Democratic state senator blasts Amazon's HQ2 as a PR scam, saying 'New York fell for it'

  • It's not New York's "responsibility to provide billions of dollars to Amazon," which doesn't need it, state Sen. Michael Gianaris says.
  • Amazon is not "worth providing $3 billion and setting a precedent" for other companies to pick the city's pockets, he says.
  • Amazon could move instead to Manhattan and the $3 billion can be used for subway infrastructure, schools and affordable housing, Gianaris says.

New York struck a "bad deal" with Amazon to bring one of the tech giant's East Coast headquarters to Queens, New York state Sen. Michael Gianaris told CNBC on Wednesday.

Gianaris, a Democrat whose district includes Long Island City, where the Amazon facility would be located, called Jeff Bezos' HQ2 search process "one of the great PR scams" and said New York responded by handing out $3 billion to the company.

"Why is it the state and the city's responsibility to provide billions of dollars to Amazon, which is probably the one company in the country that needs it the least?" Gianaris said on "Squawk Box."

The senator mentioned that big tech companies such as Facebook and Google parent Alphabet have expanded in Manhattan and created thousands of jobs without the bait of tax relief. Additionally, the state is providing "completely discretionary" incentives that could go instead toward funding affordable housing, schools and subway infrastructure repairs.

"I don't think it's worth providing $3 billion and setting a precedent, by the way, that every other company around the country is going to look at and say 'Well, I guess New York's got its pockets open to be picked. Maybe we should get next in line,'" Gianaris said.

Gianaris' comments came before the New York City Council questioned Amazon executives and the New York City's Economic Development Corporation chief on Wednesday. Several council members are critical of what they saw as a clandestine negotiation process and worry that the project won't benefit the local Queens community.

New York Deputy Mayor Alicia Glen has defended the $1.5 billion in tax credits that Amazon could get through the city's real estate and employee tax subsidy programs. Amazon took advantage of the programs that were designed to spur development outside of Manhattan and the deal could produce $12.5 billion in future tax revenues, she told CNBC last month.

"If they're worried about the outer boroughs so much, I'll tell you what: Let Amazon go to Manhattan, like Google and everybody else, and give us $3 billion worth of affordable housing in Long Island City," Gianaris said. "We take that deal in a second."

Gianaris, the Democratic Conference chair, also disputed the idea that the Long Island City office will be an East Coast headquarters given that Amazon is opening a twin center in Northern Virginia.

The Seattle-based e-commerce mammoth kicked off a competition in 2017 to choose a city for its second headquarters, where it would create 50,000 jobs, before deciding to split the project in half between the two regions.

Amazon now promises to create 25,000 jobs at each location over a decade.

"They set up this process to squeeze as much money as they can out of these various localities, and New York fell for it," Gianaris said, framing the 25,000 jobs over 10 years as a drop in the bucket compared with the 90,000 jobs created in the city each year.

"It's relatively modest in the scope of the size of New York City and the economy and the way it's been growing," he said.

Representatives from the New York mayor's office and Amazon did not immediately respond to a request for comment.