The devil is in the details, and ever since Amazon cheerfully announced on Tuesday that it is bringing half of HQ2 to Northern Virginia, skeptics and critics have found what they say are a few devils buried inside the agreement signed between the Commonwealth and the Seattle-based internet retailer. One deals with a usual point of contention — the public money that’s offered up to private companies to locate their headquarters in a specific place. The second touches on how much information about the deals can be made public. And then there’s the helicopter pad.
Public Money
As part of Amazon’s announcement that it was splitting HQ2 between Crystal City and Long Island City, it also disclosed what it was getting by way of financial incentives. In Virginia’s case, it’s $573 million — $550 million from the commonwealth in payments to Amazon for the expected 25,000 employees it hires (at an average salary of $150,000), and $23 million in grants from Arlington County if hotel stays tick up over the next 15 years.
But there’s more: the per-employee payments to Amazon could increase to $750 million if the company hires 37,850 people by as late as 2038. The deal also commits Virginia to spending up to $295 million on transportation upgrades, and Arlington County says it will spend up to $28 million from 2021 to 2030 on infrastructure improvements. Finally, Virginia is putting $250 million into a new Virginia Tech graduate campus in Potomac Yard and $125 million to help expand George Mason University’s Arlington campus.
All told, Virginia’s incentives and investments related to Amazon could total $1.4 billion.
Virginia officials say the incentive package is structured appropriately. Speaking on Tuesday, Gov. Ralph Northam said the $750 million Amazon could get would only be available if the company meets certain job-creation benchmarks.
“These incentive payments will be provided only after qualifying jobs are created each year. The incentives will generate net positive revenue for Virginia from day one, and will produce a more than 6 to 1 return on incentives over the term of our performance agreement with Amazon,” he said. “I can proudly say that Virginia’s proposal represents good fiscal stewardship.”
Stephanie Landrum, the director of the Alexandria Economic Development Partnership, also says that while plenty of attention has been given to the payments to Amazon for the people it hires, a larger portion of the total package actually focuses on other things.
“One of the things we are very proud of is that the majority of the investment is actually investments in our community, as opposed to a direct investment to the company,” she said, speaking about the education and transportation commitments. “The package, the majority of the money is going to tech talent creation.”
“The costs are higher than we expected, and lots of devils left to play out in the details.”
Still, critics worry that the final price tag could increase.
“The costs are higher than we expected, and lots of devils left to play out in the details,” said Greg LeRoy, a leading critics of financial incentives at Good Jobs First.
“The costs are higher than we expected, and lots of devils left to play out in the details,”
LeRoy concedes that Virginia’s overall package is far less than the $8.5 billion that Maryland offered Amazon, but says that the fact that Amazon chose a location with a smaller incentive package proves his belief that incentive packages don’t really influence where companies choose to put offices or headquarters. (Virginia’s deal was also cheaper than New York’s; $22,000 per potential Amazon employee compared to $48,000 in New York.)
While many Virginia elected officials reacted positively to Amazon’s decision to choose Crystal City, at least one state legislator said the deal was no good.
“Smells like the North end of a Southbound mule,” tweeted Del. Lee Carter, a Democratic Socialist who represents Manassas.
Carter, who was first elected last year, spent much of Tuesday reading the agreement and tweeting his critical thoughts on it. He lambasted the decision to rename a portion of Pentagon City, Crystal City and Potomac Yard “National Landing,” and pointed out that the agreement allows Amazon to terminate the deal with only five days notice while keeping whatever state money it had already received.
He also pledged to fight the deal when it comes up for a vote in the General Assembly next year: “Oh, it’s gonna be a fight in Virginia. Promise.”
Private Information
Another provision that quickly drew criticism deals with what information about the deal itself can be made public. The provision says that while “portions of certain materials, communications, data, and information” related to the deal between Amazon and Virginia are subject to disclosure under the Commonwealth’s Freedom of Information Act, Amazon is to be given a two-day window to “seek a protective order or other appropriate remedy” to fight the disclosure of certain documents.
While that provision isn’t new — a mid-2017 agreement between Arlington County and Nestlé has similar wording — and trade secrets and proprietary information is already excluded from public disclosure, open-government advocates worry that Amazon gains too much power under the deal.
“It doesn’t distinguish between [proprietary information] and, say, a fire inspection report that shows that there’s some serious problems with the fire systems that are in the office buildings,” said Megan Rhyne, the executive director of the Virginia Open Government Coalition. “That’s clearly a public record. Now does Amazon get to review that and decide that maybe it’s a public record but we want to ask for a protective order so that it’s not revealed? Because it is so vaguely worded, it has the potential to cover all sorts of clearly public non-exempt records.”
Rhyne said that the New York deal included no similar provision, and she worries that too much of what happens in the realm of economic development in Virginia is kept from the public — as deals are negotiated, and after they are done.
“When it comes to economic development, I think there is a real deference to businesses and corporations,” she said.
The Helicopter Pad, And More
In both New York and Crystal City, Amazon extracted a distinct concession: a helicopter pad at both locations.
“The County understands that Amazon desires to have a helipad at its Arlington facility,” wrote County Manager Mark J. Schwartz in a letter to Amazon. “Arlington County staff will assist Amazon in its effort to obtain required County Board, Commonwealth and Federal approvals for the development, construction, and operation (at the Company’s expense) of a helipad at the Facility.”
And in the Virginia deal, Amazon included a provision requiring state officials to ensure that the company enjoys “regulatory flexibility.” This means Virginia will have to “actively encourage” a “forward-looking regulatory frameworks that… increase consumer choice and allow new and innovative forms or technologies and services to enter the marketplace,” reassess laws that are said to be harming innovation and competition, and “limit prescriptive conditions” on the creation or operation of new technologies.
This story was originally published on WAMU.
Martin Austermuhle