{"id":901,"date":"2018-06-29T05:40:12","date_gmt":"2018-06-29T05:40:12","guid":{"rendered":"http:\/\/newarkspeaks.com\/?p=901"},"modified":"2018-07-07T17:16:55","modified_gmt":"2018-07-07T17:16:55","slug":"will-amazon-pick-underdog-newark-for-its-hq2-experts-worry-the-city-cannot-afford-to-win","status":"publish","type":"post","link":"https:\/\/newarkspeaks.com\/index.php\/2018\/06\/29\/will-amazon-pick-underdog-newark-for-its-hq2-experts-worry-the-city-cannot-afford-to-win\/","title":{"rendered":"Will Amazon pick underdog Newark for its HQ2? Experts worry the city cannot afford to win."},"content":{"rendered":"
By Jonathan O’Connell<\/span><\/span><\/div>\n
<\/div>\n
Newark is the hard-knock contender that for six decades has watched its population slide and its commercial corridors clear out. Analysts\u00a0dismiss\u00a0the city\u2019s chances at landing the project, called HQ2. Bookies will give you 50-1 odds.<\/div>\n
\n

So Newark is going in big, partnering with New Jersey to offer the company a $7\u2009billion incentive package to lure the project and its 50,000 jobs.<\/p>\n

The offering is among the most lucrative of any known Amazon bid and among the largest that experts say they\u2019ve ever seen extended to a corporation.<\/p>\n

Critics say the win-at-all-costs proposal risks overwhelming Newark\u2019s $660 million budget and further sinking New Jersey\u2019s\u00a0disastrous<\/a>\u00a0credit rating, which already places it among the nation\u2019s worst business climates, according to\u00a0an index by tax experts<\/a>.<\/p>\n

Greg LeRoy, executive director of Good Jobs First, a D.C. advocacy group that tracks corporate subsidies, said the package could be a \u201cfinal dagger to New Jersey\u2019s fiscal health\u201d if Amazon accepts it.<\/p>\n

\u201cThere\u2019s no question it\u2019s of a magnitude that it would be a net loss for taxpayers,\u201d he said.<\/p>\n

Business and civic leaders see a once-in-a-generation chance to change the city\u2019s fortunes. Former governor Chris Christie\u2009(R), who assembled the bid, said winning would provide \u201cjet fuel\u201d to Newark\u2019s nascent revival.<\/p>\n

Yet Seattle, the original benefactor of Amazon\u2019s furious expansion, offers a cautionary tale. The city\u2019s economy has boomed, with rapid growth in incomes and tax revenue. But that success has come with dramatic rises in home values and in the city\u2019s homeless population.<\/p>\n

So it\u2019s an open question how Amazon would shape \u201cBrick City.\u201d<\/p>\n

Newark native Ana Baptista, an urban planning expert and assistant professor at the New School, joined residents huddled over folding tables and chicken wings on a recent evening at a City Hall meeting about development in the area.<\/p>\n

\u201cPeople here are terrified of being gentrified,\u201d she said. \u201cWe do not have a great track record as a city of making deals that generate wealth for the people who need it most. So I worry. And I do think we\u2019re in a moment where we can ask for more.\u201d<\/p>\n

Newark\u2019s mayor, Ras J. Baraka, recently addressed that anxiety before an audience of civic and business leaders in a downtown hotel ballroom.<\/p>\n

\u201cThere is a sense that with the challenges that Newark has had over the decades, that people have grown accustomed to struggling,\u201d he said. But, he added: \u201cYou can\u2019t be afraid to move forward because there is risk involved. You can\u2019t walk away from 50,000 jobs.\u201d<\/p>\n

Foundation for rejuvenation<\/div>\n
<\/a>Whole Foods recently opened in a vacant department store building, and apartments upstairs are attracting professionals looking to relocate from New York City. (Bryan Anselm for The Washington Post)<\/span><\/em><\/h6>\n
<\/div>\n

When Amazon launched its search last fall, it gave little indication it was looking for a reclamation project. It quickly eliminated cities with similar demographic profiles, such as Detroit and Baltimore.<\/p>\n

But as Amazon and other tech powerhouses assume growing dominance in the nation\u2019s economy, they are coming under increased scrutiny. Critics point to wages, workplace environments and consumer protections. That has Newark leaders thinking that Amazon founder Jeffrey P. Bezos (who owns The Washington Post) may want to align himself with an underdog.<\/p>\n

And there is broad agreement that things are on the upswing in Newark, which is now adding people every year, luring workers who have been priced out of Manhattan and its close-in suburbs. One of the most extensive fiber-optic networks in the country\u00a0runs<\/a>\u00a0beneath its streets. Elected leaders including Christie and Sen. Cory Booker (D) got behind Newark\u2019s bid early, and other companies have expressed interest in the city after seeing Amazon\u2019s interest.<\/p>\n

