Ken Plum: Amazon is coming to town
Amazon, which has made its way into just about every consumer’s home with its online goods and services, has announced that it is bringing its second headquarters or at least half its east-coast headquarters to Alexandria in Crystal City. The area – now being called “National Landing” – is actually in Arlington County. The other half of its headquarters, originally expected to be in one location, will be in Long Island City in Queens, New York. There were few regrets in Virginia or the Washington, D.C., area at getting just half the prize in the most competitive contest for an economic development project in recent times. Even half the prize is expected to bring 25,000 top jobs to the region.
I attended the announcement of Amazon’s decision in an abandoned Crystal City warehouse that has in recent years fallen on hard economic times. The warehouse will be demolished to make room for the new HQ2. During Governor Ralph Northam’s remarks, I was thinking that we have truly reached a crossroads in economic development in the northern part of the Commonwealth. There will be little need for the structures like that warehouse. Northern Virginia that includes Reston and Tysons Corner has fully moved into the arena of high technology and will be mentioned in the future as one of the centers of technological innovation in our country. Amazon’s Jeff Bezos is just the latest of a long list of entrepreneurs who have seen the value of a NoVa location.
I am a skeptic of big pay-out deals that have been increasingly used by states and localities to lure companies to their locations. There seems to be almost unanimous agreement among economic development experts that Virginia may have pulled off one of the best deals they have seen in an economic development proposal in recent times. There is cash to Amazon involved, but that cash is in the form of performance payments when Amazon reaches certain tiers of development and production of top-paying jobs. The math of the proposal shows that in the end Virginia will be a substantial net winner from the economic activity coming from the new headquarters and supporting development and the new Virginia taxpayers it will include.
For many, the strength of the Virginia Amazon proposal goes beyond the location of a new headquarters. Governor Northam called Virginia’s efforts “a new model of economic development for the 21st century.” As he explained, most of Virginia’s partnership proposal consists of investments in educational 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.” The feature of the proposal that is getting the strongest kudos is the location of a billion-dollar extension of Virginia Tech that will offer graduate degrees in engineering, technology and innovation in the city of Alexandria. And yes, there will be transportation improvements to Metro and the highways to better accommodate the new residents who will be working at the new headquarters.
I believe Virginia was a really big winner in this announcement; even half the deal is certain to work to our region’s advantage!