Newsletter - March 21, 2019

I have listened very closely to the arguments for or against Amazon setting up its second headquarters (HQ2) in Arlington. Its proposed site for HQ2 is a stone's throw from communities I represent in Arlington and Alexandria, and critics are right to question the new center's impact on housing prices and transportation congestion. Furthermore, I have long opposed corporate welfare. And I'm well aware of the criticisms of Amazon's labor practices in other communities.

So why did I nevertheless vote for the deal? Because I believe ultimately that HQ2 is a good thing for our community and the entire Commonwealth, with costs to be sure but benefits that vastly outweigh the costs. I’ll do my best to explain why in some detail below.

First, the state and local money ("corporate welfare") offered Amazon seems huge: half a billion dollars from the state and $23 million from Arlington. Why, critics ask, do we give anything to a massive corporation run by the richest man in the United States? It's a fair question, and I sorely wish we didn't to provide any incentives for Amazon to come here. But I guess I'm just not convinced they'd have come here without them. 

248 localities competed for Amazon to locate there, but we won. These other cities and counties offered incentives far larger than we did. Just across the river in Montgomery County, Maryland, they offered $8 billion to Amazon or 16 times the half a billion Virginia offered!  And yet they came to us rather than a few miles away. I'm confident they came to us because we offer the most educated workforce in the country, as well as empty office space and a transportation system that would allow most Amazon workers to commute without cars.

So, the argument goes, if they'd come all the way to us with us offering only 1/16 of what Maryland did, why not offer them nothing? They'd still come! Well maybe so. And maybe not. It would be a big risk to give nothing, because we get a lot for our money, particularly when you realize that our $500 million comes from all Virginia taxpayers and not just those of us in Northern Virginia. Arlington provided $23 million. And in Alexandria, we get all of the benefits for free. (Way to go, Alexandria!)

So what do we get for our money? The agreement with Amazon provides that Amazon gets zero state or local dollars until the 25,000 jobs they provide (with an average salary of at least $150,000), plus their new investments in Northern Virginia, bring tax revenue to the Commonwealth totalling at least $3.2 billion over the next 20 years. That's six times the amount of revenue to Virginia that the Commonwealth sends back to Amazon in tax revenues. This is revenue that can be used to alleviate housing unaffordability and transportation congestion. Revenue that can be used to increase teachers' salaries, clean up the environment, or provide middle-class tax relief. In essence, Virginia is giving back to Amazon a rebate of 1/6 of its own money to bring jobs to Northern Virginia that Virginia wouldn’t have if Amazon did not come here. The Amazon incentives won't cost the state budget a dime. It will make us $6 for every $1 we spend.  

When someone gives you $6 and you give them $1 back, you're still $5 richer even if you regret giving that dollar back to them. For Arlington, the benefits are even more attractive. Arlington County is expecting to receive more than $300 million, or about $14 for every dollar it is expected to give back to Amazon. And again the money has to arrive in government coffers before the rebate happens.

These state and local projections do not even include additional increases caused by the “multiplier effect,” which is the additional tax revenues generated by the additional expenditures of Amazon employees and visitors who would otherwise not be here without HQ2. Truly it is a fantastic economic opportunity for us to fund state and local needs that would otherwise come out of taxpayer pockets.

Expected location of Amazon's HQ2 Headquarters in Arlington and Alexandria

Second, although there will be additional transportation congestion and housing costs, the money HQ2 brings in is more than sufficient to pay for essential services and investments that we need in these areas. As part of the deal I voted for, the Commonwealth of Virginia is utilizing funds received from Amazon tax revenues to vastly improve our transportation systems and our stock of affordable housing. We can do even better in the future. Indeed, it will be up to those of us that represent you to make sure these state funds keep coming and are spent appropriately. But there are more than enough Amazon tax dollars to ameliorate the problems caused by their coming here, with billions left over for other needs. And if Democrats take over in November (which I hope we do!), you know that affordable housing will be a high priority of ours.

Third, the 25,000+ jobs coming to Crystal City do not even fully replace the 35,000 or so lost over the past decade due to Base Realignment and Closure (BRAC) and the loss of the Arlington Patent Office. So we not only have the office-space capacity, we also have the transportation capacity, particularly in Metro, which is expanding capacity with longer cars. Amazon, Virginia, Arlington, and Alexandria are working together to provide hundreds of millions of dollars to construct new pedestrian bridges and provide for new buses and bicycle lanes. With special incentive packages, we expect fewer than half of Amazon employees to even use cars to commute to and from work, while most Amazon employees are expected to use other methods of transportation that impose no more traffic on our streets. Given that we didn’t have the dedicated bus lanes or expanded roads like Potomac Avenue 15 years ago — before BRAC and the Patent Office closed — plus the new transportation investment, I hope we'll find traffic congestion not much worse than it was a decade ago.

Fourth -- and most exciting for Alexandria -- is the fantastic new $1 billion/1 million square foot investment in a new Virginia Tech campus just south of Arlington which should help both Arlington and Alexandria students have easy access to one of the nation's premier “tech talent pipelines."

Fifth, none of this will happen right away. Amazon is expected to have no more than 400 employees in the region by the end of 2019. The slow ramp-up gives state and local governments ample time to prepare. And, as noted, we don't pay back a cent until the new money comes in.

I've written about these five factors at length before, with the most detail in my November 2018 newsletter which was published soon after the deal was announced. Click here to review what I wrote then. 

But sixth, the one factor that was not resolved until last Saturday was whether or not Amazon would commit to be fair to labor. This was the factor I spent hours, days, and weeks on to make sure they would follow through. I’m not pollyannaish about Amazon’s history of labor impacts in other communities. In January, I sent a letter to Andrea Fava, Amazon's Director of Public Policy, urging her to ensure Amazon's construction and renovation projects are performed under a Project Labor Agreement ("PLA"), just as Amazon's headquarters in Seattle and New York are. But when Amazon's commitment still had not been made publicly before Saturday, I intensely lobbied Amazon officials and Arlington County Board members in the days and hours before their Saturday decision to make sure Amazon put its commitment on the record before Arlington approved the incentive package.

A PLA is a custom agreement that prescribes wage scales, benefits, training, safety, hiring, and working conditions.  Any contractor -- union or nonunion – can bid on the work once a PLA is signed. A PLA ensures that high quality work gets done safely, legally, on time and on budget. Through a PLA, Amazon could help provide a path to the middle class for non-college-bound residents in Arlington and Alexandria. Through a PLA, the region’s residents -- particularly people with low incomes, minorities, and immigrants -- will have access to building-trades apprenticeships that lead to family-supporting jobs with good wages, health care and retirement security. Building-trades apprenticeships are tuition-free training programs that include both classroom and on-the-job training. Apprentices “earn while they learn.” 

And I'm proud to report that in the midst of the hubbub of a contentious public response to the Arlington County Board hearing, the most important minute of the eleven-hour (!) hearing was likely overlooked by most of the public and the media: Amazon's commitment on the record to sign a PLA. Click here to watch it.

Seems boring and technical, perhaps, which is why it was overlooked. 
In fact, it was critical.

With proper oversight, this deal can be a real benefit to the constituents I'm honored to represent and the rest of Northern Virginia and the Metro Washington region. And I will continue to monitor the project to make sure that Amazon acts in good faith and keeps its commitments.

The Hippocratic Oath of medical professionals says "Do no harm." So when people who are supposed to heal us are accidentally making us sicker, the Virginia Government should be able to track these problems and then take steps to prevent further unnecessary harm. Transparency can save lives.