As a professional economic developer, I’m often asked by my fellow Arlington residents and business owners about the importance of economic development.
After all, we have a thriving community with notable businesses, excellent schools, a highly educated workforce, an unemployment rate of 1.7% and beautiful parks and green spaces. What else do we need?
Well, the problem is that our commercial vacancy rates are too high and we need to continue to broaden the commercial tax base. Arlington’s 2018 4th quarter vacancy rate is at 17.2% (which is significantly better than the almost 21% in early 2015), and it could take up to 10 years or more before we can reach a baseline level of 10%.
Arlington County lost 34,000 jobs since 2001 due to the Base Realignment and Closure Act (BRAC), corporations right-sizing and the increased mobility of their workforce. Even with Arlington Economic Developments efforts to strategically market the county to attract new businesses, retain our existing business base and encourage our businesses to grow and expand, it takes time to recover.
So why do vacancy rates matter? And most importantly, why does it matter to you? The majority of Arlington’s taxes comes from either the commercial or residential property taxes collected.
Those taxes are what funds the services that we all enjoy as Arlington residents. Historically, Arlington is unique because our tax base is derived from almost 50% residential and 50% commercial. In most other communities the residential tax base carries the weight — which means the people that live there pay higher taxes.
If our commercial office buildings are vacant with no occupied businesses (currently almost 1/5 of the 40 million square feet of office space is empty), then that means Arlington County is not collecting as much property and business taxes, which puts pressure on the general fund in providing the services we all enjoy.
Our schools, transportation systems, parks and human services struggle for limited funds. Luckily, the recruitment of Amazon will go a long way to help broaden the commercial tax base and increase tax revenues to fund these services.
So yes, economic development is important to you. As an Arlington resident, I want to continue to have top-notch public schools for my kids. I enjoy our beautiful and convenient parks and enjoy that my trash is picked every week.
As a result, we will continue to market Arlington to attract new companies. We will expand our engagement programs to retain our existing employers and help them expand and grow. We truly understand that our mission is to generate revenue for Arlington County, and every program, service and project is focused on that goal.
Every time you read in the paper that a new business has located to Arlington, be excited because that means their taxes are paying for your services.
An Amazon executive joins leaders from around the region for a panel discussion.
A crowd of pro-Amazon demonstrators outside a town hall event at George Mason’s Virginia Square campus.
Amazon executives say they’re looking forward to becoming “good neighbors” in Arlington, delivering a decidedly optimistic message to local leaders in one of the company’s first public events since tabbing the county for its new headquarters.
The tech giant’s head of worldwide economic development, Holly Sullivan, assured a crowd of government officials and business executives last night (Thursday) that the company is looking to build a “sustainable long-term partnership” in the region. That presented a stark contrast with Amazon’s recent decision to spurn New York City over concerns that local leaders were insufficiently supportive of a new headquarters there.
The event, organized by the Metropolitan Washington Council of Governments and held at George Mason University’s Virginia Square campus, also came just a few days after Arlington officials and activists expressed concern that Amazon executives haven’t done enough to engage the community as it gears up to move into the area.
Sullivan challenged that idea Thursday, arguing the company plans to be “active in the community” and has “just started our outreach” in Arlington. But only a limited group of Arlingtonians had the chance to hear that message — the event was “invitation-only,” though the COG did offer a livestream for anyone hoping to watch from home.
That stricture prompted some local critics of the project to refuse to attend the event, calling on the company to hold public hearings with community members instead. Many have been especially critical of Arlington’s proposed incentive package for Amazon — if the County Board approves it next month, Arlington would fork over $23 million over the next 15 years to a company owned by the world’s richest man.
On that front, Sullivan was able to offer significantly less reassurance. In response to a rare question from a reporter at the event, she pointedly would not say whether the company would pull the plug on its Arlington plans if the Board rejects the incentive package.
“The talent in the area was the primary driver of this entire process,” Sullivan said. “But incentives are important to us. They give us an opportunity to reinvest in our infrastructure and development opportunities for our workforce.”
Of course, it’s quite unlikely that the Board would take such a step. Even Board members who have expressed some unease with the incentive package have reasoned that it’s a small price to pay for the 25,000 (or more) jobs Amazon hopes to bring to the county.
The business community has also been increasingly vocal in support of the project. Not only has the Arlington Chamber of Commerce repeatedly thrown its weight behind the effort, but the Crystal City-based Consumer Technology Association recently joined in the fight as well. The CEO of the tech advocacy group attended the event to welcome Amazon to the neighborhood, and the CTA organized a crowd of dozens of pro-Amazon demonstrators to hold signs outside the gathering.
“We know this is a historic moment, not just for Arlington, but the whole region,” said Victor Hoskins, head of Arlington Economic Development.
To assuage anyone concerned that the company would bring a huge surge of out-of-state workers to jam area roads and pack local apartment buildings, Sullivan stressed that, in a perfect world, company executives “hope to hire all 25,000 workers locally.”
