New York City Development Chief Faults Amazon for Scuttled HQ2 Deal

By Katie Honan 

A top New York City official who helped draft the deal to build an Amazon.com Inc. campus in Queens blamed the company for the project's collapse, saying it did a poor job connecting with residents and communicating the economic benefits to the state.

James Patchett, president of the New York City Economic Development Corporation, said Thursday at a Crain's New York Business event that the tech giant wasn't ready for critics.

"The company was not prepared for what happened in New York City," said Mr. Patchett, one of the deal's chief architects. The speech marked his first public comments since Amazon pulled the plug on plans for a so-called HQ2 site on Feb. 14.

Under terms of the deal, announced in November, Amazon would have invested $2.5 billion on the new site in the Long Island City section of Queens and brought 25,000 jobs to the area over the next decade. In exchange for the investment, city and state officials promised the company $3 billion in tax incentives. The project was expected to generate $27 billion in government revenue over 25 years, according to state officials.

While recent polls showed a majority of New Yorkers supported the plan, Amazon faced opposition from some politicians, progressive groups and unions who lambasted the incentives as corporate welfare. Company executives and Mr. Patchett were grilled for hours at two New York City Council hearings about the incentives and Amazon's anti-union stance.

In a statement on its decision to abandon the deal, Amazon blamed politicians who were unwilling to work with the company to move the project forward.

"They didn't perform particularly well at their public hearings," Mr. Patchett said Thursday. "They never hired a single New Yorker to work for them to talk to New Yorkers. They never really connected with people in the city."

Mr. Patchett's assessment mirrored Mayor Bill de Blasio's postmortem of why the deal flatlined. In interviews in the past week, Mr. de Blasio said the company failed to engage New Yorkers.

"We'd all love to have a time machine and go back and figure out how to make this work, but the fact is I actually think city government, state government, agreed to a fair deal," Mayor de Blasio said Thursday. "We were pushing Amazon to do more for the community, which is our job, and they just walked away."

A spokeswoman for Amazon on Thursday said the company did extensive outreach across the city, meeting with every city council member who represents Queens, representatives from the City University of New York and State University of New York, and local businesses and residents.

Company representatives also held discussions with members of public-housing tenant associations and met with a community advisory panel, including local leaders who asked to provide input on the project, the spokeswoman said.

Officials from the Economic Development Corp. and City Hall spent months negotiating with Amazon, mostly behind closed doors, before the deal was announced in November. Mr. Patchett said after the deal rolled out, Amazon miscalculated its messaging around it.

Mr. Patchett also said many people misunderstood the $3 billion in tax incentives, believing that the money would now be available for other needs. The incentives included $1.2 billion in state tax credits tied to job creation. The state also promised more than $500 million in a capital grant for the Long Island City site.

"Anyone familiar with the facts knows there was no $3 billion," he said. "I think it was the dialogue that poisoned it and the company's reaction to that."

Since Amazon announced its exit, Mr. Patchett said he hasn't heard of any other companies changing their minds about coming to New York.

And he said he doesn't regret that the city pursued Amazon, even after the deal was dead. "I remain incredibly proud of the work we all did together," he said.

Write to Katie Honan at [e-mail]

(END) Dow Jones Newswires

February 21, 2019 17:07 ET (22:07 GMT)

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