Northern Virginia, NYC to split HQ2 spoils

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As we reported earlier this month, Northern Virginia and New York City are Amazon’s choice for its coveted HQ2, an expansion of its headquarters that is expected to mean about 50,000 new jobs.

“This is a big win for Virginia — I’m proud Amazon recognizes the tremendous assets the Commonwealth has to offer and plans to deepen its roots here,” said Governor Ralph Northam. The decision will be formally announced this afternoon at a news conference.

“Virginia put together a proposal for Amazon that we believe represents a new model of economic development for the 21st century, and I’m excited to say that our innovative approach was successful. The majority of Virginia’s partnership proposal consists of investments in our education and transportation infrastructure that will bolster the features that make Virginia so attractive: a strong and talented workforce, a stable and competitive business climate, and a world-class higher education system,” Northam said.

“Congratulations to Arlington County and New York City!” said Fairfax County Board of Supervisors Chairman Sharon Bulova.  “We look forward to welcoming Amazon as our neighbor here in Northern Virginia. This is a big win for our region!”

“A rising tide lifts all boats, and we look forward to the whole community benefiting from Amazon’s second home in Northern Virginia and the D.C. Metro region,” said Loudoun County Board of Supervisors Chair Phyllis Randall.

Before it was officially announced, the decision was trumpeted by the Washington Post and other major newspapers. Already, the still unannounced decision is becoming fodder for various political and public interest groups, with the Wall Street Journal grousing that Amazon’s three headquarters cities — Seattle, New York and Arlington County — that “politically lean left” and the Northern Virginia Transportation Alliance issuing an ominous statement that reads, “Amazon is coming. Will Metro be ready?”

Despite the growing pains it is bound to spark, the decision gives local politicians something to feel good about. New York Governor Andrew Cuomo had quipped that he would change his first name to “Amazon” if that would sway the decision.

The benefits of landing Amazon are obvious — lots of high-paying jobs and an overall economic boost that’s hard to quantify but will undoubtedly be huge. The downside is pretty obvious too — more traffic congestion and pressure on housing costs. Of course, both are already bad in both cities and won’t come as a surprise to anyone.

“Having HQ2 in Northern Virginia will bring important jobs, business diversity and more innovative technology to the area,” said Gerald L. Gordon, Ph.D., president and CEO of the Fairfax County Economic Development Authority. “We look forward to continuing to work with Amazon Web Services to expand its presence here and are excited to collaborate with other innovative companies that will be putting down roots in Fairfax County soon.”

Agreement spelled out

As part of his statement, Northam outlined the details of the agreement with Amazon for the creation of at least 25,000 jobs. Virginia will:

  • Provide post-performance incentives to Amazon that will be paid annually based on job creation and wage levels, with minimum average wages of at least $150,000. Subject to General Assembly approval, the company will be eligible to receive up to $22,000 per job or up to $550 million in incentives. Additional incentives would be available if Amazon creates more than 25,000 jobs; and
  • Invest up to $195 million of non-general fund money in transportation projects that will improve mobility in the region, including additional entrances to the Metro stations at Crystal City and Potomac Yard, improvements to Route 1, a connector bridge from Crystal City to Washington National Airport, and a transitway expansion supporting Pentagon City, Crystal City, and Potomac Yard. Additional funding would be available if Amazon creates more than 25,000 jobs.

To support the growth of the technology sector across the Commonwealth, Virginia will:

  • Make performance-based investments in bachelor’s degree programs in computer science and related fields that will be distributed statewide based upon a negotiated agreement with each public university or community college that wishes to participate;
  • Make performance-based investments of up to $375 million over 20 years for new master’s degree programs in computer science and related fields at George Mason’s Arlington campus and for Virginia Tech to establish a new Innovation Campus in Alexandria, both of which are subject to a one-to-one match from the universities with philanthropic funds; and
  • Invest $50 million over 20 years in K-12 tech education and internship programming to connect higher ed students to tech jobs. 

“Strategic investments” pay off

“I am pleased Amazon has chosen Virginia for a major headquarters,” said Delegate Chris Jones, Chairman of the Virginia House of Delegates Appropriations Committee. “Strategic investments made in recent years to position Virginia as a business-friendly state have produced excellent results, and we look forward to investing further in our higher education system to catalyze growth in the tech sector.”

“I am proud of the responsible agreement we negotiated for the Commonwealth, with incentives paid to the company only after new jobs are created that pay at least $150,000 per year, plus benefits, and new revenues are received. I congratulate the many partners at the state, regional, and local level that worked together on this historic project, and I look forward to Amazon expanding its presence in the Commonwealth,” Jones said.

In addition to the Commonwealth’s investments, Arlington County and the City of Alexandria plan to fund over $570 million to date for transportation projects, including rail connections, transit facilities, multi-modal streets, and corridor connectivity serving the site. Arlington County and the City of Alexandria are also actively pursuing additional funding opportunities to advance investments in this corridor.

A review of available transportation services, facilities, and associated capacity indicate that the regional and local transit systems have significant unused capacity, even during peak travel periods. Amazon is expected to help fill that existing capacity, as they are a transit-focused employer, with most employees utilizing public transit, walking, biking, or carpooling each day.

Housing and infrastructure

Arlington County and the City of Alexandria have also committed to fund affordable housing, workforce housing, and public infrastructure, relying on revenues generated from Amazon’s new presence in their communities. Combined, the communities project annual investments of more than $15 million over the next decade, resulting in the creation and preservation of 2,500 to 3,000 units in and around the Crystal City, Pentagon City, and Columbia Pike areas and through the City of Alexandria. In addition, the Virginia Housing Development Authority will work with Arlington County and the City of Alexandria, and will provide an additional $15 million per year for affordable and workforce housing.

“We are proud that Amazon has selected National Landing for a major new headquarters. This is, above all, a validation of our community’s commitment to sustainability, transit-oriented development, affordable housing, and diversity,” said Arlington County Board Chair Katie Cristol. “The strength of our workforce coupled with our proximity to the nation’s capital makes us an attractive business location. But Arlington’s real strength is the decades of planning that have produced one of the most vibrant, civically engaged communities in the world. Those plans have paved the way for this investment, and we look forward to engaging the Arlington community about Amazon’s plans and how we can grow together.”

Amazon’s existing presence in the Commonwealth is already substantial, including 8,500 full-time employees, and 28,000 small and medium-sized businesses that use the site as a platform for sales. Their operations in Virginia include six fulfillment and sort centers, three Prime Now hubs, six solar facilities, several large data centers, and the East Coast campus of Amazon Web Services. Since 2011, the company has invested over $29 billion in Virginia, including cloud and customer fulfillment infrastructure as well as compensation to its teams.

 

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About the Author

Truman Lewis
A former reporter and bureau chief, Truman Lewis has covered presidential campaigns, state politics and stories ranging from organized crime to environmental and consumer protection.