Although a site on the border of Loudoun and Fairfax counties was a top contender for Amazon’s second headquarters, the company announced Tuesday morning it will be split between sites in Arlington and Alexandria and New York City.
Amazon calls the Virginia site “National Landing,” referring, according to the office of Governor Ralph Northam, to parts of Pentagon City and Crystal City in Arlington County and Potomac Yard in the City of Alexandria. The company says it will bring about $2.5 billion in investment; 4 million square feet of energy-efficient office space, possibly expanding to 8 million; and estimated tax revenues of $3.2 billion over 20 years.
The project was initially pitched as a single headquarters complex when the national site selection process was launched earlier this year, spurring bids from scores of jurisdictions. However, Northern Virginia will share the project with New York City, which will get the other part of Amazon’s promised $5 billion investment.
It also comes with a more unusual incentive than the typical offer of cash and tax breaks—although those are also included, linked to the company’s job creation. Virginia’s winning bid focused mainly on expanding the pool of tech talent in the region and improving its transportation infrastructure.
“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,” said Gov. Ralph Northam in a statement announcing the company’s decision. “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.”
The state will work to double the number of annual number of graduates with computer science or closely related degrees, with a goal to add 25,000 to 35,000 graduates over the next 20 years. To do that, the state will establish a performance-based investment fund for higher education institutions to expand their bachelor’s degree programs, and spend up to $375 million over the next 20 years on George Mason University’s Arlington campus and a new Virginia Tech campus in Alexandria. That money is contingent on matching philanthropic fundraising by the universities.
The state will also spend $50 million on science, technology, engineering, math, and computer science education in public schools and expanding internships for higher education students over the next 20 years. It also plans to spend up to $195 million on multimodal transportation projects in the area, with additional funding if the company creates more than 25,000 jobs.
The other incentives are contingent on Amazon’s job-creation performance, including that it will hire 25,000 people within 10 to 12 years, with the potential to grow to 37,850 jobs around year 15. Amazon must pay an average annual salary of at least $150,000 plus benefits, escalated at 1.5 percent annually.
The technology incentives could help target what is often cited as the greatest drag on the technology industries in Northern Virginia—the dearth of tech talent. Although the region is one of the most highly educated in the country, it has more tech jobs available than people to fill them.
Roughly half of the jobs at Amazon’s new headquarters are expected to be technology related, including software development engineering, artificial intelligence and machine learning, user interface design, and user experience design. According to Amazon, hiring will begin in 2019.
If the company meets its benchmarks for hiring and salaries, it stands to receive $573 million in incentive money, including a cash grant from the state of up to $550 million. It could also receive a cash grant of $23 million from Arlington County over 15 years based on growth in the county’s transient occupancy tax.
Still a Good Thing for Loudoun?
A proposed location at the Center for Innovative Technology, part of a joint proposal between Loudoun, Fairfax, and developer Open-Rebees, was long considered a front runner for the project, and made a short list of 20 possible sites from among 238 proposals in January.
Local leaders hoped to land Amazon at The Hub property, an 85-acre undeveloped site straddling the county borders near Dulles Airport and near an Amazon Web Services campus.
But with many Northern Virginia residents commuting east for work, the prospect of a new Amazon headquarters in Arlington and Alexandria could also mean the impacts of thousands of new Loudoun residents could be felt without the giant new technology campus to bolster local revenues. The additional state funding for affordable housing and transportation in the project does not extend to Loudoun.
But business and economic development leaders say a rising tide lifts of all ships.
“We consider this a win for the entire region,” stated Loudoun County Department of Economic Development Executive Director Buddy Rizer. “Many of Loudoun’s highly educated professionals will join the Amazon workforce, and many of Loudoun’s wine country and other retail and recreation venues will become favorite destinations for Amazon employees throughout the Northern Virginia/DC Metro region.”
He said he looks forward to announcing new Loudoun companies soon.
Tony Howard, president and CEO of the Loudoun County Chamber of Commerce, said the county could feel the impact of Virginia’s “antiquated and inefficient tax and revenue system.”
“The Commonwealth will reap the significant bounty form the economic development win in the form of incomes taxes and other taxes paid by those workers, and Arlington county will get some in the form of increases in real estate values,” Howard said. “… Jurisdictions around the region will bear the cost of the folks that drive to work every day, and assuming some of them have children they want to put through school.”
But overall, he said, the project is still a positive both for Loudoun and the region.
“I still think that’s a win for the region, because I think it does help further solidify the region as a technology community, and a place where the tech sector can really thrive and flourish,” Howard said. “I think it’s great caché to have HQ2 in our region. …The net economic benefits will be significant, and they will accrue to all the localities in the region.”
Loudoun Economic Development Advisory Commission Chairman Todd Pearson, a senior vice president at B.F. Saul, said the new Amazon campus will increase housing demand for the region, but also prospects.
“There’s going to be a lot of businesses that want to locate near Amazon,” Pearson said. The important thing for Loudoun, he said will be to be prepared and positioned to recruit those businesses to Loudoun.
And Sharon Virts, vice chairwoman of the GO Virginia Northern Regional Commission and a former chairwoman of the Loudoun Economic Development Advisory Commission, said Loudoun will feel the impact of those “honeypot” businesses that will grow or come to the region because of Amazon.
“When you get an organization that big, it’s the concept of all boats rise with the tide, and that’s what we’re going to see,” Virts said. “Just like the federal government in Washington DC being there it has caused, over the decades, our economic outlook to rise along with those businesses that are dealing with the federal government directly.”
And she said Loudoun is still a prime location.
“It’s good for us, and as they grow—and they will grow—we have the facilities. We still have Loudoun County wide open for them, and the greenfield space we’ll be happy to offer here, especially when Metro comes out.”
And, Howard said, making the short list for a new Amazon campus is pretty good marketing for the still-vacant site straddling the Loudoun-Fairfax border.
“Frankly, a lot of those independent assessments put it at the top of the list as checking so many boxes, and I think what that does is market the site for so many other companies,” Howard said. “I don’t think all is lost on this one. Sure, we’ll wish we won [HQ2], but I think we’re at a pretty good darn position for a number of reasons.”