Spend a day in downtown Newark, and evidence of a comeback, supported already in part by Amazon\u2019s tentacles, is on display. In renovated Military Park, people play kickball and table tennis until dusk. A 22-story apartment tower is\u00a0advertised<\/a>\u00a0as \u201cthe first new ground-up residential construction in the city in several decades.\u201d<\/p>\n

Audible, a Newark-based audiobook subsidiary of Amazon, employs more than 1,000 people here, and its chief executive is leading a pack of others championing the city. The company is renovating a long-vacant \u00ad108-year-old church as a technology center. It has also offered to\u00a0pay a year\u2019s worth of rent\u00a0to entice workers to relocate. Whole Foods (newly acquired by Amazon) recently opened in a renovated department store.<\/p>\n

Prudential Insurance and Panasonic have large and growing offices here, and the infrastructure that made Newark a hub of American industry in the 1950s remains, including the nation\u2019s third-busiest port and\u00a014th-busiest airport<\/a>.<\/p>\n

But outside downtown, many of the neighborhoods that burned during widespread racial protests in 1967 remain destitute. More than 23,000 of the city\u2019s children, about 37 percent, live in poverty, although that number has fallen in recent years.<\/p>\n

Growing up in Jersey City, Krystal Watson said she thought of Newark \u201cas a place where people got robbed.\u201d But after rents in her home town kept rising, she moved into an apartment above the Whole Foods almost two years ago.<\/p>\n

She said Amazon would help Newark, even if it pushed rents higher.<\/p>\n

\u201cThings are getting better here, but it\u2019s slow,\u201d she said.<\/p>\n

Gloria Thornton, a social worker whose husband works at an Amazon loading dock and whose children attended Newark schools, was also supportive. \u201cWe can\u2019t keep being a welfare city,\u201d she said. \u201cYou have to pay your own way sooner or later. It\u2019s time for a change.\u201d<\/p>\n

‘A net benefit to New Jersey’<\/div>\n
<\/a>If Amazon opens its second headquarters in Newark, it promises to bring 50,000 workers. (Bryan Anselm for The Washington Post)<\/span><\/em><\/h6>\n
<\/div>\n

The incentives package for Amazon\u2019s HQ2 won approval from both political parties. Christie called it \u201ca layup\u201d for the state if it lands Amazon. New Jersey Gov. Phil Murphy\u2009(D), in office since January, said the incentives are more than he would have offered but backed the proposal.<\/p>\n

\u201cWhen you look at the scale of the potential investment and the potential employment,\u201d he said, \u201cI look at it as a once-in-a-generation-chance opportunity.\u201d<\/p>\n

Booker said that even with the subsidies, an Amazon deal would \u201cbe a net benefit to New Jersey.\u201d He said he would like to see the company set an example for how to operate with an eye on making positive contributions to society as well as its own bottom line.<\/p>\n

But the offer also rankles liberals leery of corporate giveaways and conservatives focused on the state\u2019s dismal budget status. Among the reported offers to Amazon (not all have been made public) only Maryland\u2019s, at $8.5\u00a0billion, is larger.<\/p>\n

\u201cNew Jersey shouldn\u2019t be in the business of picking winners and losers, nor should we give special tax breaks to a company that\u2019s driving our mom-and-pop shops out of business,\u201d\u00a0Republican\u00a0<\/a>state Sen. Mike Doherty of nearby Warren, N.J., said after the legislature approved the package in January.<\/p>\n

If Newark lands Amazon, it would fall to Baraka to explain to residents why an $805 billion company needs another $7\u00a0billion from such a cash-strapped corner of America.<\/p>\n

<\/a>Ras Baraka, mayor of Newark, is homegrown and was reelected with 77 percent of the vote last month. (Alex Flynn\/Bloomberg)<\/span><\/em><\/h6>\n

The son of a local activist, Baraka was a collaborator with hip-hop star Lauryn Hill, a high school principal and community advocate before running for City Council from the poorest of the city\u2019s five wards. While Booker is a star in national Democratic politics, many locals never forgot that he was raised in suburban Bergen County; Baraka is homegrown and was reelected with 77\u00a0percent of the vote in May.<\/p>\n

In the 200-page proposal Newark officials sent the company, they included a hypothetical Wired magazine article from the year 2027. The fictional story has Bezos selecting Newark for the project and crediting the city for \u201ccreating a new sense of purpose for Amazon.\u201d<\/p>\n

<\/div>\n

The proposal suggests areas in and around downtown where developers have assembled vacant or underutilized property. Last year, the city broke ground on a $10 million park, Mulberry Commons, with space for Amazon office buildings adjacent to it. Two years ago, the city sold a minor-league baseball stadium to a developer after the team left town. Another developer has bought\u00a079 storefronts and other parcels<\/a>\u00a0and produced designs for skyscrapers.<\/p>\n

The incentives being offered amount to breaks on taxes that Amazon would pay, but it\u2019s not cash in hand to fix things. Many Newark families send their children to failing schools in crumbling buildings, with trash blanketing the sidewalk and potholes ravaging the streets.<\/p>\n

