50°Rain

BREAKING: Amazon Will Split ‘HQ2’ Between Crystal City, Long Island City

by Alex Koma November 13, 2018 at 9:57 am 0

(Updated at 10:35 a.m.) After months of breathless speculation, Amazon has made it official and announced that it is coming to Arlington — but the county isn’t alone in winning the tech giant’s second headquarters.

The tech giant announced today (Tuesday) that it will split its $5 billion investment for an “HQ2” between Crystal City and Long Island City in Queens, confirming earlier reporting of the last-minute switch. Nashville will also receive 5,000 jobs as part of the arrangement.

A press conference has been scheduled for 1:30 p.m. in Pentagon City.

Amazon will now set up roughly half of the new headquarters on a site in Crystal City a bid championed by state and county officials, as well as JBG Smith, the region’s biggest real estate owner.

In a press release, Amazon dubbed the site as “National Landing.” A county spokeswoman tells ARLnow that “National Landing” refers to the Crystal City, Pentagon City and Potomac Yard area, which together will make up the footprint of Amazon’s local campus. A map included in the announcement also refers to the Rosslyn-Ballston corridor as “Downtown Arlington.”

More from Amazon’s announcement:

As part of Amazon’s new headquarters, Virginia and Arlington will benefit from more than 25,000 full-time high-paying jobs; approximately $2.5 billion in Amazon investment; 4 million square feet of energy-efficient office space with the opportunity to expand to 8 million square feet; and an estimated incremental tax revenue of $3.2 billion over the next 20 years as a result of Amazon’s investment and job creation.

Amazon will receive performance-based direct incentives of $573 million based on the company creating 25,000 jobs with an average wage of over $150,000 in Arlington. This includes a workforce cash grant from the Commonwealth of Virginia of up to $550 million based on $22,000 for each job created over the next 12 years. Amazon will only receive this incentive if it creates the forecasted high-paying jobs. The company will also receive a cash grant from Arlington of $23 million over 15 years based on the incremental growth of the existing local Transient Occupancy Tax, a tax on hotel rooms.

The community and Amazon employees will benefit from the Commonwealth investing $195 million in infrastructure in the neighborhood, including improvements to the Crystal City and the Potomac Yards Metro stations; a pedestrian bridge connecting National Landing and Reagan National Airport; and work to improve safety, accessibility, and the pedestrian experience crossing Route 1 over the next 10 years. Arlington will also dedicate an estimated $28 million based on 12% of future property tax revenues earned from an existing Tax Increment Financing (TIF) district for on-site infrastructure and open space in National Landing.

“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 of Virginia. “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.”

“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.”

JBG Smith owns huge swaths of property throughout the neighborhood, which was long thought to be a key factor in Arlington’s favor. The company has launched a new website in conjunction with the announcement: Nationallanding.com.

Crystal City’s high office vacancy rate, long a thorn in the side of county leaders that will now be alleviated virtually overnight, also provided plenty of open space for the company to work with as it plans a new campus.

While communities across the country were vying to earn HQ2 as part of an unusual public bidding process, the D.C. region was widely viewed as a favorite to earn Amazon’s new headquarters after the company listed Northern Virginia, Maryland and D.C. among its 20 finalists in January. Even still, the company announced late in the process that it would seek to split HQ2, noting that executives didn’t believe that any of the finalists had enough “tech talent” to fill the contemplated 50,000 jobs for the new offices.

Arlington was long viewed as a particularly strong contender after the county submitted both the Crystal City site and locations along the Rosslyn-Ballston corridor for consideration. Amazon officials subsequently toured those locations this spring, and even linked many of its employees to a particular ARLnow article about the county’s environmental accolades.

With the decision finally made, Arlington officials will now have to grapple with the impact of the company’s arrival — especially now that the company won’t be bringing quite the same investment as it originally promised.

The rosiest estimates of HQ2’s impact suggest the company will create a “prosperity bomb” in the region, offering tens of thousands of high-paying jobs and filling up the coffers of local governments.

But many critics have spent months warning that HQ2’s arrival could exacerbate many of the problems already plaguing Arlington. They reason the arrival of so many wealthy Amazon workers could cause housing prices to skyrocket and make it virtually impossible for low-income people to afford to live in the area, or even strain the region’s already challenged transit systems.

Others still worry that the county has offered a series of lucrative tax breaks and cash incentives to the company, dampening whatever economic benefits HQ2 may offer — the county has steadfastly refused to offer any details of its offer to Amazon, as the company has sworn HQ2 bidders to secrecy. There’s also no telling if the county and state might look to revise its incentive offer, now that Amazon has split up HQ2.

