AP NEWS

Amazon-New York split catches Virginia officials off-guard

February 15, 2019

On Valentine’s Day, Amazon broke up with New York City and turned all of its attention to Northern Virginia, announcing it would not set up half of its second headquarters in Queens and would move ahead with its plans for Crystal City.

“After speaking with Amazon representatives earlier this day, we are moving forward as we had planned,” Christian Dorsey, chairman of the Arlington County Board of Supervisors, told reporters in a conference call hours after the announcement. “Nothing has changed.”

Mr. Dorsey said Amazon’s plans to nix a site in Long Island City will result in no new agreements, incentives or additional jobs for “National Landing,” the future home of the online retail giant’s 4-million-square-foot HQ2 a nest of underused office buildings in Arlington, Pentagon City and Crystal City along the Potomac River.

However, the county official said there is a possibility that Amazon might exceed its first-phase goal of adding 25,000 high-paying jobs in Northern Virginia and top out at its second-phase goal of 37,850 jobs.

“We’re a lot closer to get to 50 [percent boost],” Mr. Dorsey said.

In a statement Thursday, Amazon said that outrage from elected officials had roiled the New York project. The Seattle-based retailer had promised to build 25,000 jobs and invest $2.5 billion development of waterfront property in Queens in exchange for nearly $3 billion in state and local tax breaks.

Criticism of the Amazon plan has cooled in Virginia, however.

“The intensification in Crystal City is not going to be what it was [in Long Island City],” said Jeannette Chapman, deputy director of The Stephen S. Fuller Institute who researches economic development in the Washington, D.C. region., “We’re just filling up buildings that had been full before.”

The National Landing site has had high office vacancy since the Base Realignment and Closure in the mid-2000s that saw many Pentagon workers and defense contractor exit the area.

“Personally, I think it’s a relief to know Amazon finds Virginia to be welcoming to them,” said Christine Richardson, a Northern Virginia Realtor who has seen a strong housing market boosted, in part, by Amazon’s announcement of its expansion plans in November.

The Virginia footprint of Amazon’s headquarters has included the prospect of 25,000 high-paying tech jobs and an investment of $2.5 billion, including the development of an innovation campus through Virginia Tech. Gov. Ralph Northam signed a $753 million incentive package into law earlier this month. Arlington County will provide a cash grant of $23 million over 15 years, funded by an increase in the county’s hotel tax.

“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,” said Stephen Moret, president of the Virginia Economic Development Partnership.

Still, Amazon’s announcement caught Virginia officials off-guard. A spokesman for the mayor of Alexandria said he was unaware of anyone in the office receiving advance notice of Amazon’s decision. And the specter of a fickle corporate partner could rattle local assurances.

Amazon has a track record of punishing local governments when it doesn’t get its way, critics say. For example, the company last year halted construction on a tower in Seattle many saw as a protest of the city board as they considered increasing taxes on high-earning businesses.

Mr. Dorsey said Arlington County is standing by its partner, at least for now.

“I think it remains to be seen whether this is an example of, ‘If we don’t get our way, we’ll take our ball and go home,’” he said. “Everything we’ve offered so far, Amazon has leaned in and embraced. One thing we’ve been clear about from the very beginning [is that] we think this fits within our existing plans and our existing values.”

Mr. Dorsey said any changes in Amazon’s posture would create a “completely different conversation.” He stressed that the county has not provided any money upfront and its payment is contingent upon Amazon actually creating jobs and moving into office space in National Landing.

“We only deliver payments after performance has been realized,” said Mr. Dorsey.

There is only speculation about the 25,000 jobs that Amazon had promised for New York City.

“We do not intend to reopen the HQ2 search at this time,” the company said Thursday. “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.”

In addition to its HQ2 plans, Amazon had announced in November an Operations Center of Excellence in Nashville, Tennessee, that will create 5,000 jobs.

Arlington County does not intend to court those other jobs.

“We’re comfortable with that, and we’re not going to make a play for anymore,” Mr. Dorsey told reporters.

Amazon’s change of heart was a serious blow to New York Gov. Andrew Cuomo and New York Mayor Bill de Blasio, who had lobbied intensely to land the project, competing against more than 200 other metropolitan areas across the continent that were practically tripping over each other to offer incentives to Amazon in a bidding war the company stoked.

Mr. Cuomo lashed out at fellow New York politicians over Amazon’s change of heart, saying the project would have helped diversify the city’s economy, cement its status as an emerging tech hub and generate money for schools, housing and transit.

“A small group of politicians put their own narrow political interests above their community,” he said.

Last month, a New York state legislator critical of Amazon was appointed to a board with veto power over the New York project. And the congresswoman for the district housing the now-aborted headquarters in Queens Rep. Alexandra Ocasio-Cortez had been a vocal critic of the deal since its announcement in early November.

On Thursday, Ms. Ocasio-Cortez tweeted, “Anything is possible: today was the day a group of dedicated, everyday New Yorkers and their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.”

⦁ This article is based in part on wire service reports.