Nailed It (with the Help of $$2.5 Billion in Incentives)!
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15 responses to “Nailed It (with the Help of $$2.5 Billion in Incentives)!”
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Jim,
You have made a very valid point. My son works in the IT sector and lives in Crystal City. Let’s say he is enticed by a higher salary to join Amazon. A new job has not been created in the area. His old employer is now left with a job to fill, while Amazon has been given a $22,000 taxpayer funded subsidy but did not create a new job in the area (although the old one needs to be filled). It is easy to see how the existing employers would feel that they are now at a significant disadvantage.
Why not spend the money on expanding the number of skilled employees that are available to all employers instead? Build a better ecosystem for skills and transportation/housing/amenities, etc. Others shouldn’t have to suffer for Amazon to succeed. Make things better for everybody.
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Tom:
By that logic Silicon Valley never grows because when one job is filled another disappears. That’s not true. People will move here for the jobs at HQ2 as well as the ones potentially vacated by your son.
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“Why not spend the money on expanding the number of skilled employees that are available to all employers instead? Build a better ecosystem for skills and transportation/housing/amenities, etc. Others shouldn’t have to suffer for Amazon to succeed. Make things better for everybody.”
Most of the state’s financial commitment related to the project is to expand degree production in computer science and closely related fields, which tend to be the biggest single source of talent for intense tech jobs, such as software development engineering, machine learning/AI, and UI/UX. At the same time all existing tech employers will benefit from the market having another attractive tech employer, particularly one not principally tied to the federal government.
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“Why not spend the money on expanding the number of skilled employees that are available to all employers instead? Build a better ecosystem for skills and transportation/housing/amenities, etc. Others shouldn’t have to suffer for Amazon to succeed. Make things better for everybody.”
Earlier this year, I interviewed a bunch of tech executives in Northern Virginia about this potential project, asking them in part what it would mean to their company if HQ2 were to come to Northern Virginia. Here are representative quotes from them:
Fortune 500 CEO: “The economic lift that we get in Virginia, the branding part of it, would be a strong positive for our recruiting efforts. Clearly we will be competing for talent, but that’s fine. I think it’s important for regions to have a diversity of employment options. The economic lift and intellectual lift for the region is a strong, strong positive. I would like to see us get selected.”
C-level exec of a Fortune 500 company: “In the short run, it will entail some competition for talent. But it’s very powerful for the region for the long term. We’ve made Virginia our hub. The fastest growing part of our ecosystem is tech – we hire thousands of associates [every year]. We want to have an ecosystem where new tech grads stay here and where there is a desire of folks from around the country to move here.”
Startup tech company founder: “Short-term it may create some additional distraction in terms of hiring and growing and retaining talent. … In the mid- and long-term, it will make us better – the best thing you can have is a strong competitor.”
CEO of a midsize tech company: “It would be a big [positive] deal for us. It would tie into our value proposition [for talent] of how high tech the area is. … Now we’ve got HQ2 in our backyard.”
Overall the sentiment was that there would be some competitive pressure in the short-term but that in the medium- and long-term, we would have a bigger, more diverse, more attractive tech talent market.
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Stephen, Thanks for the input here. This goes a long way to allaying my concerns about this particular issue. I hope the people you talked to were typical of the larger community.
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Similar comments from business folks in the Richmond area:
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Exciting news.
I just have a couple of unrelated perceptions:
(1) I recall the news some months ago saying office vacancy was fairly high in Arlington. So that may help explain that there was room to grow there.
(2) Reagan National airport is so nice, just flew out of there. So National prevailed over Dulles (yet again)
(3) Reminds me when Mobil relocated to the DC Beltway perhaps to have a better say in the Beltway politics. Not sure how that worked out in reality, but at least NoVA has a (more permanent?) replacement for that job loss to the area’s economy.
(4) Yes it seems clear NoVA development direction is going for the “internet of things”. Sometimes I need to reflect that anti-industry leftist eco attitudes around are here are due to complete lack of industry presence. But just because NoVA feels the answer for NoVA is “internet of things” does not mean other areas of the state/Country have that same jobs/career option.-
Not sure why you say NoVa development direction is going for “internet of things”.
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https://www.governor.virginia.gov/amazon/
That link takes you to more information on this deal than I’ve ever seen provided on behalf of any other deal, which is good – but I want to spend more time absorbing this before making some comments. There are other moving parts not expressly scored. For example the locality may be providing additional tax relieve under a Technology Zone ordinance. My bet this is closer to $2 billion when all is said and done. By far, without any competition, the largest package Virginia has ever put together by any measure you can imagine. Payments of $550 million (in effect a state income tax kickback) will be a line item in the state budget for how long? Need to see a cash flow chart….
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re: ” Payments of $550 million (in effect a state income tax kickback)”
perhaps one way to look at it is that NoVa is getting it’s own income taxes back rather than have RoVa get them and instead of frittering it away on faux economic development boondoggles for RoVa – it’s going to do REAL economic development!
😉
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Additional details on local incentives as well as the state fiscal impacts are available at http://www.hqnova.com.
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Potomac Yard! Now that makes a whole lot more sense than just Crystal City.
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Potomac Yard is key. I makes the deal work transportation wise. Plus Potomac Yard give very synergistic component. A powerful mix. 2+2 = 7. Without Potomac Yard the deal falls apart, just another traffic monster in precisely the wrong place.
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Before all the Monday Morning Quarterbacking begins, congratulations are in order for those people in Richmond who made this deal happen against all odds, given the competition. This is sure proof of highly competent operators at work in Richmond, and I sense it not their last big show. First class operators don’t come around very often either, anywhere, particularly in government. Virginia is fortunate to have such public servants.
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re: Potomac Yard, if I recall correctly, DJ called that area as the most suitable target back when this thing was first floated.
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