County officials have long insisted that they’re prepared to meet these challenges, however, and with Apple still weighing its own move to Arlington, it seems quite likely that such conversations will dominate their attention in the coming months.

Arlington County and the City of Alexandria trumpeted the selection in a joint press release issued shortly after Amazon’s announcement.

The press release says Virginia Tech will now establish an “Innovation Campus” in Alexandria near the new headquarters, while Arlington and Alexandria public schools will “have access to new resources related to computer science education, to be made available statewide” and George Mason University’s campus in Virginia Square will expand. Also funded thanks to Amazon’s arrival: the long hoped-for second entrance to the Crystal City Metro station and a new High Line-like pedestrian bridge from Crystal City to Reagan National Airport.

Amazon.com, Inc, announced this morning that it has chosen Arlington County to establish a major new headquarters. Arlington and the City of Alexandria, after working together for the last year in a unique and unprecedented regional partnership, are announcing that Amazon will locate in National Landing, a newly branded neighborhood encompassing parts of Pentagon City and Crystal City in Arlington and Potomac Yard in Alexandria. The Commonwealth’s announcement also includes news of a new partnership with Virginia Tech to develop a revolutionary Innovation Campus to fill demand for high-tech talent in National Landing and beyond. […]

Specifically, for the National Landing proposal, Arlington and Alexandria partnered with property owner and developer JBG SMITH to present Amazon with a compelling 150-acre site – a mixture of existing vacant buildings and developable land – seamlessly connected by a robust transportation network, including three Metrorail stations and a commuter rail station, walking and biking paths. The National Landing proposal offers Amazon the opportunity to establish a major headquarters in a thriving, urban environment. The proposal to Amazon that was crafted by Arlington, Alexandria, JBG SMITH, VEDP, and others can be found online.

“We are incredibly pleased to partner with Amazon on their new headquarters,” said JBG SMITH CEO, Matt Kelly. “Their selection of National Landing is a fantastic outcome for the entire region and reflects the close collaboration between the JBG SMITH team and our partners in Arlington, Alexandria and the Commonwealth of Virginia.”

Amazon’s new home at National Landing builds on the strength and history of an established community with nearly 12 million square feet of existing office space and more than 13,000 residential units that also has exciting growth potential. JBG SMITH owns 6.2 million square feet of existing office space and 2.4 million square feet of existing multifamily, and controls 7.4 million square feet of estimated potential density in National Landing, excluding Amazon’s proposed land purchase. Amazon’s initial development plans focus on JBG SMITH-owned properties in Crystal City and Pentagon City in Arlington County, while the new Virginia Tech Innovation Campus will be developed in the Alexandria portion of the National Landing site. Amazon’s new headquarters and related investments are generally consistent with the communities’ adopted growth plans for the National Landing area in both Arlington and Alexandria, which envision high-density, mixed-use, transit-oriented development.

Virginia Tech Innovation Campus

In Alexandria’s portion of Potomac Yard, Virginia Tech and the Commonwealth intend to provide funding for an Innovation Campus near Amazon’s new headquarters to build a graduate campus in the southern portion of National Landing, specifically targeted at tech talent that will benefit all companies in the Commonwealth. The campus will house master’s and doctoral level programs that dovetail with the industry’s most pressing demands. Degree programs and research opportunities will focus on computer sciences and software engineering, while offering specializations in high-demand areas, including data sciences; analytics and collective decisions; security and the Internet of Things; and technology and policy. The campus will build on the growing innovation economy in Alexandria and Arlington, anchored by the United States Patent and Trademark Office, the National Science Foundation, the Defense Advanced Research Projects Agency and now private sector companies like Amazon.

“Launching the Innovation Campus is a watershed moment for Virginia Tech and a great day for the Commonwealth we are committed to serve,” Virginia Tech President Tim Sands said. “As Virginia’s land-grant institution, we stepped up to claim our role of driving economic development by leveraging our strengths in technology and engineering and building on our strong partnerships in Washington, D.C. The Innovation Campus will bring together the highest-caliber students, world-class faculty, smart ideas and forward-thinking companies.”

Investments in the Community

K-12 and Higher Education: As part of the Commonwealth’s increased investment in the tech-talent pipeline, Arlington and Alexandria public schools will have access to new resources related to computer science education, to be made available statewide. They include: ongoing professional development for current and future teachers; high-quality curriculum and related resources; summer and after-school programming for students; and meaningful career exposure and work-based learning opportunities in high-demand fields.

