Friday , March 5 2021

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

Amazon will open major outposts in Northern Virginia's Crystal City and in New York City, splitting its much-sought investment of up to 50,000 jobs between the two East Coast sites, the company announced Tuesday.

"We are excited to build a new headquarters in New York City and Northern Virginia," Amazon founder and CEO Jeffrey P. Bezos said in a statement. "These two locations will allow us to attract world-class talent, which will help us to continue inventing for customers for years to come." The team did a great job selecting these sites, and we look forward to becoming even larger part of these communities. "

The company also announced that it has selected Nashville for 5,000 jobs as part of a new Center for Excellence for its Operations business, which is responsible for the company's customer satisfaction, transportation, supply chain and similar activities.

The choice of Crystal City in Arlington County as one of the winners will cement Northern Virginia's reputation as a magnet for business and will potentially transform the Washington region into an eastern outpost of Silicon Valley over the next decade.

The selections came with a price tag, details of which are just becoming public. Virginia Gov. Ralph Northam (D) and Arlington County leaders agreed to give Amazon direct subsidies totaling $ 573 million based on the company creating 25,000 jobs with an average wage of $ 150,000. The state and county will also invest a total of $ 223 million for transport improvements that will benefit Amazon as well as the rest of the community.

Crystal City, is seen Tuesday, Nov. 13, 2018. Crystal City will share one of Amazon's new headquarters with New York. (AP Photo / Cliff Owen)

The money, which is subject to approval by the Virginia General Assembly, also includes $ 195 million in transport improvements to nearby Metro stations, Reagan National Airport and build a pedestrian bridge connecting to the company's new hub, which will be in the newly branded neighborhood called National Landing, encompassing parts of Pentagon City and Crystal City in Arlington and Potomac Yard in Alexandria.

Virginia Tech plans to build a $ 1 billion graduate campus in Alexandria focused on innovation, part of the higher education package that the state offered the company.

Northam said Virginia's tech talent and stable business environment were keys to landing the prize. Making a formal announcement of the deal at a warehouse in Crystal City on a site that will eventually house Amazon property, he told a crowd of state and local officials and business leaders, "We are dedicated to being on the leading edge of next technology and innovation breakthrough. "

Draped over the lectern where Northam spoke was a sign reading, "Virginia is for Amazon lovers."

This file photo taken on Nov. 7, 2018 shows the view of the waterfront of Long Island City in the Queens area of ​​New York, along the East River. Amazon has decided to split its new headquarters between New York City and Crystal City, Va. (Photo by Don EMMERT / AFP / Getty Images)

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 of the promising billions of dollars in capital investments alone – but could also put pressure on already-steep housing prices in the region, congested roads, and zawning divide between wealthy and low -income residents.

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

According to a The 25-page agreement between the company and the state, Amazon expects to hire 400 people in 2019 and 1,180 in the following 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.

Other final suitors included in 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 they have to pony up incentives to the company, but experts say both should result in economic gains. Bowser called for regional leaders to create concrete affordable housing goals – an acute problem that economists say may aggravate as Amazon grows.

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

Hogan said he expects to see other companies relocated 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 tomorrow's Amazons," 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 whole big D.C. region. "

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

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

Many were concerned about the cost of living and why the company run by Bezos, the wealthiest person in the world, needed any public funds.

It's "unfathomable that we would sign a $ 3 billion check to Amazon," argues New York Sen. Michael Gianar and City Council member Jimmy Van Bramer, especially given the city's crumbling subways, crowded schools and inadequate health care.

"We are witnessing a cynical game in which Amazon dumped 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's the highest rate of return for a country's economic incentive program," 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 Vice President of Advocacy Group Progress Virginia. "Tens of thousands of new employees and their families are definitely straining community resources when it comes to affordable housing, mass transit and traffic, and quality local schools. It's just right that Amazon will pay their fair share. "

Jay Carney, Amazon senior vice president of global corporate affairs, said that the company considered 100 different metrics carefully and reviewed all locations, but ultimately made its decision, including the choice to split the project, based on how best the company could recruit. 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 talent and are fantastic places to live," he said in a telephone interview.

Carney said that Amazon would apply some of the lessons it 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 the competition among cities only to change the rules midstream. Some said it was unfair that the company seemed to consider only sites in wealthier 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 it launched, that Amazon would become what it became, or that we would have only ten thousands of employees in Seattle alone, "Carney said.

