Amazon HQ2 decision: Amazon splits prize between Crystal City and New York

New York leaders offered Amazon more money— $1.85 billion, much of it also tied to the company’s job growth and salaries.

The decision hands Northam and local leaders the largest economic-development prize in a generation — one promising billions of dollars in capital investments alone — but could also put pressure on the region’s already steep housing prices, congested roads, and yawning divide between wealthy and low-income residents.

Northam, in a statement, said he expected Amazon to invest $2.5 billion in the commonwealth and create $3.2 billion in tax revenue.

According to a 25-page agreement between the company and the state, Amazon expects to hire 400 people in 2019 and 1,180 next year. It expects to create a minimum of 25,000 jobs by 2030 and potentially a total of 37,850 by 2034.

“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,” he said.

It also represents a victory for New York Mayor Bill de Blasio (D) and Gov. Andrew M. Cuomo (D), who had joked that he would change his name to “Amazon Cuomo” if necessary to land the project.

[How can the D.C. region absorb an Amazon headquarters if it can’t cope now with gridlock and housing costs?]

Other final suitors included the District, Montgomery County and 16 other jurisdictions Amazon considered since narrowing its list in January. D.C. Mayor Muriel E. Bowser (D) and Maryland Gov. Larry Hogan (R) both applauded the announcement.

Neither will have to pony up incentives to the company, but experts say both should see economic gains as a result. Bowser called on regional leaders to create concrete affordable housing goals — an acute problem that economists say is likely to worsen as Amazon grows.

“Amazon in Arlington is a win for D.C.,” Bowser said in a statement. “We will continue preparing residents with the skills and knowledge they need for the jobs of the future, including at Amazon.”

[Northern Virginia property owners are delighted Amazon HQ2 is moving in. Renters, first-time buyers, and low-income residents aren’t.]

Hogan said he expects to see other companies relocate to the region to be near Amazon. “Collectively, we will not only gain 25,000 corporate-level jobs, but also many businesses that are part of Amazon’s supply chain,” Hogan said.

AOL co-founder Steve Case, who now works with tech entrepreneurs in smaller cities, issued a statement encouraging them not to lose faith despite the selection of two East Coast stalwarts.

“The best economic strategy is not to lure existing companies to open offices or factories, but instead to birth the new companies that could be the Amazons of tomorrow,” he said. But in the same breath, the longtime Northern Virginia resident took a victory lap: “Amazon’s announcement is a win not just for VA, but also for the entire greater D.C. region.”

Opposition to the move started shortly after the announcement, as groups dedicated to fighting inequality and opposed to corporate subsidies began rallying their supporters in both New York and Virginia as details of the deal began to emerge.

“We’ve been getting calls and outreach from Queens residents all day about this. The community’s response? Outrage,” said Rep.-elect Alexandria Ocasio-Cortez (D-N.Y.), who will take office in January.

[Washington won its piece of Amazon’s HQ2. Now comes the hard part.]

Many were concerned about the cost of living and questioned why a company run by Bezos — the world’s wealthiest person — needed any public funds.

It is“unfathomable that we would sign a $3 billion check to Amazon,” argued New York Sen. Michael Gianaris and City Council member Jimmy Van Bramer, particularly given the city’s crumbling subways, crowded schools and inadequate health care.

“We are witness to a cynical game in which Amazon duped New York into offering unprecedented amounts of tax dollars to one of the wealthiest companies on Earth for a promise of jobs that would represent less than 3 percent of the jobs typically created in our city over a 10 year period,” they wrote in a statement.

But Cuomo said the benefits dwarf the subsidies.

“The revenue-to-incentive ratio is 9 to 1. That is the highest rate of return for an economic incentive program that the state has ever offered,” Cuomo said. He contrasted it with the return from the state’s film tax credit, where he said the state gets $1.15 for every $1 it invests.

Similar concerns were voiced in Virginia.

“Thousands of new high-paying jobs could be a boon to our community, but we deserve to know the cost,” said Anna Scholl, executive director of the advocacy group Progress Virginia. “Tens of thousands of new workers and their families are sure to strain community resources when it comes to affordable housing, mass transit and traffic, and quality local schools. It’s only right that Amazon pay their fair share.”

Jay Carney, Amazon senior vice president of worldwide corporate affairs, said that the company considered all the locations carefully and reviewed 100 different metrics, but ultimately made its decision — including the choice to split the project — based on how best the company could recruit the talent it needs.

“We came to realize that of course these are two fantastic metropolitan areas, and each of the areas has an existing pool of talent and are fantastic places to live,” he said in a phone interview.

[How Crystal City, the future home of Amazon’s new headquarters, got its name]

Carney said that Amazon would apply some of the lessons it had learned from its growth in Seattle to its new locations. He said Bezos was “involved very deeply” in the process and was in every leadership meeting where it was discussed.

Amazon’s decision to split the project rather than open a second headquarters on par with its Seattle campus has angered some who said the company had ginned up competition among cities only to change the rules midstream. Some said it was unfair that the company seemed to be considering only sites in more affluent communities.

“One thing that’s different here is we are planning in advance with these cities. Amazon started in a garage. Nobody foresaw, not even Jeff, when they got launched that Amazon would become what it became or that we would have tens of thousands of employees in Seattle alone,” Carney said.

Amazon launched the project in the fall of 2017, dubbing it HQ2 and issuing search criteria for “a second corporate headquarters” with as many as 50,000 jobs and an investment of $5 billion.

In picking Crystal City, Amazon opted for a close-in suburban site, just across the Potomac River from Washington and a half-mile from National Airport. Outdated buildings and underused properties now fill the site, where some office buildings have yawning vacancies.

The selection represents a triumph for the growth strategy of Arlington and Alexandria to promote development along mass-transit routes. The site is close to the Crystal City Metro station on the Blue and Yellow lines, and the planned Potomac Yard station scheduled to open in 2021.

But residents in the nearby Del Ray neighborhood in Alexandria expressed worry earlier this year that Amazon’s arrival would worsen daily rush-hour backups that already slow traffic to a crawl, and would erode the quality of life in their neighborhood of mostly single-family homes.