It’s official. Amazon has announced plans to establish its second headquarters in New York in the Long Island City neighborhood of Queens and Crystal City, Virginia, which is just outside Washington, D.C. I first wrote about Amazon’s search in a blog back when several California cities were vying for HQ2, then another when Los Angeles made it to the short list. I wrote in the blog that I thought Jeff Bezos had already made up his mind where to locate HQ2 but wanted to start a bidding war to get the best deal possible from his favored city(ies).
I can’t help but feel vindicated. Here’s what others have said about the two-city deal:
“The whole contest was a massive sham.” – Business Insider
“Was Amazon’s Headquarters Contest a Bait-and-Switch? Critics Say Yes.” New York Times
“They’ve duped more than the bidders. They’ve duped all of us.” – Robert Engel, Free & Fair Markets Initiative
Business Insider reported that New York offered Amazon “13 million square feet of real estate, a fun neighborhood, and speedy commutes.” Gov. Andrew Cuomo proclaimed, “I am doing everything I can…we have a great incentive package.” As part of the pitch, he even promised to change his name to “Amazon Cuomo” and to rename a polluted creek the “Amazon River.”
Crystal City officials took things one step further. In the press release announcing the move, they have rebranded the region where the Amazon development will be built as “National Landing,” which confused area residents as they had never heard of the name.
The Washington Post (owned by Bezos) reported that the city was so confident of its new tenant during the process that Crystal City’s top real estate developer, JBG Smith, pulled some of its buildings off the leasing market in anticipation of the announcement.
Both cities, of course, offered significant tax breaks and subsidies to lure Amazon. New York City and the State of New York gave away a combined $1.525 billion to Amazon in various public subsidies, while Crystal City, er National Landing, offered up $573 million in subsidies and $195 million in infrastructure improvements.
The economic gains from targeted subsidies and tax incentives to specific companies and projects have been debunked by many academic studies. Nevertheless, politicians who reel in a big fish like Amazon make headlines and earn kudos from the voters.
If my theory is correct, Los Angeles never stood a chance, even if we promised to rename Los Angeles to “Los Amazon” or the state “Calamazonia”.
As for the lucky winner(s) – Amazon Cuomo might not be too happy now if he knew he always had it in the bag.
Rowena Itchon is senior vice president at Pacific Research Institute.