In an interview, the mayor made a calculation similar to that of other elected leaders offering subsidies to corporations to relocate.<\/p>\n

\u201cWe are definitely going to get as much out of it as we put in,\u201d he said. \u201cIt\u2019s like if you buy a car that\u2019s expensive, you\u2019re going to drive the hell out of it until the wheels come off that thing. If they come to this region, we are going to use the brand, the wealth, the resources to help us develop this town.\u201d<\/p>\n

A cautionary tale in Seattle<\/div>\n
<\/a>Even without the Amazon project, Newark is a city that sees itself on the upswing. Construction is underway on the Mulberry Commons park across from the Prudential Center arena. (Bryan Anselm for The Washington Post)<\/span><\/em><\/h6>\n

Newark used to be a bigger city, with 442,000 residents in 1930. Its vacant land could accommodate thousands of new housing units without redeveloping existing neighborhoods.<\/p>\n

\u201cIt\u2019s got the bones for growth. It\u2019s got the capacity for growth,\u201d said Murphy, the governor. \u201cYou can see how an employer with 50,000 jobs here could work. You don\u2019t have to squeeze other people out the other end of the tube.\u201d<\/p>\n

But the challenge of leveraging white-collar job growth to benefit far less educated residents is one cities further along the growth curve are already facing, with uneven results.<\/p>\n

Seattle provides troubling precedents. Despite the city\u2019s efforts to quickly add new housing and infrastructure, the Seattle area has led the nation in home-price increases every month for 20 months in a row,\u00a0according to\u00a0the Case-Shiller index.<\/p>\n

In Newark, where the median household income is $33,025, the arrival of six-figure jobs from Amazon \u2014 or other tech companies \u2014 could create opportunities for people with college educations and skills but also lead to displacement of residents.<\/p>\n

Community organizers are focused on managing growth in Newark neighborhoods such as the Ironbound, a working-class enclave of 40,000 people, including many Portuguese American families in two- and three-story buildings with businesses on the first floor. In recent years, swanky new restaurants have joined the many longtime small groceries and family-owned eateries.<\/p>\n

Easy access to Newark Penn Station and a new riverfront park have drawn home buyers, and Mars Wrigley\u00a0plans\u00a0an office of at least 500 people nearby. When Amazon officials toured the city, Murphy, Baraka and Booker\u00a0took them to dinner at Mompou, a tapas restaurant in the Ironbound. (\u201cWe charmed them and got drunk a little bit,\u201d Baraka said.)<\/p>\n

The Ironbound is still reeling from the environmental costs of serving the New York area and much of the East Coast. The neighborhood is home to the port and an industrial area that produces mass amounts of chemicals, metal parts, food and household items such as plastic cups and cigarette lighters.<\/p>\n

\u201cThe ghosts of industry\u2019s past come back to haunt you all the time here,\u201d Baptista said.<\/p>\n

With an eye on what happened in Seattle, Baraka and Newark officials have begun instituting protections. Last year, the mayor signed two policies, one requiring developers to include below-market-rate units in new apartment buildings and another requiring builders who get tax breaks to hire city residents and make community contributions.<\/p>\n

\u201cWhat\u2019s great is to have a mayor who is thinking about these issues,\u201d said Arnold Cohen of the Housing and Community Development Network of New Jersey. \u201cWe live in a capitalist society, so you can\u2019t shut the door, and in a city like Newark, you want growth to help the city as a whole. The question is how you manage that.\u201d<\/p>\n

Booker said Newark\u2019s chance lies in the possibility that Amazon and Bezos decide they want to do something unexpected.<\/p>\n

\u201cThere is a moral case that Chicago and New York just don\u2019t have,\u201d Booker said. \u201cAnd that is the very idea of America and being part of a city that is standing up and saying, \u2018Look at us, we are here to rekindle and repair the idea that the American Dream can thrive everywhere.\u2019\u2009\u201d<\/p>\n

<\/a>As Mayor Ras J. Baraka puts it: \u201cWe\u2019re an American city that\u2019s pushing on its own like the train that wouldn’t quit \u2014 we\u2019re just going, going, going, going.\u201d (Bryan Anselm for The Washington Post)<\/span><\/em><\/h6>\n<\/article>\n","protected":false},"excerpt":{"rendered":"

By Jonathan O’Connell Newark is the hard-knock contender that for six decades has watched its population slide and its commercial corridors clear out. Analysts\u00a0dismiss\u00a0the city\u2019s chances at landing the project, called HQ2. Bookies will give you 50-1 odds. So Newark is going in big, partnering with New Jersey to offer the company a $7\u2009billion incentive […]<\/p>\n","protected":false},"author":2,"featured_media":914,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":""},"categories":[13,2,1],"tags":[],"yoast_head":"\nWill Amazon pick underdog Newark for its HQ2? 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