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I don't understand the indignant opposition towards this deal to be honest. All but $505m of the ~$3b in subsidies here comes from programs that already existe

I don't understand the indignant opposition towards this deal to be honest. All but $505m of the ~$3b in subsidies here comes from programs that already existed in NY State and NYC (Excelsior, ICAP, and REAP). Would you give up $3b over 10 years (and just $505m above programs that are broadly available) to attract business that will provide an incremental $13.5B in new tax revenue and $186B in GSP over 25 years? That is a _tremendous_ ROI, the kind that typically does not exist in the market, and a $505m capital grant (the primary Amazon-specific concession) is a small price to secure it. The 9:1 return they projected on this deal is the best such program NY State and NYC will have ever run. To put it into context, the Film Tax Credit program had a 1.15:1 ROI. We can argue all day about whether the HQ2 search was a bluff or sham or whatever, but there is no reasonable claim to certainty here - and hence negotiation enters the picture to turn something uncertain (Amazon MAY come to NYC) into certain (Amazon WILL come to NYC). > The construction is expected to create an average of 1300 direct construction jobs annually through 2033. Overall, the project is estimated to create more than 107,000 total direct and indirect jobs, over $14 billion in new tax revenue for the State and a net of $13.5 billion in City tax revenue over the next 25 years. The project provides a 9:1 return on investment. > According to an economic impact study by REMI, Inc., a world leader in dynamic forecasting and policy analysis, the Amazon project will generate over $186 billion in Gross State Product for the New York State economy over the initial 25 years. REMI also projects over $14 billion in total new tax revenue for the State (in 2019 dollars), with annual revenues growing from $10.8 million in 2019 to nearly $1 billion in 2043. The City forecasts $13.5 billion in total new tax revenue. https://www.governor.ny.gov/news/governor-cuomo-and-mayor-de-blasio-announce-amazon-selects-long-island-city-new-corporate https://www.governor.ny.gov/news/governor-cuomo-and-mayor-de...

jkaplowitz 8y ago
None of these deals ever come with enforcement imposed on the economic projections used to justify them, whether for corporate headquarters or sports stadiums. If these things are so profitable for the taxpayers, why doesn't Amazon guarantee the projected numbers, paying any eventual shortfall directly to the state and city? (Yes, there would need to be a way to measure whatever metrics are used.) For most of these deals, companies make promises that are used to make the deal politically palatable, but since they are not penalized for failing to meet them, and therefore frequently do so.
- throwawaysea 8y ago
  The projections are done by the city and state in this case, not Amazon. The city/state agents involved worked with a third-party (REMI) to perform a comprehensive forecasting and economic analysis. Also, most of the subsidies here are not in the form of capital investments, but rather things like tax credits which are provided for some action already taken (for example, having created a job that meets certain requirements). This deal is very safe because it is paid out incrementally, over time, and mostly in-step with incremental actions taken by Amazon, and because the ROI is so big (even if projections are significantly off target, this will still be a win).
  - jkaplowitz 8y ago
    I don't think it matters whether Amazon or the city/state engaged the third party - the personal career/campaign finance incentives of the individual politicians/functionaries who negotiate for the city/state are aligned with Amazon's wishes and against those of the taxpayers. And the third party's incentives are to please the paying customer in showing a good return on investment. But if the subsidies won't actually get paid unless Amazon delivers on their promises, I agree this deal is way better than most of its type.
kerkeslager 8y ago
You don't understand why giving one of the largest, most profitable companies in the world money for real estate while homelessness is widespread and on the rise[1] is objectionable? Frankly, I don't believe those ROI projections: we've seen these kinds of wildly optimistic plans time and time again with companies promising tax revenues based on straightforward filing, and then using the wide variety of loopholes to (legally) avoid the projected taxes. But even assuming the projections come to fruition: who receives those returns? Is it going to help New Yorkers who need help, or to the already rich? Right now all signs point to the latter. If we're just re-gifting all the money back into already highly profitable companies, I don't really care to hear about ROIs. [1] http://www.coalitionforthehomeless.org/basic-facts-about-homelessness-new-york-city/ http://www.coalitionforthehomeless.org/basic-facts-about-hom...
- throwawaysea 8y ago
  > who receives those returns? Is it going to help New Yorkers who need help, or to the already rich? The net new revenue can be used by the city and state to pay for whatever services they deem fit (e.g. infrastructure, health, etc.). > we've seen these kinds of wildly optimistic plans time and time again with companies promising tax revenues based on straightforward filing, and then using the wide variety of loopholes to (legally) avoid the projected taxes The company is not promising tax revenues here. The city/state are. They are the ones who commissioned the economic analysis, and I am sure the findings informed their negotiations. The tax sources are not just Amazon either - it includes things like taxes from the additional jobs and businesses that will be created outside of Amazon. > I don't really care to hear about ROIs. The ROI is what matters, though. If you were a city that is looking to increase your budget to provide more services to your constituents, you might consider what sort of investment choices you could make to get there. The ROI here is well beyond any other conceivable option. It is so large that even if projections of a 9:1 ROI are way off, it would be a big win. To put it into context, the NY Film Tax Credit program had a 1.15:1 ROI but was still implemented. Also, most of the subsidy to Amazon is not an up-front lump sum. Rather, most of it takes the form of credits for prior actions. Taking all this into account, this seems like a super safe path to greater tax revenues, which will improve the city and state as a whole.

