One of the self-styled revolutionaries seeking to prevent Amazon from planting its second headquarters in Arlington County complains the local incentive package offered is $23 million. A research fellow at the Mercatus Center at George Mason University puts the total at $51 million. The actual monetary value is elusive and still to be determined.
Both critics appear in a story from the politically-charged “news” outlet The Blaze, showing Amazon’s local incentives are national news. So far, the much-larger state package, now approved by the 2019 General Assembly, has been the focus. That was before a band of New Yorkers spit out their piece of Amazon Pie, inspiring Northern Virginians of similar ideological bent to step up a local battle.
UPDATE (2 p.m.): The Arlington Board of Supervisors is set to vote on its agreement with Amazon on March 16, and here is the draft of the contract, just posted.
While probably more than previously discussed, unless there are some deep secrets yet to surface, the local package in Virginia is a sliver of the offer from New York City: $897 million from the city’s Relocation and Employment Assistance Program (REAP) and $386 million from the Industrial & Commercial Abatement Program (ICAP).
Arlington county has assembled much of the available information about its Amazon deal on one web page. As Amazon’s plans take firm shape more detailed projections should be possible, perhaps before the Board of Supervisors gives formal approval to the deal. The City of Alexandria is less specific about incentives, based on what it has shared on that Arlington web page.
The revolutionaries are gearing up for a public hearing in Arlington on May 19, which is better information on timing about the local decisions than I can find elsewhere. Arlington officials are in the middle of a long series of neighborhood meetings set to end in a few weeks, with their standard Amazon 101 presentation also on the website.
Arlington’s known incentives are mainly a share of new revenue streams which won’t exist if Amazon bails. Some of the incentive programs have been on the books for years and are available to other local businesses. Many of the proposed transportation assets, such as the footbridge to Reagan National Airport seen above, will help far more people than simply Amazon staff.
The $23 million figure for Arlington incentives, which has been cited in several places, is based on a single element. The county has offered 15 percent of the incremental growth in the transient occupancy tax (TOT), to be provided to Amazon as a grant for 15 years. Any headquarters operation will be filling up hotel rooms and other short-term rentals. The $23 million estimate could be off in either direction.
The $51 million figure apparently includes that TOT rebate plus $28 million from another source tapping into expected tax growth, a tax incremental financing (TIF) district. The TIF district has been around since 2010, dedicating 25 percent of the revenue growth to infrastructure projects. The county is offering to hike the take to 50 percent. Again, that $28 million additional revenue over 10 years could easily be a low estimate.
According to the incentive package description, Arlington had $360 million in transportation improvements already in its plan for those areas, with $215 million committed and $145 million more being sought. Elsewhere Alexandria mentions $330 million. The transportation proposals were described in more detail in an Arlington Now article Monday. Perhaps the TIF revenue goes there.
There are two other major incentives mentioned in the county’s document, both of which already exist. Arlington offers discounted rates for its Business, Professions and Occupations License (BPOL) Tax for companies setting up in a defined technology zone, if the activity is “creation, design and/or research and development of technology hardware or software.”
For a company with more than 1,000 employees the tax on gross receipts from those tasks drops from 36 cents to 10 cents per $100 in taxable revenue. That’s a tax break of $2,600 per $1 million in revenue, or $2.6 million for each billion, a reduction available for ten years.
Just how much taxable revenue is Amazon going to have sourced to that location, from those activities? That will be the fun part, figuring out what revenue from the multi-national behemoth gets sourced to National Landing. That will also be important for state tax purposes, as well.
The county offer package also mentioned financing support for investments in energy efficient buildings under the county’s Commercial Property Assessed Clean Energy program (C-PACE). It is easy to imagine all the new buildings at least will be LEED Silver.
“With C-PACE, building owners receive up to 100 percent financing for existing building projects or 20 percent financing for new construction projects – for soft costs (energy audits, for example) and hard costs (equipment) – with attractive repayment terms consistent with the useful life of the improvements (up to 25 years).“ Again, whether Amazon would even care about such an opportunity is not clear, nor is the marginal value of the benefit.
Other portions of the basic document discuss the county’s investments in affordable housing (with a top range income target of $135,000) and promises to expedite the planning and approval process and help with employee relocation. Arlington seems to be simply moving forward with previous housing plans, while Alexandria commits to add $1 million a year to that process.
Alexandria’s incentive discussion focuses on the Virginia Tech Innovation Campus, mentioning but not promising local property tax breaks, tax exempt bond financing and possible direct financial support. No specific dollar figures are mentioned with everything apparently still to be negotiated when this material was put out.
For both localities the local incentives appear minor and without local risk. Arlington will see no additional transient occupancy tax without Amazon. The TIF revenue on the property tax likewise won’t materialize without the project and is going to public facilities, not Amazon. There may be major BPOL tax breaks on tech development work at the new location, but any other company inside the zone could seek the same benefit.
Hardly the stuff of revolution.There are currently no comments highlighted.