Ama­zon HQ2 pro­ject will give Va. econ­omy $14B boost, study says

Richmond Times-Dispatch - - FRONT PAGE - BY MICHAEL MARTZ

Vir­ginia’s half of Ama­zon’s HQ2 equals $14.2 bil­lion in eco­nomic ac­tiv­ity for the state over the next new 12 study. years, ac­cord­ing to a

The Seat­tle-based com­pany’s de­ci­sion to build half of its cov­eted new head­quar­ters in Ar­ling­ton County will cre­ate 59,308

jobs in the state, more than dou­ble the 25,000 di­rect jobs the re­tailer will fill at the Na­tional Land­ing site in Crys­tal City and Pen­tagon City, said the re­port by Ch­mura Eco­nomics & An­a­lyt­ics in Rich­mond.

“The en­tire state of Vir­ginia will ben­e­fit from Ama­zon’s de­ci­sion to lo­cate part of its sec­ond head­quar­ters in North­ern Vir­ginia,” said Chris­tine Ch­mura, the firm’s CEO and chief economist, in a col­umn to run Mon­day in the Metro Busi­ness sec­tion of the Rich­mond Times-Dis­patch.

The Vir­ginia Cham­ber Foun­da­tion and McGuireWoods Con­sult­ing com­mis­sioned the study and re­leased it to co­in­cide with the foun­da­tion’s an­nual Vir­ginia Eco­nomic Sum­mit in Wil­liams­burg on Fri­day.

The key­note speak­ers at the sum­mit are Gov. Ralph Northam, who an­nounced the com­pany’s choice of North­ern Vir­ginia on Nov. 13 in Ar­ling­ton, and Holly Sul­li­van, head of world­wide eco­nomic de­vel­op­ment for Ama­zon.

The de­ci­sion cul­mi­nated a fren­zied, 14-month search that re­sem­bled a con­ti­nen­tal trea­sure hunt, with 240 metropoli­tan ar­eas in North Amer­ica pitch­ing sites for a pro­ject that promised $5 bil­lion in di­rect in­vest­ments and cre­ation of 50,000 jobs for one of the world’s big­gest com­pa­nies.

The Rich­mond, Hamp­ton Roads and North­ern Vir­ginia re­gions pitched 10 sites in Oc­to­ber 2017, but only North­ern Vir­ginia re­mained in the hunt af­ter the com­pany nar­rowed the field to 20 re­gions at the begin­ning of the year. Those in­cluded mul­ti­ple sites in North­ern Vir­ginia and Wash­ing­ton, D.C., as well as one in Mont­gomery County, Md.

In the end, Ama­zon split the pro­ject be­tween Ar­ling­ton and Long Is­land City, in the Queens bor­ough of New York City, which came as a re­lief to Vir­ginia of­fi­cials con­cerned about the size of di­rect in­cen­tives pledged to the com­pany and the re­gion’s abil­ity to ab­sorb the surge in pop­u­la­tion.

Vir­ginia promised $550 mil­lion in di­rect in­cen­tives for 25,000 jobs, each pay­ing an av­er­age of $150,000 a year, but only af­ter the jobs were cre­ated and the tax rev­enues were gen­er­ated to cover the state pay­out.

Even so, the deal has come un­der fire from some tax­pay­ers, such as in­de­pen­dent book­sell­ers in mor­tal com­pe­ti­tion with Ama­zon, and some elected of­fi­cials, pri­mar­ily in parts of the state that won’t be af­fected di­rectly.

Ch­mura es­ti­mates the pro­ject will gen­er­ate $1.83 bil­lion in state in­come and sales tax rev­enues from 2019 through 2030, when an­nual col­lec­tions are fore­cast to reach $346.7 mil­lion — “an amount that will con­tinue to grow in the years go­ing for­ward,” she writes in her col­umn.

“In ad­di­tion to ben­e­fit­ing the state trea­sury, the in­creased tax revenue will di­rectly ben­e­fit the fund­ing across the state of lo­cal ed­u­ca­tion sys­tems, higher ed­u­ca­tion in­sti­tu­tions and trans­porta­tion in­fra­struc­ture,” she writes.

The pro­ject agree­ment in­cludes a sec­ond phase that would pro­duce an ad­di­tional 13,850 jobs. The anal­y­sis es­ti­mates that the state re­ceived $13.3 mil­lion in tax revenue for ev­ery 1,000 ad­di­tional jobs cre­ated by the pro­ject.

The study es­ti­mates the pro­ject will gen­er­ate $8.4 bil­lion in di­rect eco­nomic ac­tiv­ity over 12 years and $5.8 bil­lion in in­di­rect and in­duced ac­tiv­ity.

In Ar­ling­ton alone, that means an av­er­age growth rate of 2.2 per­cent a year, a per­cent­age point higher than pro­jected be­fore the an­nounce­ment, based only on the new jobs cre­ated by Ama­zon, Ch­mura said.

The anal­y­sis does not in­clude the promised $1.1 bil­lion in new state spend­ing at higher ed­u­ca­tion in­sti­tu­tions across Vir­ginia to pro­duce up to 35,000 new un­der­grad­u­ate and grad­u­ate de­grees in com­puter sci­ence and re­lated fields to pro­vide a “tech tal­ent pipe­line” to fill jobs at Ama­zon and other high-tech com­pa­nies.

How­ever, the economist writes, “This pro­ject will also ce­ment Vir­ginia’s po­si­tion as a high-tech cen­ter on the East Coast, at­tract­ing high-pay­ing jobs and highly skilled in­di­vid­u­als to the state, ben­e­fit­ing Vir­gini­ans for gen­er­a­tions to come.”

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