As Amazon’s HQ2 Stalls, Incentives Have, Too

March 21, 2023

Bloomberg CityLab: As Amazon’s HQ2 Stalls, Incentives Have, Too

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“Amazon announced its plans to build a new HQ in Arlington County in 2018, ending a months-long country-wide bidding war which saw some states and cities promise upwards of $6 billion to attract the e-commerce giant. The Virginia region made headlines for its less extravagant approach, which tied comparatively modest state and county incentives to tangible benefits Amazon pledged to provide.

Almost five years later, neither Virginia nor Arlington have yet paid the company a penny. And while Amazon is ahead of schedule on hiring, the pandemic’s effects are lingering, and the broader economic transformation it promised has yet to materialize. This month, Amazon publicly scaled back its short-term ambitions, announcing it would pause construction on PenPlace and delay the second phase of its HQ2 project, amid company-wide layoffs and economic uncertainty.

The state-level package was more significant. Virginia offered Amazon up to $550 million for creating those 25,000 six-figure jobs by 2030, or as much as $750 million if they hit 37,850 jobs by 2038. But the company hasn’t yet submitted a request for payment, according to the Virginia Economic Development Partnership. If it does so by this year’s deadline of April 1, Amazon will be eligible to start receiving grants starting in 2026.

Taking those things into account, “costs and benefits to date are mixed,” said Greg LeRoy, the executive director of Good Jobs First, a nonprofit think tank that has been critical of megadeals in the past. While Amazon’s hiring is slightly ahead of schedule, he said, other construction-related jobs will lag due to the building pause. “If the company ultimately occupies less space, that could suggest a shortfall on total permanent job creation.”

Read the full story at Bloomberg CityLab.