Amazon Deal Has Pols Reconsidering NYC Tax Breaks

NEW YORK — The enormous size of the local tax breaks Amazon got for its Long Island City headquarters has some officials reconsidering the programs that made them possible.

The Relocation and Employment Assistance Program and the Industrial and Commercial Abatement Program are meant to lure companies to areas outside Manhattan's core with tax credits and property tax abatements, respectively. Together they account for nearly $1.3 billion of the roughly $3 billion in incentives offered to Amazon for its sprawling new campus.

The staggering amount has raised hackles among city and state officials critical of the Amazon deal, who argue programs established at economic low points for the city have become vehicles for corporate giveaways. Lawmakers said the state Legislature should rework or scrap the incentives, which are both coming up for renewal within the next four years.

"As they currently exist they should be wiped out. We should start over," state Sen. Michael Gianaris, a Democrat who represents part of Queens, said Monday at an anti-Amazon press event. "If we think there’s an economic development program that makes sense and doesn’t lead to results like this, then that’s a different story."

Taken together, the subsidies for Amazon's new facilities in New York, Virginia and Tennessee rank among the largest economic development deals ever inked in the United States, according to the watchdog group Good Jobs First.

They comprise the fourth-largest "mega-deal" in the nation's history and the biggest deal ever for a headquarters, said Greg LeRoy, the group's executive director.

Proponents of the deal, including Mayor Bill de Blasio and Gov. Andrew Cuomo, argue the city and state will get a nine-to-one return on their investment as officials say the project will generate $27.5 billion in tax revenue over the next 25 years. It's also expected to create at least 25,000 jobs with an average salary of more than $150,000.

The Relocation and Employment Assistance Program, or REAP, on its own is expected to benefit Amazon to the tune of nearly $900 million. That equates to $75 million a year — more than twice the $32 million in REAP benefits that went to 205 firms in 2017, according to City Comptroller Scott Stringer.

The programs are as-of-right, meaning any qualifying company can receive them. But there's no cap on how big the benefits can get, which allowed Amazon — a trillion-dollar company — to take advantage in a big way, critics say.

"You adopt these things at sort of like a low moment when people want to see growth and it winds up locked in," City Councilman Brad Lander (D-Brooklyn) said. "And so years later you’re giving away hundreds of millions of dollars for something and no one remembers why and the rules don’t make a lot of sense."

Gianaris said state lawmakers will have the most leverage to alter or eliminate the programs when they come up for renewal. REAP is due to expire in June 2020 and ICAP is in place until March 2022.

Aside from capping the benefits, the lawmakers who spoke at Monday's event did not give specifics on how the programs should be tweaked. But they all agreed they're unacceptable in their current forms.

"This is the time to rethink how we do economic development and what we give, and we should absolutely eliminate the programs as they exist and then see what makes sense going forward," said Councilman Jimmy Van Bramer, a Democrat who represents Long Island City.

The city's Economic Development Corporation, which helped broker the Amazon deal and promotes REAP and ICAP on its website, did not immediately respond to a request for comment on Monday.

(Lead image: Graffiti has been painted on a sidewalk by someone opposed to the location of an Amazon headquarters in the Long Island City neighborhood in the Queens borough of New York, Friday, Nov. 16, 2018. Photo by Mark Lennihan/Associated Press)