By Jimmy Vielkind, Laura Stevens and Katie Honan
Jeff Bezos and other top Amazon executives gathered in Seattle
on Wednesday to decide whether to go ahead with its planned
headquarters in New York City.
Brian Huseman, vice president for public policy, was on the
phone, and the news was not good.
He had met with Andrea Stewart-Cousins, the majority leader in
the restive New York Senate, and separately with three union
leaders in the office of Gov. Andrew Cuomo, a champion of the
project who brokered a discussion to allay labor's concerns.
Nothing in Mr. Huseman's call allayed growing fears at the
company that the fiercer-than-expected backlash against the $2.5
billion development in Long Island City, Queens, was generating
negative publicity and political uncertainty.
Mr. Bezos had signed off on the previous decisions in Amazon.com
Inc.'s lengthy public contest to locate its so-called HQ2, and on
Wednesday he and his team decided it was time to pull the plug,
according to people familiar with the matter. It was worth the
embarrassment and negative publicity in the short term, they
reasoned, to avoid a yearslong problem in New York.
Amazon made the news of the pullout public on Thursday, leaving
Mr. Cuomo and the deal's other biggest supporter, New York City
Mayor Bill de Blasio, stunned and chagrined. The final decision
followed dozens of meetings with New York lawmakers and
communities. Even after months of talking, Amazon's team and vocal
New York critics failed to allay the other side's concerns,
convincing company executives that compromises would be too hard to
achieve.
After a yearlong nationwide search for a site of a second
headquarters, Amazon announced in November that New York City and
Northern Virginia were the winners, splitting the prize with each
location promised at least 25,000 new jobs.
In return for Amazon's job creation and investment in New York,
city and state officials agreed to provide up to $3 billion in tax
incentives. Mr. Cuomo had warned executives that the deal might
spark a minor backlash, but that it would go through.
After the announcement, a group of state and local leaders
seized on the incentive package and questioned why one of the
richest companies in the world was getting subsidies at all. Cries
of corporate welfare and vulture capitalism became refrains among
progressive Democrats, including the state's newest political star,
U.S. Rep. Alexandria Ocasio-Cortez, as well as from within the
newly Democratic state senate.
Those politicians, together with union leaders, also beat a drum
about Amazon's stance against organized labor. Members of the New
York City Council joined in, grilling company executives at
hearings in December and January over their record with unions and
about the closed-door negotiations with state and city officials
that had produced the biggest project-based incentive package in
state history.
"This was a secretive process intentionally structured to avoid
a substantive public review in advance of any commitments being
made," City Council Speaker Corey Johnson said at a Jan. 30
hearing.
Amazon executives were completely unprepared for the backlash,
according to the people familiar with the matter. Polls showed a
majority of New Yorkers supported the new campus, but Amazon grew
more wary when state Sen. Mike Gianaris, who represents the project
site in Queens, was nominated on Feb. 4 to the Public Authorities
Board. The seat meant Mr. Gianaris, an outspoken critic of the
deal, could potentially veto the proposed campus.
A day later, his leader, Ms. Stewart-Cousins, met with several
Amazon lobbyists in her office at the State Capitol. It was a
cordial exchange that lasted 20 minutes, according to people
briefed on the meeting.
By Friday, Feb. 8, the first indications that the Amazon deal
was fraying surfaced with reports that company executives were
reconsidering the New York campus.
Ms. Stewart-Cousins, a Democrat from Yonkers, said Mr. Huseman
-- who was not in the earlier Capitol meeting with her -- called
her on Feb. 8 and Feb. 9. They spoke generally about the project,
and Mr. Huseman asked about Mr. Gianaris's nomination.
She said she told Mr. Huseman that Mr. Gianaris's perspective
was important because he represented the area where Amazon had
proposed to locate. She also said she conveyed to Mr. Huseman that
she would work with Amazon but that she had criticisms about the
way the deal was being processed.
"Because there has been no real legislative input, it was
important that I at least give an opportunity to a person who's in
the district," Ms. Stewart-Cousins said, referring to Sen.
Gianaris. "There would certainly be questions asked. But that's it:
he wasn't representing himself, he's representing us."
Ms. Stewart-Cousins said Mr. Huseman didn't have any specific
reaction.
Days later, Mr. Cuomo called Mr. Huseman as well as several
other Amazon executives to meet Wednesday morning with leaders of
the state's AFL-CIO, Teamsters and Retail, Wholesale and Department
Store Union.
Unionizing Amazon's workers had become a bigger issue. Mr. de
Blasio had come out strongly in support of allowing unionization,
despite Amazon saying it wouldn't budge on the issue. While
Amazon's official position is that it respects employees' rights to
unionize, Mr. Huseman had been grilled at a three-hour City Council
hearing at the end of January on the issue. He said the company
wouldn't remain neutral if workers attempted to organize.
In a conference room near his 39th floor office, Mr. Cuomo
opened a discussion about fair practices for workers organizing at
Amazon's warehouse on Staten Island, people familiar with the
meeting said. The union leaders asked about rights of access for
organizers and a commitment that Amazon wouldn't treat them with
hostility or retaliate against workers who spoke to them.
After an hour, the meeting broke with cordial handshakes. RWDSU
President Stuart Appelbaum said he planned to draft a written
framework.
"We left there with the understanding we were going to continue
conversations. It was a good meeting," he said.
Mr. Huseman's report to Amazon's top brass Wednesday didn't
bring any comfort.
Company officials are sensitive to being wanted, some of the
people familiar with the matter said. They developed their HQ2
campaign in part to draw attention to its ability to create jobs
and investments -- points they had stumbled at making previously,
in part due to Amazon's slow, steady build-out across the
nation.
At first the executives thought they could stick it out and
probably win the battle, but the meetings with the union and Ms.
Stewart-Cousins served to push Amazon out of the deal.
Now the 25,000 jobs destined for Long Island City will be spread
out among the company's nearly 20 corporate offices and tech hubs.
The company has already initiated expansion plans in many of those
places. New York will continue to grow too, according to some of
the people. The company had already planned to add jobs slowly and
had plenty of space in its existing office space in the city.
Still, the decision stung.
Amazon spokesman Jay Carney, a former White House press
secretary, called both Messrs. de Blasio and Cuomo on Thursday
morning with the bad news -- just minutes after their top aides
attended a community meeting in Queens about the Amazon
project.
"There wasn't a shred of dialogue. Out of nowhere they just took
their ball and went home," Mr. de Blasio said Thursday evening at
Harvard University.
Write to Jimmy Vielkind at Jimmy.Vielkind@wsj.com, Laura Stevens
at laura.stevens@wsj.com and Katie Honan at Katie.Honan@wsj.com
(END) Dow Jones Newswires
February 15, 2019 19:37 ET (00:37 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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