Put Amazon to Work

A lot has already been written about what is wrong with the Amazon deal and a lot more will be as the project has brought together opponents from both the left and the right.  I have my own reservations about the deal, but I would be a complete hypocrite if I didn’t come clean. As a former state economic development professional, who would have once sawed off his right arm for a shot at a deal of this magnitude, I totally understand why the state and city felt they had to compete.  The Amazon HQ2 competition was the Superbowl of economic development contests, (which might be the problem in and of itself) and winning matters. Well usually, winning Foxconn didn’t work out so well for Governor Walker, more on that later.

At the end of the day, Amazon located exactly where they wanted and needed to be, in the two labor markets with the most tech talent in America, New York City and Washington, DC.  Might they have gone to New Jersey, sure but who really wants to go to New Jersey?  I mean even 9/11 didn’t scare the green eyeshades at Goldman Sachs back to New Jersey.  In making any deal, economic development professionals always weigh the question of the CEO premium, is Jeff Bezos a Jersey guy? I don’t think so. New Jersey, all the high taxes, corrupt politicians, miserable transit issues and yes crappy pro football of New York, without the charm, the skyline and the sexy address.

Did New York overpay, probably. But it’s not an exact science and on paper, no matter which way you cut it, the deal is probably still technically worth the price. As my former colleague and much smarter friend John Bacheller points out in his blog, Policy By the Numbers, by traditional economic development metrics this deal drives real returns for the state.

And when compared to the Foxconn mega deal, Amazon looks like a bargain. It’s hard to imagine but two pro-union, progressive New York Democrats totally out negotiated a Republican, union busting, conservative. Walker’s deal with Foxconn provides $4 billion in state and local taxpayer subsidies in exchange for an actual guarantee of only 3,000 jobs paying an average of $53,000 a year in Wisconsin. Whereas, New York is providing $1.5 billion in direct state subsidies for 25,000 jobs with an average salary of $150,000. (Then again, consider, Foxconn is going to Mount Pleasant, Wisconsin, which I couldn’t point to on a map and Amazon is going to be literally just outside Governor Cuomo’s Manhattan office window across the river in Queens, which every 5th grader in America can locate.)

After you strip away the philosophical concerns regarding the state’s increasing reliance on corporate welfare and consider the deal on it’s own terms, my biggest single problem is not the return on the state’s investment, I think ultimately the deal is a net plus for the state. My problem is not the structure of the deal, because it’s clear reading the documents that real economic development professionals are back in charge, congratulations Mr. Zemsky.

My problem is the where!  New York City doesn’t need this deal. The New York City market, despite it’s high taxes, broken subway, booming homeless population, gridlock and ridiculous regulations and red tape is somehow still working on its own.

In fact, the New York City economy, as compared to the rest of the state, is doing quite well and when you compare it to Upstate, it is absolutely booming.

Moveover, as a result of the November elections, the gap between the haves (NYC and downstate) and the have nots (Upstate) just became wider at the exact same time more political power has shifted to the haves. Some downstate pols who oppose the deal juxtapose the Amazon incentive offer against the real, dire needs for transit repairs and affordable housing in New York City.  Others are arguing about helipads. There isn’t a whole lot of talk about the jobs. As a born and bred Upstater, even though I totally get it, it’s a bit galling. We’ll take the jobs, the helipad too and deal with our crumbling roads and bridges.

And at the core of it, that’s increasingly the problem. Upstate is starved for good jobs and in the process becoming more and more working class, save for our university suburbs. As David Brooks wrote recently in the New York Times, “Businesses like Amazon will invest in rich places like New York and Northern Virginia, but they won’t invest much in working-class communities in Ohio or Kentucky.” Add Upstate New York to the list.  Which makes you wonder if Walker’s deal in Mount Pleasant, Wisconsin is by order of magnitude what would be necessary in Upstate.

Amazon isn’t alone. And Amazon didn’t create the problem of the Upstate economy and long suffering working class, but with some nudging from the state, they can be part of the solution The deal is done, but Amazon and the state should get to work shipping some of the benefits of the HQ2 decision beyond the five boroughs.