But she followed that up with a laugh, acknowledging that such a possibility is a bit unlikely. However, she is confident that D.C. region has enough highly skilled tech workers to provide a deep hiring pool for Amazon. And it helps, she believes, that the company already has corporate offices in both Herndon and D.C. to draw from too.
“A few people may choose to relocate from our Seattle headquarters, but this is not a relocation of corporate employees from Seattle,” Sullivan said.
Sullivan added that, wherever the company’s employees hail from, Amazon plans to design its offices in a way to “push employees out into the neighborhood to support local businesses.”
While the tech giant is still in the most preliminary phases of designing the office space it plans to lease from JBG Smith in Crystal City and build in Pentagon City, she said the company fully expects to draw from the design principles it used in Seattle.
“We’ll be trying to take the indoors outdoors and vice versa,” Sullivan said. “We want it to feel very much like a neighborhood. There will be no walls around it, no big sign that says ‘Amazon’ on it.”
That includes a focus on welcoming retailers and other restaurants onto the ground floor of the company’s offices. Though JBG has already worked fervently to bring more mixed-use developments to the area, it’s a process the area’s dominant property owner is hoping that Amazon will accelerate, to the whole neighborhood’s benefit.
“Crystal City gets pretty quiet at night, because everyone leaves right after work,” said Andrew VanHorn, JBG Smith’s executive vice president. “It may not be 24/7, but we want to make it more of an 18/7 environment.”
Until the Board signs off on the incentive package and Amazon starts submitting construction plans for its new offices, VanHorn pointed out that any design conversations are quite preliminary at this point.
However, he said JBG is working under the general assumption that the company will move into all of its leased office space in Crystal City by 2020. Then development work on a new building at Metropolitan Park in Pentagon City will run roughly from 2021 to 2025; construction at the former “Pen Place” development will run from 2023 to 2027.
Sullivan stressed that the buildings won’t look too out of step with the existing skyline, saying executives hope to “integrate into what’s already there” in Pentagon City.
Arlington’s notoriously extensive civic engagement process for new developments offers a long road ahead for the company, but Sullivan said she’s looking forward to embarking on it to answer a simple question: “How can we be a better neighbor?”
“We’re all doing this together,” Sullivan said. “We’re going to be neighbors.”
(Updated at 2:45 p.m.) Amazon is cancelling plans to build half of its “HQ2” in New York City, citing mounting criticism from local officials and activists in its reasoning for abandoning its other proposed location for a new headquarters outside Arlington.
But Amazon said in a statement announcing the change that it does not intend to re-open the HQ2 search and will “proceed as planned in Northern Virginia and Nashville.”
County Board Chair Christian Dorsey says the company told local officials that “nothing has changed” when it comes to Amazon’s plans for Arlington, and that the county isn’t likely to suddenly see jobs bound for New York head here instead.
Amazon originally announced plans to bring 25,000 jobs to Crystal City and Pentagon City in November, though the terms of the state incentive deal recently approved by Gov. Ralph Northam do allow for the company add another 12,850 jobs to the Arlington headquarters after that.
Dorsey told reporters on a conference call Thursday afternoon that the chances of the company reaching that larger number have likely increased with today’s news. However, he added that the county does not plan to try to lure any of the jobs originally set for New York to Arlington instead. Spokespeople for JBG Smith, Amazon’s future landlord in some buildings and development partner for others, declined to comment on Amazon’s New York City changes.
“If they want to occupy more square footage, that will be contingent on the community plans we already have in place for any business,” Dorsey said. “But at this point, there is no reason to speculate about that.”
Amazon pointed to a lack of “positive, collaborative relationships with state and local elected officials” in explaining its decision to abandon its New York plans. Rumors first started circulating that the tech giant could spurn the city once New York lawmakers appointed a vocal Amazon critic to a state board that would have oversight over the state’s incentive package for the company, and a coalition of lawmakers and left-leaning activists have been intensely skeptical of Amazon’s plans for the city.
But Dorsey says this development has done little to change his opinion of Amazon as a partner for the county, praising the company’s executives as “collegial and collaborative” thus far.
“They’ve been a completely honest broker and we feel good about our relationship with them,” Dorsey said. “I can’t speculate about what went wrong in New York… we’re just trying to treat Amazon as they’ve treated us: by being transparent, honest and forthright. They’ve not only accepted who we are and our values, but embraced it.”
Amazon’s skeptics in the county think it’s foolish for local leaders to view today’s news so charitably. Roshan Abraham, an outspoken Amazon critic and a leader of the progressive group Our Revolution Arlington, thinks the company’s sudden decision to pull out of New York should give county officials “significant pause” in dealing with Amazon.
“This demonstrates Amazon’s need for control,” Abraham told ARLnow. “Amazon wants things to go their way, and if it doesn’t, they’ll leave. They’ll hold the county hostage with that threat. They’re clearly not afraid to use that to their advantage.
