While retail giant Amazon scrapped plans to move to the Long Island City neighborhood of New York City last month following backlash from community organizers and opposition from some New York politicians, the Seattle-based company is still charging forward with its plans for a second headquarters in Northern Virginia.
Amazon has dubbed the area “National Landing,” and it is located three miles from downtown Washington, D.C. It includes parts of Pentagon City and Crystal City in Arlington, as well as Potomac Yard in Alexandria.
The move to Virginia is expected to bring 25,000 jobs to the area, While the Virginia HQ2 has not faced the scale of the backlash in New York, some critics have similarly called out the incentives the retailer could see from bringing its second headquarters to Arlington.
The Old Dominion State has already approved $750 million in state incentives, but it is the additional $23 million in Arlington County incentives that stirred new debate this week.
As reported by The Washington Post, local activists are now demanding that Arlington County require the company to pay union-level construction wages, donate to affordable housing funds, and even end its partnership with federal immigration authorities.
Under the current agreement Amazon could receive 15% of any increase in the amount of hotel taxes that the county receives, but only if the retail giant meets key occupancy goals. According to a draft agreement that was released on Tuesday, the company must fill a certain amount of office space in Arlington. If this goal is met, Amazon will receive the staggered payouts over the next 15 years.
The draft agreement noted that Amazon would receive this payment from revenue the country receives from its “transient occupancy tax” (TOT), or taxes on hotels and other lodgings when compared with its baseline – but only if the total square footage of the facilities meet required levels. The payments would come from expected increases in taxes on hotels, motels and other lodgings.
The idea is that HQ2 could increase hotel occupancy and spending in Arlington and around the Crystal City area. For its part, Amazon is expected to meet 90% of the occupancy targets by targeted deadlines. The draft agreement called for Amazon to fill 64,000 square feet of office space by the end of July of next year, and if that goal is met it will receive the first payout in August 2020.
By 2021 the company is expected to occupy the 252,800 square feet of office space required to receive the next incentive, and it must have more than 5.5 million square feet of space at HQ2 in Arlington by July 2034 to meet the final requirement goals.
The agreement also requires Arlington to set aside a portion of funds raised from incremental real property tax revenues in the region to further fund Amazon projects. The agreement noted, “to support the continued realization of the aforesaid land use plans the County Board has envisioned for this area, particularly in and around the Amazon Arlington Facility, each year, based on Amazon’s achievement of the Annual Facility Target and subject to appropriation, the County Board will segment a portion of the incremental real property tax revenue from the TIF Area from Fiscal Years 2022 through 2031 and, through the Country’s Capital Improvement Plan (“CIP”) process, will identify projects to be funded, in whole or in part, with these resources.”
If Amazon does fulfill at least 90% of its facility targets, a portion of the increased tax revenue from the country’s specified fund will also be set aside to fund those projects between the county’s fiscal years 2022 and 2031.
While Amazon has been notoriously private on past deals, and had even required strict confidentiality from local and state governments during the HQ2 selection process, the draft agreement does require that Amazon acknowledge that information it provides to county and state is now subject to Virginia’s Freedom of Information Act statute. Square-footage reports, the number of employees hired in Arlington, incentives paid and the composite tax and revenue data will be subject to that statue.
