is eligible for up to $1.3 billion in subsidies from two city programs, in addition to the state package and other incentives.

In a significant boost for Amazon opponents, the Senate this week nominated Gianaris to the Public Authorities Control Board, where he could effectively veto the project. Cuomo has not said whether he will accept Gianaris's nomination, but the Senate's action signaled that the governor and legislature will be at odds over the deal.

Gianaris and other critics portray the New York struggle as a national test for populist forces confronting big companies' influence, and for the contest within the Democratic Party between its grass-roots and business-friendly wings.

"We are dealing with an era of unprecedented corporate power in this country," Gianaris said. "This Amazon deal represents a tipping point that is going to set the stage for what this country is going to be going forward."

Amazon surprised the nation in November by announcing that it would split its much-publicized second headquarters between Arlington, Virginia, and Long Island City, with employees at each site earning an average of more than $150,000 a year. Initially, the company said it planned a single location with all 50,000 jobs.

The divergent reactions in New York and Virginia arise from political and economic differences between the two, according to officials and analysts in both locations.

New York is a pro-labor city, whereas Virginia is a right-to-work state where employees cannot be obliged to join a union as a condition of employment.

Amazon has opposed attempts to unionize its workforce and said it would do the same in New York. "What Amazon is looking to do is come in and change the values of our city," said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union.

New York also is straining from the effects of rapid economic growth, whereas Arlington is eager to attract investment to Crystal City to offset the loss of thousands of federal government jobs there in a Pentagon reorganization that began in 2005.

The community around Long Island City is home to legions of grass-roots organizations that were already unhappy about gentrification and warn that Amazon's arrival would further raise housing prices. Some also fault Amazon for selling facial-recognition technology to law enforcement agencies and partnering with companies that work with U.S. Immigration and Customs Enforcement.

The activists have occupied an Amazon store in Manhattan, marched in Albany and demonstrated at the office of Assemblywoman Catherine T. Nolan (D-Queens), who supports the deal.

"The geography in New York has brought together a lot of threads of activism who were really ready to react to this kind of announcement and were particularly outraged," said Deborah Axt, co-executive director of Make the Road, an organization of low-income immigrants and communities of color.

Northern Virginia, Axt said, does "not have quite the pool of amazing champions ready to jump into the fray as we're fortunate to have here in New York."

Amazon supporters are aghast that local politicians—including Gianaris and Van Bramer—have turned against the company.

"Everyone in local government has said for years that we need to emphasize outer borough commercial development and that we want tech jobs in Long Island City," said Stephanie Báez, a spokeswoman for the New York City Economic Development Corp. "But now we are seeing a few of the same local politicians abruptly flip-flopping in reaction to a small and well-organized group of people."

In Virginia, almost all state and local leaders support the arrival of Amazon, despite opposition by several progressive groups—Tenants and Workers United, Our Revolution Arlington and some members of Indivisible Arlington—that have staged small protests at community meetings.

The Arlington County Board is putting final touches on a proposed $23 million local incentives package, which it is expected to approve in March or later.

"Most people think this is a great opportunity," Board Chair Christian Dorsey, a Democrat, said.

The board is pressuring Amazon to sign a project labor agreement that ensures a living wage, proper job classifications and safety standards for all those employed by construction contractors and subcontractors.

"They have emphatically not promised anything," board member Erik Gutshall, a Democrat, said. "But I didn't get the sense that any of those things was a non-starter."

Residents of the neighborhoods around the Arlington site worry about rent increases, spiking property taxes and paralyzing traffic. But neither they nor the progressive groups lobbying against the company appears to have enough political clout to block the deal.

In New York, critics are hoping that Amazon will tire of devoting time and money to fighting a battle it didn't expect.

"The way these fights work, you push on each and every little thing," Van Bramer said.

That approach was sure to worry Amazon, whose vice president for policy, Brian Huseman, told the recent City Council hearing, "We want to invest in a community that wants us."