5 Things Amazon Can Do for Upstate

Leverage Amazon R&D with Upstate Universities – The Daily News headline, ShAmazon, was amusing but misleading. In 2017, Amazon led all U.S. tech companies spending $22.6 billion on research and development, 41 percent more than in 2016 (when it also topped the list). Amazon invested resources into AWS, Alexa and technologies like computer vision to support projects such as the Amazon Go cashierless store of the future.  One of Upstate’s strengths are all the great universities that conduct leading research and development. The state should work with Amazon to leverage research development partnerships with SUNY Albany, Binghamton, Cornell, Clarkson, SU and others.

DrOne-ida – Amazon has a leadership role developing drones as part of their goal to develop a fleet of unmanned aerial vehicles that can get packages to customers in 30 minutes or less. Here in New York, we boast one of only six federally authorized sites for drone testing in the United States.  The Northeast UAS Airspace Integration Research Alliance (NUAIR) at Griffiss Airbase has a leadership role in developing the first air corridor in the nation where unmanned aerial vehicles can safely fly beyond line of sight for testing and development. The state should work with Amazon and strongly encourage it to center it’s drone testing and R&D at Griffiss Airbase in the heart of upstate, Oneida County, New York.

ReSkill the Upstate Workforce – Amazon chose its New York and DC locations because of access to high-tech talent, at the same time Upstate working class employees continue to be left behind as companies like New Era close. Working class, as defined in an excellent study out just this week by AEI and Brookings, are New Yorker’s with at least a high school diploma but less than a four-year college degree living in households between the 20th and 50th income percentiles—roughly $30,000 to $69,000. New York should work with Amazon and other leading tech companies to immediately develop a well-funded program targeted specifically to reskill working class Upstate New Yorkers.

Improve and Increase Rail Between NYC and Upstate  –  While much is written about the poor performance of the MTA and subway system, Upstate rail is still lacking and little is written about the state’s obligations to AMTRAK service. As the Empire State Passenger Association has argued, the state could immediately impact rail service by developing an aggressive pro-rail strategy that focuses on adding and replacing 40 plus year old cars and engines.  Long-term high-speed rail should be a priority. New York should increase access to job opportunities downstate, by making short and long-term improvements to AMTRAK that add capacity and shorten travel times.

Targeted Upstate Job Recruitment Goals  –  As too many Upstate communities hollow out, it may feel like soul sucking irony to suggest creating targeted Upstate recruitment goals for Amazon’s HQ2, but better here then the Southwest or God forbid, Florida. State’s typically set aside employment goals for underrepresented and underserved populations, New York’s working class is approaching that status. New York should work with Amazon to establish a goal of recruiting 10% of their workforce from “working class” Upstate New Yorkers.

Finally, one last suggestion that might enure value downstate – if I’m running the MTA, I’m on the phone with Jeff Bezos. A huge part of the Amazon magic is its genius managing logistics, successfully moving over 608 million packages a day, by comparison the MTA is only moving a little under 6 million persons a day.  The Byford Plan is solid, but New York’s congestion and growing transportation problems could benefit from some out of the box thinking.

Amazon, welcome to New York, now get to work earning that subsidy.

Advertisements

Amazon…It Ain’t Just a River in South America

It seems like half of America’s cities are competing for Amazon’s 2nd headquarters project and why shouldn’t they – big projects, mega projects matter. The potential of 50,000 employees and billions of investment is a game changer.  Yes mega projects are expensive, yes they are risky – but if you are going to take a big risk it would strike me as smart to wager on the e-commerce giant.

Last week, Ross Douthat writing in the New York Times, called upon Amazon to select a site on the basis of “what’s good for America.” He opined on Amazon’s opportunity to revitalize a desolate place in America – downtown St Louis, Detroit, Chicago or Baltimore – and a chance to be “seen as a company that renews cities and doesn’t just put brick and mortar out of business.”  If these communities were just impoverished, I might be more sympathetic – but the elected officials in those cities have dramatically failed to uphold the most basic responsibility of government – ensuring security.  Whether it’s Iran or the streets of Chicago, safety and security are precursors of economic opportunity not the other way around. 