Abraham hopes the company’s decision to leave New York demonstrates “the power of activists and what activism can achieve,” and emboldens the tech company’s opponents around the county. Though anti-Amazon sentiment has been a bit more muted in the county than in New York, activists have raised concerns ranging from affordable housing to labor and environmental practices to the use of public funds to benefit one of the world’s largest companies.
But local leaders say they aren’t worried about any sort of major community backlash derailing Arlington’s own incentive deal for Amazon, just yet.
“Some things could change a little bit in our performance agreement with Amazon… and this is likely to contribute to some increased heat over the next six weeks,” County Board member Matt de Ferranti told ARLnow. “I don’t want to underplay it, but we’re certainly not panicked by it.”
The Board is still mulling that agreement, which will work out to about $23 million in grant money for the company over the next 15 years. The cash will be drawn only from a projected increase in hotel stay tax revenues that Amazon is expected to generate.
A vote on that deal was delayed after originally being targeted for this month, and Dorsey says the Board is currently eyeing March 16 for the big decision.
“We are excited that Amazon’s plans for Virginia remain in place and that we can continue working together to position Virginia’s dynamic tech sector for healthy, sustained, statewide growth,” Stephen Moret, the president and CEO of the Virginia Economic Development Partnership (which helped broker the Amazon deal) wrote in a statement.
Here’s the full Amazon statement about its Valentine’s Day breakup with NYC:
After much thought and deliberation, we’ve decided not to move forward with our plans to build a headquarters for Amazon in Long Island City, Queens. For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term. While polls show that 70% of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City.
We are disappointed to have reached this conclusion — we love New York, its incomparable dynamism, people, and culture — and particularly the community of Long Island City, where we have gotten to know so many optimistic, forward-leaning community leaders, small business owners, and residents. There are currently over 5,000 Amazon employees in Brooklyn, Manhattan, and Staten Island, and we plan to continue growing these teams.
We are deeply grateful to Governor Cuomo, Mayor de Blasio, and their staffs, who so enthusiastically and graciously invited us to build in New York City and supported us during the process. Governor Cuomo and Mayor de Blasio have worked tirelessly on behalf of New Yorkers to encourage local investment and job creation, and we can’t speak positively enough about all their efforts. The steadfast commitment and dedication that these leaders have demonstrated to the communities they represent inspired us from the very beginning and is one of the big reasons our decision was so difficult.
We do not intend to re-open the HQ2 search at this time. We will proceed as planned in Northern Virginia and Nashville, and we will continue to hire and grow across our 17 corporate offices and tech hubs in the U.S. and Canada.
Thank you again to Governor Cuomo, Mayor de Blasio, and the many other community leaders and residents who welcomed our plans and supported us along the way. We hope to have future chances to collaborate as we continue to build our presence in New York over time.
The Made in Arlington Pop-Up is in full bloom on February 12 at the Courthouse Plaza Shop with new vendors and sweet treats for all the Valentines in your life.
Adding local charm to gifts of the heart, Arlington’s creative makers, artisans and entrepreneurs are part of a growing creative sector. Not sure how to declare your love or say it best? FastSnail greetings is on hand with artist designed cards that will make the recipient smile.
Welcome fresh flowers from new vendor Tiny Bloom Shop. Pick up a small vase of beauty designed by Gretchen Dimina, a former buyer for the Renwick Gallery shop, who puts charm and whimsy in all her arrangements.
Sweets for your sweet? Hand decorated cookies made from scratch are a hallmark of Village Sweet that spell out messages in icing. Or give in to a chocolate craving with rich delights from Kingsbury Chocolates.
More local surprises for the home and heart come from Dennison Lane home accessories and Mandy Sahm’s unique felted wool jewelry and crafts.
Stop by and shop some local love!
Tuesday, February 12
11 a.m.-2 p.m.
Plaza Library Shop
2100 Clarendon Blvd., 1st Floor Lobby
For ongoing Creative Economy listings and opportunities, click here. View more Creative Economy stories on our blog.