Amazon launched the project in the fall of 2017, dubbing it for 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-up 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 are already slow traffic to crawl and would erode the quality of life in their neighborhood mostly single-family homes.

The decision marks a dramatic upturn in the fortune for Crystal City, which lost thousands of jobs when the military agencies and defense contractors departed in the Pentagon Defense Base Closure and Reformation Commission (BRAC) process, beginning in 2005.

One advantage is that the properties are all overseen by a single well-capitalized company, JBG Smith. The $ 4.4 billion firm is the largest real estate owner and most active developer in the region, and owns most of the property in the bidding process – enough to accommodate the entire project on its own in Crystal City and Potomac Yard.

Amazon's Choice also burns Northern Virginia's standing as an attractive site for corporate headquarters. In the past 15 years, it has lured the Volkswagen Group of America to Herndon, Northrop Grumman to Falls Church, Hilton Worldwide to Tysons and Nestle's U.S. headquarters to Arlington.

Northam said in March that the state's pitch focuses on workforce development, inclusivity and transportation along with quality of life.

Although 238 locations originally submitted to Amazon, many experts considered the Washington region a favorite from the outset because of Bezos's personal connections in the region, especially the $ 23 million mansion he bought in the city's Kalorama neighborhood last year and his ownership of The Post.

Others suggested that Amazon executives wanted to be close to Washington to be fed up with the federal government, either because of increased concerns that regulators might pursue anti-trust actions against the company or because the government has become a critical Amazon customer.

Virginia also offers the political advantage of being a purple state, making it easier for the company to seek support from both parties.

Amazon previously announced that it would headquarter its cloud computing unit, Amazon Web Services, in Herndon, near some of its data centers.

The Washington area also naturally fit many of the Amazon's search criteria, including a large pool of talented workers, a robust public transit system and easy airport access.

Amazon launched its search in September 2017, vowing to make a decision by the end of 2018 and occupy an initial building of 500,000 square feet in 2019.

The company says its Seattle headquarters has injected $ 38 billion over what the company spent on its buildings into the area economy, generating an additional $ 1.40 for each dollar spent by the company.

Seattle officials have not contested the figures, but they have also been racing to keep up with the staggering growth of the company and the requirements it places on public transit, schools, road networks, parks and utilities. The company now has more than 45,000 employees, occupying more than 40 buildings and 10 million square feet of office space.

Compared to other large corporations, Amazon employees are less likely to commute by car, as about 55 percent either walk, bike or take public transit, according to a survey conducted by the company from its Seattle workforce. The company purchases transit cards for employees and is building a dedicated cycle track to separate bikes from cars near its Seattle buildings.

Amazon's growth is also likely to put new strains on housing. Since Amazon's arrival, Seattle has become one of the most expensive places in the United States to live, forcing low-income residents to move to far-off suburbs. The city and surrounding King County declared a state of emergency in 2015 over homelessness.

Even without Amazon, the Metropolitan Washington Council of Governments estimated that the region needs to add 235,000 housing units by 2025 to keep pace with expected job growth. Amazon's arrival could push the target to over 267,000, according to a recent analysis by the Urban Institute. Right now it's pace to add about 170,000 new units by 2026.

Since the beginning of the headquarters search, Bezos and the company have made several announcements that could soften Amazon's image as it moves to open its second hub.

Bezos announced in September that he would donate $ 2 billion of his own money to support groups battling homelessness in America and to create a network of preschools in underserved communities. In October – after the bearing of the months of criticism from Sen. Bernie Sanders (I-Vt.) Over its treatment of workers – Amazon announced that it would raise its minimum wage for all employees to $ 15 per hour.

The minimum wage decision is not likely to have much effect on company hiring in Northern Virginia, where Amazon says its facility will employ mostly white-collar workers with average salary of more than $ 100,000 a year.

Before Amazon announced its search, Washington-area jurisdictions – forced in part by federal budget cuts – had already been diversifying their workforces away from a reliance on federal spending. The region has gained more than 55,000 jobs annually from 2015 to 2017 despite budget cuts and stagnation in the Congress. But its job growth has been slower than average among major metropolitan areas.

Patricia Sullivan, Gregory S. Schneider, Michael Laris and Fenit Nirapp contributed to this report.

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