Amazon applies for first incentives for HQ2: as much as $152M

But no money has been paid out yet: The company declined over the past three years to seek out these performance grants amid the coronavirus pandemic, Amazon spokesman Zach Goldsztejn said. (Amazon founder Jeff Bezos owns The Washington Post.)

The company’s application, which was submitted by an April 1 deadline, comes during a turbulent period for the company. Amazon has laid off tens of thousands of employees and announced last month that it would pause construction on the second part of its campus, including three office towers as well as a futuristic “Helix” just a stone’s throw from the Pentagon.

Virginia’s incentives for Amazon are supposed to reward the company’s progress toward its stated goal of creating 25,000 new jobs in the commonwealth by 2030.

According to the deal, state officials will pay the company $22,000 for each full-time job with an average salary of $150,000. (That salary is supposed to climb slightly each year.)

Amazon has consistently been ahead of schedule on hiring, the company has said, and as of last month it had taken on more than 8,000 employees to work at HQ2. It could have begun applying for incentives as early as three years ago and received its first payments starting this summer.

From 2020 through 2022, Amazon did not request any payments, the Washington Business Journal first reported in February. Goldsztejn said the company had decided to delay submitting a request for payment because of pandemic-related challenges in those three years.

According to the contract, this is the final year in which Amazon can submit an application for this round of incentives. The payments reflect hiring and job creation through the end of 2022 and cannot be paid out until fiscal 2027.

Goldsztejn said the company sought state dollars for 6,939 jobs it has created in Arlington, including only new positions that meet definitions laid out in the contract.

The Virginia Economic Development Partnership is reviewing the company’s application to verify each new job, agency spokeswoman Nicole Hansen said.

Arlington County’s incentive grants were expected to total $23 million by the end of this decade, but no money has been paid out. Local officials agreed to pay the company part of an increase in tax revenue from hotels and short-term rentals, assuming that the new headquarters would boost local hotel stays.

That increase in Arlington revenue has yet to materialize. Cara O’Donnell, a spokeswoman for the county’s economic development arm, said revenue from that tax is not expected to reach a pre-pandemic baseline established in Amazon’s deal with Arlington until fiscal 2025 at the earliest.

Arlington offered $23M for Amazon HQ2. So far, it hasn’t paid a dime.

The company’s request for payment from Virginia comes just months after Amazon announced two rounds of layoffs totaling 27,000 this year. The company has said its construction pause in Arlington is not a sign of further job cuts.

Amazon has yet to enforce a consistent return-to-office policy, although it will require employees to be in the office at least three days per week starting next month.

“Our partnership agreement with the commonwealth is based on our long-term commitment to create tens of thousands of jobs and a community-oriented development in Arlington that spurs economic vibrancy and benefits the entire region,” Holly Sullivan, the company’s vice president for worldwide economic development, said in a statement.

Tim Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research, a nonpartisan organization in Michigan that studies employment policy, said that Virginia’s incentives to Amazon are not excessive in a national context.

Other states, including many that also bid to receive Amazon’s new headquarters, offered up billions of dollars — in some cases upfront — to try to attract the company, and Virginia’s deal was more measured.

But he also cautioned that the region needed robust job training and a boost in housing supply so the positive effects of the jobs created could be felt by more residents.

“They do not need to have that much in the way of social benefits for the community to justify this payment,” he said. “Could Virginia do better? Maybe they could.”

Yet Danny Cendejas, an organizer with the group For Us, Not Amazon, said Virginia should not be rewarding a company as large as Amazon. “They do not deserve a single cent from our communities,” he said.