Apartment Project Feels ‘Amazon Effect’ — “The Amazon real estate effect in Northern Virginia is being felt from home sales to new development. Nearly two years ago, the owners of Crystal House Apartments applied to add a building and 252 units to the Crystal City Metro-proximate community. Now, that vision has more than tripled in size.” [UrbanTurf, Bisnow]
Arlington Has Low Home-School Rate — “Arlington has the lowest rate of home-schooled students in Northern Virginia, according to new state data. A total of 0.5 percent of Arlington students were home-schooled in the 2017-18 school year, according to a new jurisdiction-by-jurisdiction compilation by the Virginia Public Access Project (VPAP).” [InsideNova]
Lots of Green Space for Future H-B Woodlawn Home — Despite a relatively small footprint and a vertical profile — rising five stories above grade — the future home of the H-B Woodlawn Secondary Program in Rosslyn will have plenty of green space for students. “Standing on top and looking down, you will think it’s a hillside meadow, not a series of roofs,” said Arlington Public Schools’ design and construction director. [ENR Mid-Atlantic]
Champagne Lounge With a View in Rosslyn — “The Observation Deck at CEB Tower will debut a new Champagne-centric bar [this] week, inviting visitors to to sip bubbly from the area’s first 360-degree public observatory.” [Eater]
Sunday Funday Moves to G.O.A.T. — The popular and sometimes rowdy Sunday Funday festivities that took place at the now-closed A-Town Bar and Grill have been moved to A-Town’s sister bar The G.O.A.T in Clarendon. [Instagram]
Arlington Spots for Mocktails — Need to go sans alcohol to meet some of your New Year’s resolutions? Some of the best mocktails in Arlington can be found at spots like Fyve Restaurant at the Pentagon City Ritz-Carlton; Green Pig Bistro and Ambar in Clarendon; and the new Punch Bowl Social in Ballston. [Arlington Magazine]
After helping convince Amazon to bring 25,000 jobs to Arlington, Victor Hoskins could probably be forgiven for looking for his next challenge.
The county’s top economic development official has already bounced around the Washington region a bit over the course of his career, serving in similar roles in D.C., Prince George’s County and even Maryland’s state government. But few of the deals Hoskins struck in those jobs could hope to rival the agreement he worked to forge with Amazon, in terms of both size and controversy.
Accordingly, it might seem perfectly reasonable if Hoskins wanted to walk away from the county after pulling off such a mammoth transaction — or perhaps parlay his Amazon-sized success into a bigger payday elsewhere.
But even with Jeff Bezos and company set to head to Arlington, Hoskins says he isn’t going anywhere. Though the tech giant plans to invest billions in the county, he believes there are still plenty of challenges left in Arlington that he hopes to tackle.
“Frankly, I want to see this through,” Hoskins told ARLnow. “This is a once in a lifetime opportunity… because we still have an 18 percent office vacancy rate. When we get down to a 10 or 12 percent vacancy rate, then I’ll consider leaving.”
Like many other county officials in recent weeks, Hoskins emphasizes that the 25,000 workers Amazon plans to move to Crystal City and Pentagon City will only help replace the similar number of employees who’ve left the area in recent years, as federal agencies and the military have headed elsewhere.
That means he sees plenty of room for Arlington to keep adding jobs, and he fully expects that the county’s economic development arm will have a key role in guiding that process.
“We’re expecting 25,000 jobs of Amazon, but at least another 25,000 over the same 10-, 12-year time period from all the supportive services or ancillary services to the company,” Hoskins said. “That means a few years from now, we could be down to a 12 percent office vacancy rate if everything goes right. But that takes hard work.”
Hoskins says it certainly helps to have a “seal of approval from the largest tech company in the world” in bringing in other high-tech businesses too. Though he’s waiting until the county and state formally sign off on the Amazon deal — a process that could wrap up as soon as February — to start courting anyone too hard, Hoskins would also concede that luring other Silicon Valley firms will be a key part of his strategy going forward.
“We’re going to be looking for companies that start deciding, like Amazon, that they need an eastern seaboard location,” Hoskins said. “And many of those are west of the Mississippi.”
He envisions branding Arlington as the next Silicon Valley, perhaps “the Silicon Valley on the Potomac,” a shift in thinking that he believes the county kicked off years ago that contributed to its successful courtship of Amazon. Part of that work will be marketing Arlington’s ever-growing tech workforce, another key piece of the pitch county and state officials made to Amazon.
For instance, Hoskins expects that the state’s investments in new, tech-focused higher education efforts in the area (including a new Virginia Tech “Innovation Campus” in Alexandria and a beefed up computer science program at George Mason’s Virginia Square campus) will send tens of thousands of graduates with high-tech degrees into the workforce in the coming years. And he hopes that other local universities will follow that lead, even if they weren’t included in the Amazon deal.
“UVA’s [Darden School of Business] opened up an MBA campus right in Rosslyn, and I know they’re probably sitting there thinking, ‘Could we raise some money in the tech arena and build on some state funds here?'” Hoskins said. “And I think we have a whole host of other universities that will come on board.”
Of course, the quality of Arlington’s public schools were another factor that lured Amazon to the county, and Hoskins expects school officials to play a role in readying students to potentially enroll in those programs.
“I know our schools are already having conversations with George Mason University and others to see what kind of cross-training they can set up to take advantage of these resources,” Hoskins said.
Yet Hoskins says that his intense focus on the future doesn’t take away the pride he feels in having helped pull off such a massive deal in Arlington. Though community concerns abound about the tech giant’s potential impact on everything from the housing market to traffic, Hoskins believes the positives for the county were enough to leave him practically giddy when he first heard the news that Amazon tabbed Arlington.
