Seattle officials tell New York to act against Amazon before it’s too late

Krystal Hu
·Reporter
Updated
FILE - In this May 14, 2018 file photo, members of the public look on at a Seattle City Council before the council voted to approve a tax on large businesses such as Amazon and Starbucks to fight homelessness in Seattle. Seattle city leaders say Monday, June 11, 2018, they'll work to repeal a tax passed just last month on businesses such as Amazon and Starbucks designed to help pay for homeless services and affordable housing. Amazon and other businesses had sharply criticized the levy and the online retail giant even temporarily halted construction planning on a new high-rise building near its Seattle headquarters in protest. (AP Photo/Elaine Thompson, File)
In this May 14, 2018 file photo, members of the public look on at a Seattle City Council before the council voted to approve a tax on large businesses such as Amazon and Starbucks to fight homelessness in Seattle. (AP Photo/Elaine Thompson)

Two Seattle city councilwomen flew to the East Coast to warn their peers in New York City about Amazon.

Founded in Seattle in 1994, Amazon has grown into a tech giant now worth about $800 billion. To find the best locations for its ongoing expansion, the corporate behemoth conducted a year-long public search and picked Long Island City in New York City and Crystal City in Northern Virginia for its new headquarters outside Seattle.

Criticism has piled up since Amazon revealed the incentive packages: New York is offering a tax break of more than $2 billion, which many consider to be outrageously high and as unnecessary. While Seattle experienced a population boom thanks to Amazon’s growth, residents in the city also suffer from higher home prices, income inequality and a rising poverty rate.

“Many of the living wage jobs will go to people moving into Long Island City,” Lisa Herbold, a Seattle City Council member told New York officials in an event on Monday, urging city officials to take measures to protect existing residents, who may face rising rent and a higher cost of living when Amazon arrives.

An Amazon spokesperson said the company “makes substantial positive contributions to the economy, the communities where we operate, and to the lives and careers of our employees. We have created more than 250,000 full-time, full benefit jobs across the U.S. that now have a minimum $15 an hour pay and we have invested more than $160 billion in the U.S. economy since 2011.”

Herbold and her fellow City Council member Teresa Mosqueda were among a group of officials who tried to introduce a regressive tax code on corporations based on their employment numbers last year in their hometown. But the Employee Hours Tax, also known as “head tax,” was repealed just one month after getting passed due to fierce oppositions from big corporations including Starbucks. More than 100 local businesses also signed an open letter to oppose the law.

Seattle wasn’t prepared to take on Amazon

Herbold said the city of Seattle lacked the time or the resources to change people’s minds while Amazon used “small business interest as a stalking horse.”

“You also have to be aware that most of your progressive residents are actually Amazon customers as Amazon is a part of people's daily lives. And people don't want to think negatively of the entity that they rely on for things brought to them super conveniently,” said Herbold.

Mosqueda said Amazon was “dishonest” with the city when they were negotiating the “head tax” issue. She said the same day Amazon representatives came to negotiate on the tax code, the company stopped construction of an office building in downtown Seattle to protest the decision.

Mosqueda urges New York officials to stand up against Amazon and avoid the mistakes Seattle made.

“Most of us are oblivious to what was happening,” said Mosqueda, recalling Amazon’s expansion in Seattle around 2012. “You are at this point I think here in your own city. We know you have zoning laws, you have the opportunities we didn’t in Seattle.”

“Amazon is engaging in a long-term listening and engagement process to better understand the community’s needs,” the Amazon spokesperson said. “We’re committed to being a great neighbor – and ensuring our new headquarters is a win for all New Yorkers.

But Mosqueda is skeptical and warns New York officials: “Don't be the city or the state [that] flinches every time a corporation flexes its muscles, threatens to move out of town, trying to say that they're going to cut jobs or stop construction and holds back on investing in the very systems and infrastructure that they refuse to pay [for].”

Editor’s Note: The previous version of the story incorrectly stated the year Amazon was founded. Amazon was incorporated in 1994.

Krystal Hu covers technology and trade for Yahoo Finance. Follow her on Twitter.

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