George Mason University’s Arlington campus will also grow, taking advantage of new performance-based investments for new master’s degree programs in computer science and related fields.

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

To manage this planned growth, Arlington County and the City of Alexandria are investing $570 million in transportation projects, including rail connections, transit facilities, multi-modal streets and transportation technology serving the site, all of which were planned as part of Board- and Council-approved long-term Capital Improvement Plans. Arlington and Alexandria are also actively pursuing additional funding opportunities to advance investments in this corridor.

To augment these local investments, the Commonwealth will invest up to $195 million of non-general fund money in new or expanded transportation projects to improve mobility in the region, including an additional entrance to the Crystal City Metro station and a south entrance off of Potomac Avenue to the new Potomac Yard Metro station. Other projects include improvements to U.S. Route 1 in Arlington County, a pedestrian bridge from Crystal City to Reagan National Airport and a transitway expansion supporting Pentagon City, Crystal City and Potomac Yard in both Alexandria and Arlington. Additional funding would be available if Amazon creates more than 25,000 jobs.

Housing: Amazon’s choice to locate in National Landing comes as the region is intensifying its efforts to increase housing capacity and making more investments in affordable housing. Arlington and Alexandria already have strong existing commitments to funding and supporting efforts to create, protect and preserve affordable and workforce housing. As part of this project announcement, both communities will fund affordable housing, workforce housing and public infrastructure, bolstered by revenues generated from Amazon’s new presence in their communities. Combined, the communities project investment of at least $150 million over the next decade, resulting in the creation and preservation of 2,000 to 2,400 affordable and workforce units in and around the Crystal City, Pentagon City and Columbia Pike areas and throughout Alexandria.

Direct Investments

Arlington’s proposed direct financial incentive to Amazon is an annual pay-for-performance grant tied to the company meeting 6 million square feet in office occupancy targets over the initial 15 years with a value of approximately $23 million. The incentive comes from a percentage of the new incremental revenue generated by the County’s Transient Occupancy Tax (TOT), which is a tax paid by tourists and business travelers on hotel rooms or other paid lodging.

In addition to direct financial incentives, Arlington County also proposed using a portion of new incremental revenue generated by Amazon’s arrival within the existing Tax Increment Financing (TIF) area to make strategic infrastructure investments in and around National Landing. The estimated new TIF revenue is projected to be $28m over a 10-year period.

The Arlington County Board will vote on a final incentive agreement no earlier than February 2019 and will follow its regular public engagement and hearing process for development decisions.

Immediately following Tuesday morning’s announcement, local lawmakers started issuing statements on the selection.

From Sen. Mark Warner (D-Va.):

As a former Governor, now Senator, but also as a former technology executive, I’m really excited about the potential Amazon offers not only to Northern Virginia but the whole capital region and the entire Commonwealth. We’ve seen that major investments like these can bring not only thousands of direct jobs but also lead to job growth in other industries. As we welcome Amazon’s new investment in Virginia, we must commit to implementing this announcement in a way that will benefit the whole region and all of the Commonwealth.

From Sen. Tim Kaine (D-Va.):

I’m thrilled that our skilled workforce helped persuade Amazon to bring a major new headquarters and its tens of thousands of jobs to Virginia. Congratulations are in order to Governors McAuliffe and Northam and the local leaders who worked to ensure that this deal includes investments in our education and transportation infrastructure.”

While serving as Governor of Virginia, Kaine focused on job training and education and by the end of his term leading publications ranked Virginia the best state to raise a child and the Best State for Business. Kaine has been a vocal advocate for Amazon bringing HQ2 to Virginia.

From a lengthy press release issued by Rep. Don Beyer (D-Va.):

Amazon’s announcement that it will bring half of its HQ2 to Arlington is a validation of a generation’s worth of work to make northern Virginia an economic engine of the nation.

The Northern Virginia of my youth was a bedroom suburb of the nation’s capital.  The Northern Virginia of today is an economic and cultural dynamo, on the leading edge of the technology revolution that is bettering lives around the world. This transformation involved leadership by all sectors — business, higher education, government, and community. […]

Congratulations to Governor Northam, and all my fellow Virginians, for winning a robust national competition. And congratulations to Amazon for selecting a very special community and region, ripe with diversity and promise.

From Virginia Gov. Ralph Northam (D):

Photo courtesy Crystal City BID

×

Subscribe to our mailing list