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January 2, 2019

Amazon HQ2—Wasting County and State Funds on Subsidizing a Corporate Giant Amazon

Amazon HQ2,Development — @ 6:16 pm

The Arlington County Board is going full speed ahead to sell its deal to provide hundreds of millions of public local tax dollars to Amazon for a new headquarters in Crystal City, and the “listening session” in mid-December at Gunston Middle School just highlighted this full bore sell campaign.

County Board members present heard an earful of good objections to giving this corporate giant any of our local tax dollars, and then gave bogus arguments in favor of this deal.
County officials and some board members present gave misleading reasons on why Amazon HQ2 would be good for Arlington County—Arlington needs more jobs; Metro can handle the transit problem of 25,000 more employees and they won’t clog up our streets; Amazon will fill up vacant office space which will raise more local tax revenues and improve county finances; and new GMU and VA Tech IT campuses are needed.

Crystal City High rise Buildings

Arlington Needs more Jobs in Crystal City?
Katie Cristol, a county board member present, said that Crystal City lost over 35,000 jobs when the Department of Defense moved employees to other areas of Northern Virginia with the so-called BRAC realignment beginning around 2005. This is misleading.

It is true there are fewer federal employees in that area of Arlington after BRAC, but total employment throughout Arlington is 28,000 higher today (up from 196,000 in January 2004 to 224,000 in January 2018). Other employers have picked up the slack, and added more jobs to Arlington. There is one job in Arlington for every resident, and the unemployment rate is about 2 percent. Arlington does not need to subsidize businesses to come to Arlington—they already are locating here without a fat subsidy from taxpayers.

The office vacancy rate in Crystal City is about 18 percent today, and it is true that the main commercial realty company JBG/Smith there is having a hard time renting its vacant space. Still, Crystal City does not have the highest vacancy rate among all business areas in Arlington, the highest vacancy rate is in Ballston and Rosslyn, each with 24 percent. Filling office space is NOT the taxpayers’ or county government’s problem but JBG’s or other realty company’s problem to solve.

>Metro and buses can handle another 25,000 employees, and there will be no further traffic congestion, and Arlington County needs to spend $360 million on Metro in Crystal City?

The county transportation director said at the Gunston MS meeting there are far fewer Metrorail passengers using Crystal City Metro stations today than a decade ago, and that, therefore, Metro can handle 25,000 more employees working there. Just spend $360 million and add new entrances to the existing Metro stations, and voila.

The reality is that Metrorail ridership is down substantially, for example daily weekday ridership declined by 25 percent on the Orange Line during 2000-17, according to WMATA data. The decline is mostly because of train breakdowns and unreliable train service, but also Uber and Lyft competition. Under its current state of disrepair, Metro can barely handle current passengers. Metro rail cannot handle another 25,000 passengers into/from Crystal City today, and the problem is not a lack of Crystal City Metro stations or entrances but rather a lack of reliable service of the trains. Amazon employees will drive to work, use Uber and Lyft, clog up our neighborhood streets, and make life miserable for Arlington residents as well as themselves.

Metrorail needs a massive infusion of billions of dollars to fix equipment, trains, and stations that now exist. The county wants to spend $360 million to add two new unneeded entrances to Metro stations in Crystal City and Pentagon Yards; these funds instead should be directed to Metro rail operations and infrastructure. The rest of us in Arlington depend on Metrorail, and just fixing up two stations in Crystal City will do nothing to fix the Orange, Blue or Silver Line delays or help Arlington residents with effective mass transit.

Filling vacant office space will automatically raise county tax revenues and improve county finances?

Libby Garvey, another county board member present, said the HQ2 deal will reduce the average office vacancy rate in the county from 18 to 14 percent, and this will raise county tax revenues and improve county finances. Roughly each drop in office vacancy rate in Arlington yields about $3.4 million in local tax revenues annually; so a 4-percentage point drop yields another $13 million a year. However, HQ2 is expected to draw up to 5,000 employees to live here, who will add another 1,000 public school children who will cost the county about $20 million more in school spending. Other costs for non-school county services will rise nearly as much. So, the NET tax revenue increase is going to be very small once the cost of additional public schools and county services are deducted.

The county board is taking responsibility for lowering the office vacancy rate but this is no business of local government, rather the problem of the largest landlord JBG/Smith to fix.

Another graduate campus for GMU and VA Tech at a cost of $375 million or more will benefit Arlington residents

The State of Virginia has promised at least $375 million to build a new campus for a VA Tech and GMU that would have graduate IT education. Why?

There is no evidence today that there is a shortage of IT graduates coming from local or other nearby universities. Why should the government subsidize Amazon and train its employees who earn $150,000 each? There are hundreds of colleges that provide IT graduates all over the U.S. today, and scores in the D.C. area already that offer advanced degrees in IT. We don’t need any more colleges in our area.
Arlington probably has the most educated population in any county in the U.S.–Arlington residents do not need another college here.

Amazon located in Arlington because it is within the second largest region in the U.S. with current IT employees (New York City being the largest Metro region). IT employees will come from all over the U.S. to work for Amazon. These Amazon employees will be earning $150,000 a year, and they can pay for their own education.

Perhaps if this $375 million went to pay the costs of college education for lower income students in Arlington and in Virginia graduate from college, this might be a good idea. This amount could finance total college costs for 1,200 low income students per year for the next 20 years! There are many low income students from other parts of Virginia who also need a chance to succeed so why not provide college tuition grants to lower income students from Arlington and all over the State?

Arlington County now spends about $20,000 or more per student for K-12 education. Lack of funding is not an issue for Arlington for so-called STEM education. We don’t need the funds for our K-12 IT studies either.