“I was exhilarated, are you kidding me?” Hoskins said. “It was 14 months of pins and needles… I’ve got a 91-year-old mother, and she told me she was delighted to hear about this. And it took her a long time to even understand what I do for a living, so that means the world.”
Crystal City’s bevy of aging office buildings have long been in need of a makeover, and Arlington officials hope Amazon’s arrival will spur some big development changes in the neighborhood.
The tech giant itself will be responsible for a major transformation of the newly christened “National Landing” all on its own, of course. Amazon will start off by leasing space from property owner JBG Smith in Crystal City, with plans to fully renovate those office buildings, and even construct its own facilities on various plots of land in Pentagon City.
And while the company could one day control as much as 8 million square feet of office space in the area, there are plenty of other buildings dotting Crystal City’s landscape that Amazon won’t touch. JBG alone controls another 6.2 million square feet of office space throughout the neighborhood, including a whole variety of buildings constructed decades ago, when Crystal City was primarily a home for the military and federal agencies.
It’s those structures that Arlington leaders are most anxious to see receive a refresh, in order to lure even more businesses to the area. While Amazon’s new headquarters will put a huge dent in the neighborhood’s office vacancy rate, officials say the county still has plenty of work left to do in that department.
“Many of these buildings were purpose-built for the federal government or overflow from the Pentagon,” Anthony Fusarelli, the assistant director of the county’s Department of Community Planning, Housing and Development, said during a question-and-answer session live-streamed on Facebook last night (Monday). “As the economy diversifies, the building stock needs to diversify with it.”
Sally Duran, the chair of the county’s Economic Development Commission, pointed out that business leaders have been strategizing ways to orchestrate such changes in Crystal City for years now, dating back to the immediate aftermath of the Pentagon’s Base Realignment and Closure process. But the county lacked any sort of driving factor to spur that change, she noted, making Amazon’s selection of the area quite welcome news indeed.
Fusarelli also observed that many Crystal City property owners, including JBG, were already nearing a critical decision point about how to handle the future of their buildings. Given the age of the structures, he said owners faced one of just a few options: sell their holdings, “reinvest and try to cary the building forward for 10 to 20 more years,” or simply “demolish and redevelop.”
With Amazon about to bring 25,000 jobs to the area, he expects to see plenty of developers choosing the third option.
“We may have these 40-, 50-year-old buildings come off the line and be replaced with residential buildings, or other uses,” Fusarelli said. “We may see the vacancy rate go down over time to the extent that additional activity in this area will lead to redevelopment and changing uses.”
Even before Amazon’s announcement, Fusarelli says the county was projecting an additional 20 million square feet of development in the area he dubbed “the Route 1 corridor,” rather than the controversial “National Landing” moniker, through 2025. Accordingly, he expects that the county will be ready to embrace all that new change, rather than be overwhelmed by it.
“Over the past 14 months, we’ve been evaluating the area and making sure it could manage that growth, and it could,” said Christina Winn, director of Arlington Economic Development’s Business Investment Group. “It was planned for that.”
But county officials remain adamant that the slow pace of the tech giant’s arrival, to be stretched out over the better part of 12 years or so, will help Arlington adjust to the changes gradually. The company plans to add only a few hundred workers in the near term, then bring on about 2,000 staffers a year through 2030.
Officials also stressed that the county will review every step of the assembly of the new headquarters. The County Board will vote no earlier than February on the outlines of the state’s proposed deal with Amazon; then, the company will submit individual applications for each new piece of construction it’s planning, most of which will require the Board’s scrutiny.
Fusarelli says the county doesn’t expect to see any applications from Amazon until early next year, projecting a first Board vote on new Amazon developments by mid-2019 at the earliest.
“We don’t expect a flood of Amazon-specific building proposals in the first quarter of next year,” Fusarelli said. “What we do expect is a gradual submission of projects over time that align well with their need to house workers.”
Amazon’s new headquarters will fundamentally transform Arlington in the years to come, but county officials are hoping to reassure residents that the area won’t change in the blink of an eye.
Instead, Arlington leaders are painting the arrival of the tech giant — and the 25,000 workers set to someday occupy its new office space — as a development that will shape the county’s economic landscape over time, rather than overnight. And, they hope, that will give the county time to prepare accordingly.
“This is not going to feel like a tsunami of new people on our streets or kids in our schools,” County Board Chair Katie Cristol said during a question-and-answer session live-streamed on Facebook last night (Tuesday).
Critics of the county’s courtship of Amazon have long feared the impact that thousands of highly paid workers arriving in the region could have on everything from home prices to school overcrowding. But Arlington leaders have often countered that the region is experiencing dramatic growth at the moment, and seems set to see even more in the future, meaning that Amazon’s arrival might not seem especially out of place.
Now that Jeff Bezos and company have made the big decision, targeting Crystal City, Pentagon City and Potomac Yard for half of its proposed second headquarters, officials remain confident in those predictions. Cristol, for instance, noted Tuesday that the tech company could draw as much as 15 to 20 percent of its new workforce from current county residents.
