Amazon Is Building Its Long Island City HQ In An Opportunity Zone

Amazon will lease the 672K SF 44-36 Vernon Blvd., owned by the New York City Department of Education, in 2019. It will also lease 1M SF at One Court Square, the blue skyscraper in the distance.
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Amazon Will Lease The 672K Sf 44-36 Vernon Blvd., Owned By The New York City Department Of Education, In 2019. It Will Also Lease 1M Sf At One Court Square, The Blue Skyscraper In The Distance.

New York state offered nearly $2B in tax incentives to lure Amazon to Long Island City, but it turns out that package is not the only break on offer.

Amazon’s HQ2 location on the East River waterfront — where it plans to build at least 4M SF across six privately and publicly owned development sites — is in a federally designated opportunity zone, PBS NewsHour reports. The zones, enacted as part of the Tax Cuts and Jobs Act passed last year, offer investors the chance to defer capital gains taxes if they invest in distressed communities.

Amazon, state and city representatives did not discuss the zones in the announcement of the new headquarters Tuesday.

The potential impact of the headquarters in an opportunity zone is twofold. One is that it may encourage people to invest in parts of the neighborhood that could use it. With 25,000 jobs coming as a result of the new campus, that could be a good thing, OPZ Capital investment fund founder Craig Bernstein told PBS.

“This will help expedite the process of building up the surrounding area,” he said.

It could be a win for Amazon, too, as the tech giant could start its own opportunity fund for real estate acquisitions around the new site, the New York Times reports. It will undoubtedly generate further questions on how much taxpayers will truly benefit from Amazon's presence, as it creates another avenue for it to legally defer or avoid taxes.

“All you have to do is look at the skyline from Manhattan. You can see billions of dollars of private investment there already,” developer Don Peebles told PBS. “Long Island City doesn’t strike me as high on the list for needing extensive tax incentives to stimulate economic development.”

Speaking at a joint press conference with Mayor Bill de Blasio and Amazon Tuesday, Gov. Andrew Cuomo said the tax incentive package was needed in order for the city to compete against its HQ2 rivals in other parts of the country, and he said the revenue to incentive ratio is nine-to-one.

“That is the highest rate of return for an economic incentive program that the state has ever offered," he said.

Not everyone is impressed. Politicians, unions and community groups held a protest against the new headquarters in Long Island City Wednesday.

“I’m sick of hearing there isn’t enough money for new schools, parks, transportation amd affordable housing,” Queens Council Member Jimmy Van Bramer tweeted, adding the subsidies should be invested in residents, not the second headquarters.

As part of the HQ2 deal, the state will provide “performance-based” incentives totaling $1.7B. Amazon will also apply for as-of-right incentives, including New York City’s Industrial & Commercial Abatement Program and the Relocation and Employment Assistance Program.

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Related Topics: Amazon HQ2 , Opportunity zones
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