Amazon’s HQ2 in Arlington, Virginia, is officially up and running. A ribbon cutting on June 15 marked the opening of Metropolitan Park in the National Landing neighborhood. The Met Park buildings have 2. 1 million square feet across two 22-story buildings with space for up to 14,000 employees. Met Park represents Phase 1. Phase 2 is expected to break ground in 2024.
While the new buildings are just opening, the impacts have been apparent for some time. Amazon HQ2 already has 8,000 workers who have been working in leased space. Numerous new housing, office and retail projects are in the works. Significant investments have been and continue to be made in the area’s transportation network. The truly transformative Virginia Tech Innovation Campus in neighboring Alexandria will be fully open in 2024.
What’s happening with the incentives?
Virginia’s Workforce Grant is based on new job creation with an annual average wage target that started at $150,000. It offers a cash grant of $22,000 per employee. As of December 2022, Amazon had 6,939 incentive-eligible employees who also met the average wage requirement of $156,852 established for 2022. Approximately 1,500 other employees were not eligible for various reasons, including those who relocated from other Virginia locations or who live outside the area. Actual payment will occur in 2026 if the jobs have been maintained.
Arlington’s incentives are based on property metrics. A pay-for-performance grant requires Amazon to meet office occupancy targets with reporting required on the total square feet leased, owned or occupied. Funds for the grant come from Transit Occupancy Tax (TOT), which is a hotel room tax. However, the incentive is only paid with incremental TOT revenue generated over a 2019 baseline. As of September 2022, TOT revenue had not exceeded the 2019 baseline, so no grant payments have been made.
Similarly, a tax increment financing (TIF) arrangement has not yet yielded any payments. A TIF area already existed, but as part of the incentive package, the terms were changed to reset the baseline for calculating the tax increment to 2021 and to increase to 50% the amount of revenue that could be dedicated to public infrastructure projects. The baseline was not exceeded last year, so no payments were made.
For more details, please see these sources:
Amazon HQ2 Primer – Washington Business Journal
Towers of Power. Amazon’s HQ2 is here. There’s a lot banking on it. Dan Brendel, Washington Business Journal, June 8, 2023.
Amazon applies for first round of HQ2 incentives, Hannah Denham, Washington Business Journal, April 13, 2023
The Once and Future Crystal City, Tamara Lytle, Arlington Magazine, February 16, 2023
Photo Credit: Amazon and Lucas Jackson