“They located here because they want access to the tech talent we have here,” Cristol said.
As for the rest of the new Amazon staffers, Arlington Economic Development Director Victor Hoskins pointed out that they won’t be arriving on the county’s doorstep next week, or even next month. Under the terms of the company’s proposed deal with the state, Amazon would only hire about 400 workers for the new Arlington campus next year.
That number will ramp up sharply over time, however, leaping to 1,180 new staffers in 2020 and then 1,964 workers the year after. But Hoskins noted that the pace of change would’ve been even more dramatic had Amazon stuck with its original plan to house all 50,000 workers in one city, rather than splitting “HQ2” between Arlington and New York City.
“After February, when the deal is set to be approved [by the Board], you’ll see the first employees arriving,” said County Manager Mark Schwartz. “Beyond that, I don’t think people will see a lot different in first year… It’ll become more noticeable a few years out.”
For parents nervous about how many kids those new workers will bring with them, Cristol is also optimistic that the school system will be able to handle the influx of students. She expects that the county will only see two to three additional students in each school per year, and that’s only when Amazon fully ramps up hiring in the coming years.
Depending on how the county is calculating that figure, such an increase would work out to anywhere from 70 to 105 new students enrolled in Arlington Public Schools each year, at a time when the school system is already struggling with severe financial pressures to match rising enrollment.
“That’s not nothing,” Cristol said. “But compared to the 500 students per year that APS is already adding, it’s really manageable.”
But Schwartz noted that, under the county’s revenue-sharing agreement with APS, roughly half of the tax revenue that Amazon generates will flow into the school system’s coffers. He estimates a $315 million increase in tax revenue over the life of the county’s deal with Amazon, which beats county projections by about $160 million between now and 2030.
Of course, Schwartz says the county will still feel some pain in the short term. Though Amazon represents a tax windfall for Arlington, he warned that it will take time for the county to feel the benefits — and that means that painful measures like layoffs, service reductions and tax increases remain on the table for the county’s new budget.
“We’ve been through several difficult budget years and we have a couple more to bridge to where we’re going to be,” Schwartz said.
Cristol acknowledged that there are some “difficult short-term conversations” on the way in the county, particularly as Arlington tries to prepare for Amazon’s impact without the tax revenues it needs to fund necessary projects and services.
But she also pledged to be open to having those difficult discussions. Some Amazon skeptics have already called on the Board to hold multiple town halls focused on Amazon alone, and Cristol said officials plan to do so, and more.
“Let us know if you want us to come meet with your civic group,” Cristol said. “We plan to have many conversations in the community about this.”
Virginia Gov. Ralph Northam answers reporters’ questions at Amazon announcement in Pentagon City in 2018 (file photo)
Arlington County Board Member Katie Cristol
Brian Huseman, Amazon’s vice president for public policy, at HQ2 announcement in Pentagon City
Virginia Secretary of Commerce and Trade Brian Ball at Amazon announcement
Arlington County Board member Erik Gutshall and state Sen. Adam Ebbin at Amazon announcement
Arlington County Board Chair Katie Cristol and Alexandria Mayor Allison Silberberg at Amazon announcement
Sen. Mark Warner, former Virginia Gov. Terry McAuliffe and Attorney General Mark Herring at Amazon HQ2 announcement
Television cameras at Amazon’s HQ2 announcement in Pentagon City (staff photo)
(Updated at 4:05 p.m.) Concerns about the wisdom of doling out millions in incentives to lure Amazon to Arlington have abounded ever since rumors first kicked up that the company could head to the county — but Tuesday’s celebration of the move in Pentagon City didn’t betray much trepidation among state and local leaders.
Instead, Gov. Ralph Northam and a cadre of others devoted the afternoon to hailing the tech giant’s decision to bring a new headquarters to Arlington as a transformative one for the region.
Crystal City and its surrounding neighborhoods have long struggled with a high office vacancy rate, ever since the military and other federal agencies fled the area years ago, a problem that vanished virtually as soon as Jeff Bezos and Amazon’s leaders tabbed the newly dubbed “National Landing” for half of their planned “HQ2.” Accordingly, the mood among local leaders was positively ebullient — even as they persistently sought to quell a nervous public’s fears about the company’s impact on the region.
“This proposal to Amazon represents a new model for economic development in the 21st century,” Northam told a crowd of more than hundred elected officials, business leaders and members of the media. “This recognizes the need to minimize impacts on the region… and these incentives we’ve proposed will generate a net positive return from day one.”
Certainly, no aspect of the county’s pursuit of the tech giant has attracted quite as much scrutiny as the incentive package it would offer to help Arlington stand out over the bevy of other suitors interested in earning Amazon’s attention. Critics from all along the political spectrum feared that the state and county could well give away so many tax breaks to the company as to make the project’s benefits on the local economy negligible at best.
