Claim: New York could invest $3 billion from failed Amazon deal to hire more teachers and fix the subways.
I’m paraphrasing a direct quote from Congresswoman Ocasio-Cortez:
“If we were willing to give away $3 billion for this deal, we could invest those $3 billion in our district ourselves, if we wanted to. We could hire out more teachers. We can fix our subways. We can put a lot of people to work for that money, if we wanted to.”
Source: Video of quote
My Stake: Challenge with 100 cred
Robert Mujica, New York’s state budget director, wrote an open letter yesterday regarding Amazon. In it, he categorically denies this claim:
"Incredibly, I have heard city and state elected officials who were opponents of the project claim that Amazon was getting $3 billion in government subsidies that could have been better spent on housing or transportation. This is either a blatant untruth or fundamental ignorance of basic math by a group of elected officials. The city and state ‘gave’ Amazon nothing. Amazon was to build their headquarters with union jobs and pay the city and state $27 billion in revenues. The city, through existing as-of-right tax credits, and the state through Excelsior Tax credits - a program approved by the same legislators railing against it - would provide up to $3 billion in tax relief, IF Amazon created the 25,000-40,000 jobs and thus generated $27 billion in revenue. You don’t need to be the State’s Budget Director to know that a nine to one return on your investment is a winner
That statement is clear and comes from a strong trust-worthy source. I’m comfortable challenging the claim based on that note but it’s important to dig into the infamous $3 billion tax credits ourselves:
Let’s start with the Excelsior Jobs program. Per their website, the program was created “to expand in and relocate to New York while maintaining strict accountability standards to guarantee that businesses deliver on job and investment commitments”. This program was created under state law and is available to all eligible businesses. Excelsior offers tax credits, including 6.85 percent of wages for each new job created and a capital investment credit equal to 2 percent of a company’s total qualified investments that result in new jobs.
Two additional programs that would have provided tax benefits include the Relocation and Expansion Assistance Program (REAP) and the Industrial and Commercial Abatement Program(ICAP). As the Gotham Gazette reports,
The latter two tax breaks are incentives established by the state government that affect the city tax rolls, while the [Excelsior Jobs Program] affects state tax rolls. For the city tax breaks, ICAP is a tax abatement program that may last up to 25 years, available to companies who undertake new commercial construction in areas outside of some exempted sections of Manhattan. It appears Amazon will be eligible for a 15-year ICAP that begins to decline in year 12. REAP is a per-job tax credit in which companies from either outside New York City or below 96th Street in Manhattan get a $3,000 per employee credit for 12 years for each employee that moves into the new office outside the REAP area.
There was also a potential cash grant from the state:
Amazon is also getting a cash grant from the state called an Empire State Development Capital Grant that’s potentially worth $505 million and is supposed to help defray some of the costs from building the new corporate campus. And because New York State is taking over the land where the office will be located and making it tax-exempt, Amazon will make payments in lieu of taxes (PILOTs) that the city has said will be equal to the property tax bill the company would pay on the land otherwise. Half of the money from the PILOT will go to the city’s general fund, and half of it will go towards infrastructure improvements around Long Island City.
To obtain the full amount, Amazon would need to employ 40,000 by 2034 and jobs must be maintained through 2037. Here’s how jobs were defined in the agreement:
So how does this all add up? Per NY curbed:
Amazon will receive $897 million from the city’s Relocation and Employment Assistance Program (REAP) and $386 million from the Industrial & Commercial Abatement Program (ICAP). It will receive an additional $505 million in a capital grant and $1.2 billion in “Excelsior” credits if its job creation goals are met. That brings the total amount of public funds granted to $2.988 billion—in other words, the city and state will pay Amazon $48,000 per job.
You can find the full agreement between New York and Amazon here or a bullet-point version of the incentives here.
tl;dr: This was an incentive program based on job creation, producing tax revenue. New York wasn’t giving away cash to Amazon.