jkaplowitz 8y ago

None of these deals ever come with enforcement imposed on the economic projections used to justify them, whether for corporate headquarters or sports stadiums. If these things are so profitable for the taxpayers, why doesn't Amazon guarantee the projected numbers, paying any eventual shortfall directly to the state and city? (Yes, there would need to be a way to measure whatever metrics are used.) For most of these deals, companies make promises that are used to make the deal politically palatable, but since they are not penalized for failing to meet them, and therefore frequently do so.

throwawaysea 8y ago
The projections are done by the city and state in this case, not Amazon. The city/state agents involved worked with a third-party (REMI) to perform a comprehensive forecasting and economic analysis. Also, most of the subsidies here are not in the form of capital investments, but rather things like tax credits which are provided for some action already taken (for example, having created a job that meets certain requirements). This deal is very safe because it is paid out incrementally, over time, and mostly in-step with incremental actions taken by Amazon, and because the ROI is so big (even if projections are significantly off target, this will still be a win).
- jkaplowitz 8y ago
  I don't think it matters whether Amazon or the city/state engaged the third party - the personal career/campaign finance incentives of the individual politicians/functionaries who negotiate for the city/state are aligned with Amazon's wishes and against those of the taxpayers. And the third party's incentives are to please the paying customer in showing a good return on investment. But if the subsidies won't actually get paid unless Amazon delivers on their promises, I agree this deal is way better than most of its type.

kerkeslager 8y ago

You don't understand why giving one of the largest, most profitable companies in the world money for real estate while homelessness is widespread and on the rise[1] is objectionable? Frankly, I don't believe those ROI projections: we've seen these kinds of wildly optimistic plans time and time again with companies promising tax revenues based on straightforward filing, and then using the wide variety of loopholes to (legally) avoid the projected taxes. But even assuming the projections come to fruition: who receives those returns? Is it going to help New Yorkers who need help, or to the already rich? Right now all signs point to the latter. If we're just re-gifting all the money back into already highly profitable companies, I don't really care to hear about ROIs. [1] http://www.coalitionforthehomeless.org/basic-facts-about-homelessness-new-york-city/ http://www.coalitionforthehomeless.org/basic-facts-about-hom...

throwawaysea 8y ago
> who receives those returns? Is it going to help New Yorkers who need help, or to the already rich? The net new revenue can be used by the city and state to pay for whatever services they deem fit (e.g. infrastructure, health, etc.). > we've seen these kinds of wildly optimistic plans time and time again with companies promising tax revenues based on straightforward filing, and then using the wide variety of loopholes to (legally) avoid the projected taxes The company is not promising tax revenues here. The city/state are. They are the ones who commissioned the economic analysis, and I am sure the findings informed their negotiations. The tax sources are not just Amazon either - it includes things like taxes from the additional jobs and businesses that will be created outside of Amazon. > I don't really care to hear about ROIs. The ROI is what matters, though. If you were a city that is looking to increase your budget to provide more services to your constituents, you might consider what sort of investment choices you could make to get there. The ROI here is well beyond any other conceivable option. It is so large that even if projections of a 9:1 ROI are way off, it would be a big win. To put it into context, the NY Film Tax Credit program had a 1.15:1 ROI but was still implemented. Also, most of the subsidy to Amazon is not an up-front lump sum. Rather, most of it takes the form of credits for prior actions. Taking all this into account, this seems like a super safe path to greater tax revenues, which will improve the city and state as a whole.