But following Douthat’s rationale, if Amazon wants to make a difference and be successful – Upstate New York, makes a lot more sense.

According to news reports and stuff I happen to hear – the Albany-Schenectady-Troy / Saratoga MSA is a bidder, the Buffalo-Rochester / Toronto region is a bidder as well as Manhattan, Brooklyn, the Bronx and possibly some yet to be determined area of Westchester.  They all have some obvious merits and they all have their obvious challenges. Among the rumors I’ve heard from around the state, only Buffalo-Toronto and Manhattan will get a real listen from Amazon – but like the lottery, you have to be in it to win it – so as a grandson of the Pastures in Albany, and a cheerleader for upstate I’m rooting for the Capital Region.  

But where? The obvious choice is the Harriman campus – long a site waiting for meaningful redevelopment. My guess is that Harriman could someday make sense for a less brand conscious tenant – but my gut is Bezos and Amazon will want to make a statement. Office parks, corporate parks, tech parks seem soooo 1990’s. Harriman, in my personal view, lacks the sass to stand out in an uber crowded field and ultimately doesn’t tell a story worthy of Amazon’s gravitas.

The big play – the out of the box option for Albany – is to check the gift wrap box, put a bow on it & deliver the Empire State Plaza to Amazon.

And why not?

It will definitely get some attention –  I can pretty much guarantee you no other state will do it.

The assets are all already under control.

It reeks of crazy serious commitment – from the State and local leaders.

It would dramatically re-imagine downtown Albany – giving downtown Albany back to the City.

In short, it has sass.

The Corning Tower alone has almost 1 million sq feet of office space – twice Amazon’s initial need.

The proposal could be to rehabilitate the interior of the (Corning) Bezos Tower (since we are renaming things these days), update the exterior with a state of the art wrap or edifice, add a Winter Garden on the plaza level to house retail / amenities and radically modernize the lobby. Finally, create an off site energy plant to provide 100% GREEN power to the site and yes build the much ballyhooed gondola from the Albany-Rensselaer train station to the Plaza (it would actually make sense)

The kicker – displaced state workers could be relocated in downtowns across the Capital Region. Everybody wins.

Why Albany?  

#1 Albany, the Capital Region and Upstate is a bastion of higher education:

Access to talent is a key driver for technology behemoths such as Amazon and there are few parts of America that can rival the number of students that attend colleges and universities in Upstate New York and the Capital Region. In the Capital Region alone there are 21 traditional higher education, degree-awarding institutions. Our state’s public universities, most of them located upstate, graduate more than 40,000 undergraduates each year, and another 17,000 with master’s degrees or above.

#2 Albany is and always has been affordable:

Historian John McMaster wrote,“…Albany was a place where a man with a modest competence could, in time, acquire riches; where a man with money could, in a short space of time, amass a fortune.” Affordability is a key factor in attracting and retaining talent and in particular the relatively low-cost of housing in the region is a big plus.

#3 Albany is and always has been at the epicenter of transportation:

As the site of one of the 1st commercial airports in America, Albany is an important transportation gateway to millions of people in the Northeast, New England and eastern Canada.

#4 Albany’s skyline is iconic:

The Empire State Plaza, while iconic, is overdue for reinvention. The Corning Tower is the tallest structure between Montreal and New York City.   I’d like to believe the Plaza’s architect, Governor Nelson Rockefeller, who loved to build big things – important things, would be thrilled by a modern adaptation of his work.

#5 Albany is just a “drones throw away” from Griffiss Airport in Rome:

In late 2013, the Federal Aviation Administration (FAA) announced that Griffiss International Airport, a former Air Force base in Rome, N.Y., would be one of ONLY SIX sites nationwide with authorization to test commercial unmanned aerial systems (UAS), commonly referred to as drones.  The Association for Unmanned Vehicles Systems International predicts growth to approach $82 billion by 2025 – Amazon’s, Prime Air, is a leader in this rapidly growing industry.

Judging by recent announcements in Staten Island and Manhattan, New York state economic development officials already boast a strong relationship with Amazon- here is a chance to take it to the next level.