Amazon is considered the largest company in the world today. In September 2017, Amazon released an RFP for a second headquarters, which our staff brought to the Board for application approval. Given the high commercial vacancy rate we had at the time (over 22% overall and about 30% in Crystal City) and that every percent of vacancy means about $3.4M lost tax revenue per year, we agreed. However, we gave staff the strong message that we were not willing to change Arlington’s character to attract Amazon. The application process was run by staff in cooperation with the Commonwealth of Virginia and Alexandria City (Alexandria and Arlington made a joint proposal to Amazon), and the Board wasconsulted before every major decision point was reached. Now, with our selection as the location for HQ2 in November 2018, our task is holding Amazon accountable as one of our corporate citizens.
Managing Growth: Though Amazon is big, Arlington has long beenhome to large enterprises. Federal government agencies, including the Pentagon, are among the largest organizations in the County. Over the years, it has become clear to me that we needed to diversify our economic base so that we have less dependence on the Federal government. Our recent high commercial vacancy rate is largely due to government policies, particularly Base Realignmentand Closure (BRAC) and Sequestration. These shifts, which were out of our control, meant we were not achieving our development goals, especially in Crystal City and Pentagon City.
Our agreement with Amazon anticipates 25,000 new employees by 2030. Even this growth will not fully offset the 32,000 Federal jobs Arlington has lost over the last 20 years and the additional 3,000 jobs we will lose when the TSA leaves Crystal City. We not only have space for Amazon but also for the new companies we expect will be attracted to Arlington because of Amazon. No current businesses will be displaced.
Regarding the area’s transportation, Metro and bus ridership is below capacity in Crystal City. Our agreement provides transportation enhancements in Crystal and Pentagon Cities, much of which will be paid for by the State of Virginia. Based on Amazon’s Seattle employees, we expect about 77% of Arlington hires will use transit, walk, or bike to work. In short, our planning for the area has long anticipated this growth.
Our Incentive Package Benefits Arlington Directly: People often wonder why a company as wealthy as Amazon should expect any incentives. Rather than new monies paid by the County directly to Amazon, they are investment dollars which the County had long committed for infrastructure and other improvements with or without Amazon. Since the company is building multiple projects, these investments are being jointly funded by the State of Virginia, Alexandria and Arlington; and they will happen more quickly rather than incrementally. For example, we approved the first Amazon project in December 2019 and it has already begun to transform 6.2 acres of Pentagon City’s Metropolitan Park from abandoned 1950s-era warehouses and surface parking into two office towers and an added 1/2 acre to the already planned public park. Additionally, Amazon has agreed to spend at least $15M to improve and maintain the park. Overall, Amazon will invest at least $2.5 billion here over the next 12 years
The multi-jurisdictional agreement commits to investing $570M in transportation infrastructure and transit improvements, most of which are not new for Amazon but were already planned in our Capital Improvement Program budget. Of this, $195M will come from Arlington; and $150M in affordable and workforce housing will be paid by the State of Virginia, Arlington and Alexandria. Arlington County – on its own – would have needed to make these investments in housing and infrastructure with or without Amazon. One incentive that Arlington County will pay directly to Amazon is $23M which they can use for enhancements like parks and open space. This grant from us of up to $23M (but no higher) represents 15% of the added revenue the County will get from increased hotel tax revenue due to Amazon employees and visitors from companies with which they are doing business staying in hotels here. Many details about the incentive package can be found at ….
Additional Benefits for Arlington: Amazon’s Phase I development (Met Park) will include green roofs at several levels of their buildings; new and improved public open spaces (18,000 sq. ft.); a $20 million affordable housing contribution; public streets and transit improvements; street level retail space and a shared underground parking garage (about 1,980 spaces). The developer will make event and meeting spaces available to the community. And, they will contribute $225,000 to the County’s Public Art Fund.
Holding Amazon Accountable: Arlington’s economic development performance agreement with Amazon is a pay-for-performance grant.
It sets out the terms and conditions for the company to perform target metrics with set reporting dates in order to receive the disbursement incentive. A steering committee has been set up by the Virginia Economic Development Program (VEDP) to make sure all parties are adhering to the agreement. Amazon came to us for approval of their first two towers at Met Park in December 2019. They are going through the same approval process every developer must and, as usually happens, the process resulted in amendments including increased energy efficiency with LEED Platinum and Energy Star certification. The building will use 100% renewable energy.
In addition, while the Board has no authority over labor agreements, we have strongly encouraged Amazon to pay workers a living wage and make sure their contractors treat workers fairly. Amazon agreed to abide by the Davis-Bacon Act and pay prevailing wages. They also hired a firm to ensure that contractors pay their workers and no wage theft occurs. In fact, when Amazon learned about the prevalence of wage theft on their sites, it suspended work until they could be sure that wage theft and other harmful practices were not occurring.
As Amazon becomes a part of our corporate Arlington community, I will continue to make sure they are good corporate citizens, adhere to agreements, and treat their employees and contractors well. They have insisted this is what they want and, so far, have been good to their word.