But with the deal finally out in the open, after Amazon forced officials into silence for months, Arlington leaders are ready to make the case that they help broker a fair deal for the new headquarters.
“There’s a lot of people who had a worst-case scenario for what they expected to happen, and I think any clear, objective analysis shows that has not been realized,” County Board Vice Chair Christian Dorsey told ARLnow. “I don’t want to make this rosy; we’re going to have housing challenges, transportation challenges, land use challenges, we’re going to have to deal with all of that stuff. But hopefully people recognize the incentives aren’t crippling our commitment to our residents.”
In all, the state and county will combine to give Amazon about $819 million in tax breaks and other investments, with about $23 million in grant money coming from the county over the next 15 years. Arlington will pull that money away from an existing tax on hotel rooms for the $23 million, but all the incentives Amazon receives are contingent on it creating at least 25,000 jobs in the area over the coming years. The company could even reach more than 37,000 jobs by 2034.
However, when the company announced that it would be halving its initial proposal to bring 50,000 jobs to whichever area it selected for a new “HQ2”, cries grew louder that the state might be paying for only half of the investment it was initially promised.
Northam told reporters only that the state “had to make some modifications” in response to that development, but did not elaborate further. But even with Arlington splitting the new headquarters with Long Island City, he praised the deal for its potential to “diversify our economy” away from dependence on the federal government in a transformative way.
Arlington leaders certainly agree with that sentiment.
Victor Hoskins, director of Arlington Economic Development, remembers shouting “yahoo!” when he and his staff received confirmation of the good news last night. He added that the county recently learned that Apple has since started looking elsewhere for its new headquarters, eyeing Fairfax County instead, but that hardly matters given the size of the county’s Amazon deal.
“What’s great about it is it also opens the door to other businesses, because there are other businesses that like to follow Amazon, there are businesses that support Amazon, and there are some businesses that support the community,” Hoskins said. “All of that is going to happen too, and for us that’s the larger opportunity.”
Other officials pointed out that other nearby states put forward incentive packages worth billions, while Virginia’s offer primarily focuses on investments in transportation and education improvements. The deal with Amazon calls for new state investments in everything from Metro infrastructure to new high-tech education programs at Virginia Tech and George Mason University.
“We long ago thought, when we heard New Jersey and Maryland were putting billions of dollars on the table, there’s no way we’re going to compete with that,” said County Manager Mark Schwartz. “Our package is 95 percent investments that we were going to do already, and there’s a small increment there in the [hotel tax], which is paid by people who visit Arlington and not people who live in Arlington, so we’re pretty happy with what we were able to do.”
Still, Dorsey acknowledged that county officials have plenty of work to do to make the sell to the community. The Board is set sign off on portions of its deal with Amazon in February, leaving plenty of time for critics to have their say.
“The taxpayer funded subsidy offers made to Amazon by the state of Virginia have been completely hidden, and there has yet to be any opportunity for local community input on this deal,” Roshan Abraham, an organizer with Our Revolution Arlington representing a coalition of opponents to Amazon’s plans, wrote in a statement. “We oppose a massive state gift to a company headed by the world’s richest person.”
The General Assembly will also get the chance to scrutinize the deal, though the exact details of how it might do so remain murky. A commission of both state senators and delegates convened to review major economic development proposals has already lent the deal its approval, but Del. Patrick Hope (D-47th District) says all 140 state lawmakers will get a chance to vote on the incentive package in next year’s legislative session. Some of the budget amendments to power the proposed investments included in the deal will also go before the General Assembly in the coming years, Hope added.
But Del. Lee Carter (D-50th District), an ardent critic of the company’s potential impact on the region, isn’t holding out much hope that his colleagues will do anything other than simply “rubber stamp” the deal Northam helped broker.
“This deal was put together in shady back rooms, not only out of the public’s sight, but out of the sight of most legislators,” Carter said. “That’s why I think the General Assembly needs to act very differently than it has in the past. We need to actually take the reins back and legislate, instead of letting executive branch do this for us.”
Nestle is now in line to earn half of the $4 million in local grants Arlington promised the company in exchange for moving to Rosslyn, after meeting the county’s targets to qualify for the incentives.
In all, the packaged food giant will receive $12 million in cash and infrastructure improvements after agreeing to relocate its corporate headquarters to 1812 N. Moore Street last February. But the money did come with some strings attached, forcing the company to prove that it will create 748 new jobs with an average annual salary of $127,719 in the county and lease at least 205,000 square feet of office space by the time 2020 arrives.
Only $4 million will come from the county itself, through a “Economic Development Incentive” grant, while a $6 million state grant and $2 million in nearby infrastructure construction round out Arlington’s deal with Nestle. Even still, the grants have become a hot-button political issue around the county, with plenty of observers questioning whether the incentive money might’ve been better spent elsewhere.
