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A24 technology
Tuesday 11 december 2018

Amazon touted as big win for NY, but math is more complex

By JENNIFER PELTZ
Associated Press
NEW YORK (AP) — New
York officials tout their deal
to land a new Amazon
headquarters as can’t-miss
math. The city and state put
up $2.8 billion in tax breaks
and grants. In return, they
get an economic engine
expected to generate $27
billion in new tax money
over a quarter-century.
“This is a big moneymaker
for us. Costs us nothing,”
Gov. Andrew Cuomo said
when the agreement was
announced.
Experts say the economic
equation isn’t that simple.
The state’s predicted 9-to-
1 return on its investment
was based on a widely
used economic model that
compares the costs of tax
incentives with expected
tax gains, but it didn’t fac-
tor in the substantial costs In this Nov. 13, 2018, file photo, a sea gull flies off holding fish scraps near a former dock facility, with “Long Island” painted on old
of accommodating Ama- transfer bridges at Gantry State Park in the Long Island City section of the Queens Borough in New York.
zon’s growth in the city, Associated Press
economic development efits and not a lot about “the highest rate of return Some improvements are the possibility of economic
researchers said after re- the costs,” said Megan for an economic incentive already in the works. The growth in Queens even if
viewing the documents. Randall, a research ana- program that the state has Amazon agreement prom- Amazon never came.
The city and state will have lyst at the Urban-Brookings ever offered.” ises a new school and infra- There were prior plans for
to spend money to edu- Tax Policy Center. “That’s REMI’s analysis is deep and structure upgrades. Critics, big commercial and resi-
cate the children of Ama- not to say that the costs will thorough, the state’s eco- including some local politi- dential development on
zon workers, improve pub- automatically override all nomic development agen- cians, are skeptical it will do part of the potential Ama-
lic transportation to get the benefits ... (but) cities cy said. enough. zon site that have now
them to work, collect their should be armed with that “Their model is widely con- They’ve held a series of ral- been scuttled in favor of
garbage, adjust police and knowledge.” sidered to be the gold lies and protests and are accommodating the com-
fire coverage, and provide New York state’s evalua- standard for economic exploring possible options pany.
all sorts of other services for tion of the Amazon deal is and fiscal impact analysis to try to stop the project. The state analysis also didn’t
a growing number of peo- based on an assumption and has been recognized While voters in New York examine whether New York
ple. that the company will ulti- for its analytical depth, so- City support bringing Ama- could have bagged the
“Claiming 9-to-1 isn’t just mately create 40,000 rela- phistication and flexibility,” zon’s campus to the city, same prize while offering
implausible. It is a dishonest tively high-paying jobs in Adam Kilduff, a spokesman they are divided when it less, as Virginia did to score
way to present the return the city by 2034. That’s the for Empire State Develop- comes to the incentives an additional Amazon
on these incentives,” says maximum number foreseen ment, said in an emailed from the city and state, headquarters there.
Nathan Jensen, a Univer- in a deal that starts with a statement. according to a Quinnipi- “A proper analysis would
sity of Texas professor of promise of 25,000 jobs by A representative of the ac University poll released take seriously that we are
government who has been 2028. city’s economic develop- Wednesday. uncertain how much, ex-
critical of the way econom- The state-commissioned ment agency did not re- The survey, which has a actly, was needed to at-
ic development incentives analysis by Regional Eco- spond to questions about margin of error of plus or mi- tract HQ2 to New York,”
are used. nomic Models Inc. also pre- the analysis. nus 3.8 percentage points, said UT’s Jensen.
The reports also don’t mea- dicts Amazon’s presence The analysis may be right found that 57 percent of Amazon officials have
sure the Amazon “HQ2” in the city will eventually about tax revenue, but “it’s city voters support Ama- said “the driving factor”
project against any other create 67,000 other jobs incomplete,” said Timothy zon’s decision, while 26 op- in choosing New York and
possible development of its outside the company, in Bartik, a senior economist pose it. Forty-six percent of Virginia was the availability
intended site in the boom- industries from tech to real at the W.E. Upjohn Institute respondents support the of enough tech talent, not
ing Long Island City neigh- estate to restaurants that for Employment Research incentives, however, com- the tax incentives.
borhood. might serve Amazon work- and a leading expert on in- pared with 44 percent who “I honestly don’t think that
Four academic and think ers. centives. “You need to look said they are opposed. the main thing that peo-
tank researchers who Over 25 years, all those new at the spending side.” Beyond the costs of growth, ple should be looking at
weren’t involved in the jobs will generate about Opponents of the project the New York analyses also is whether or not it makes
state’s cost-benefit analy- $14 billion in state income have raised alarms about don’t address some other money for the state gov-
ses said that while its meth- and sales taxes and about adding to the strain on sub- questions, experts said. ernment. That’s not the
ods were standard, its $13.5 billion in city taxes, ways, sewers and schools David Merriman, a Univer- purpose of state govern-
scope was limited. according to that analysis already struggling to keep sity of Illinois at Chicago ment,” he said. “The bigger
“It’s a standard cost-ben- and a city report also in- up in the fastest-develop- public administration pro- impact is if you create jobs
efit approach, but it tends volving a REMI model. ing neighborhood in New fessor who specializes in tax that otherwise wouldn’t be
to talk a lot about the ben- Cuomo lauded that as York City. issues, said it didn’t consider there.”q