So far, at least, the company seems to be holding up its end of the bargain. According to documents released through a Freedom of Information Act request, Nestle has created and maintained 358 new jobs at the Rosslyn office, and has leased 229,000 square feet of space in Rosslyn through June 30. Daniel Nugent, chief legal officer and general counsel for the company, signed a July 18 affidavit attesting to those statistics.
That means the company has well exceeded its office space requirement to earn the grant money, but fell just short of the 374 new jobs it needed to create by the time June 30 rolled around.
However, Cara O’Donnell, a spokeswoman for Arlington Economic Development, noted that the company only needed to hit 90 percent of the grant’s requirements to earn the money. Accordingly, the county will now release $2 million to Nestle.
“This year, Nestle achieved 95 percent of its new jobs target and 111 percent of its facility lease target, well above the 90 percent required in each category,” O’Donnell told ARLnow. “They are currently meeting targets as required.”
Josh Morton, a spokesman for Nestle, added that the discrepancy in the job figure is because “the number is always changing as more people are hired in Arlington.” In July and August alone, he says the company hired another 125 employees.
Though she generally remains “skeptical” of such relocation incentives, County Board Chair Katie Cristol thinks “it’s great, but not a surprise to know that Nestle is performing consistently with those expectations.” She attributes that to the work of county staff to “develop an incredibly conservative incentives program where we can see a very clear and really significant return on investment in any incentive we make.”
“We’re not going to do something speculative where we’re giving away the public’s money without a lot of confidence that we’ll see that money return to us well in orders of magnitude beyond what we invested,” Cristol said.
Cristol is well aware what kind of controversy the Nestle incentives kicked up after the Board approved them last year, and how the prospect of similar grants going to Amazon to bring HQ2 to Arlington has roiled the community.
So while she does remain “a little uneasy” about the prospect of “a community like Arlington, that has so much else to offer, seeking to offer cash incentives,” Cristol thinks the Nestle deal does show that these grants can work, if managed properly.
“We’re delighted to have Nestle here, they’ve been a great partner in the community already,” Cristol said. “And in the long term sense… we’re going to be really gimlet-eyed about continuing to look at all over those targets and looking at the return on investment over the life of any deal we put together.”
Nestle will next report back to the county on July 15, 2019 to affirm that it’s indeed created all 748 jobs it promised for the Rosslyn office.
County Board members Christian Dorsey and Libby Garvey and help SyLearn CEO Jay Chandok cut the ribbon on his new business.
SyLearn staffers, Arlington officials and family members chat at the grand opening of SyLearn in Virginia Square.
SyLearn’s computer labs in Virginia Square
While most ribbon cuttings for new businesses around Arlington tend to be full of pomp and circumstance, SyLearn’s grand opening in a modest Virginia Square office building Wednesday was a family affair.
CEO Jay Chandok, who helped found the new IT training company, busily urged guests to help themselves to a full buffet, as the daughters of Chandok and other staff members snapped pictures of new arrivals with iPhones. One made sure to introduce each visitor to one of her dolls, which she’d given a Hawaiian name: Leilani.
The event, much like SyLearn itself, was relatively small in scale. But Arlington officials say arrival of such businesses in the county is just as important as some of the bigger names economic development staffers are focused on these days.
“People think that they spend all their time on the Amazons and Nestles of the world, and while those are certainly important, this is really the bulk of what they do,” County Board Vice Chair Christian Dorsey told ARLnow. “It’s these small businesses that we hope will become big businesses someday.”
Chandok says the county indeed helped connect him with real estate brokers as he searched for a home for his new business, which was born out of another, similar program he worked on in Arlington.
He landed on a suite in an office building at 3330 Washington Blvd. It sits just behind George Mason University’s Arlington campus, but a bit off the beaten path of the bustling Rosslyn-Ballston corridor — Dorsey expects that certainly helped “lower the cost of entry a bit.”
Chandok hopes to eventually start hosting as many as 200 students each year in the space, with a pool of eight instructors to help them earn certifications on the latest software, or even make a career change and embrace IT.
“We’re looking to help people who aren’t going through four-year institutions, and we’re not bound by the same red tape as they are,” Chandok said. “We can help career changers, or career upgraders. Anyone who’s looking to test the waters and see what else is out there.”
With a legion of federal agencies, not to mention contractors, nearby, Chandok surely won’t lack potential customers. Dorsey also hopes that the county’s school system will consistently “provide a pipeline of talented students” interested in IT, noting that “we can only do so much” when it comes to career education.
Board member Libby Garvey, a longtime School Board member herself, also pointed out that SyLearn could be a perfect fit for the many veterans in Arlington, should they want to build on the tech training they received in the military.
“They have incredible talent that we need to tap into,” Garvey said.
With that sort of pool of would-be students available, Dorsey expects to be attending another ribbon cutting for SyLearn sooner, rather than later.
“As he grows, I want you to find him a bigger space,” he implored the economic development staff in attendance.
