County Board Member Matt de Ferranti’s March 16, 2019 closing remarks following the Board’s unanimous vote to approve a performance agreement with Amazon for HQ2.
73 days ago, I sat on this dais for the first time and outlined the standards that I would apply to an initial agreement between Arlington County and Amazon. Today, I apply those standards to the 13-page Performance Agreement before us.
My first criteria: “an agreement must provide a significant net benefit to our whole community.”
The language in the agreement sets “preconditions” requiring that Amazon occupy office space and pay real estate taxes in year one 1, before receiving 15 percent of the increase in the hotel tax in year two that would not exist if Amazon were not to locate here. Similarly, for each year from years two through 12, this agreement only obligates Arlington if Amazon after it verifies that it has occupied office space and pays us taxes.
After looking critically at Arlington Economic Development’s analysis, the Fuller Institute Report from George Mason, and the New Virginia Analysis, and taking out the hotel tax incentive, I see a net benefit over 12 years to Arlington of what I estimate to be $151 million. That estimate would increase to more than $300 million over 16 years, because in those last four years, when the 25,000 to 38,000 Amazon employees are likely to be located here in offices that require real estate tax payments. That is a significant net benefit that we must, and will, use for our whole community.
The $195 million in transportation funding Arlington will receive from the state of Virginia for transportation projects and the additional $75 million, at a minimum, that we will receive, from the state for housing are also benefits that we must consider.
Concerns raised over the past two weeks that the business professional license and professional occupations tax do not alter that conclusion for me. Revenues from BPOL are not included in the $151 million and the Commissioner of Revenue, not the County Board makes that decision.
Benefiting the whole community means that the net $151 million must be used for the benefit of all our residents, and most importantly those most in need. That means that we must invest additional revenues in housing affordability and do so at rates and amounts greater than the rent increases and home assessment increases that impact those most in need, and our middle class. This deal must be a good for the 8 percent of Arlingtonians who live in poverty, and middle class Arlingtonians – our police officers, firefighters, teachers, county employees, young families trying to make it, and seniors who want to stay here.
My second criteria was that this agreement must “consider and further our plans on housing, transportation, and our schools.” I believe the Performance Agreement meets this standard—the $7 million of our AHIF funding that we are committing today to the neighborhoods closest to where Amazon will locate is a start. The $75 million that the state will put into housing helps as well.
On transportation, the $195 million the state will invest in the second entrance to the Crystal City Metro, the transitway, and items already in the transportation portion of our plan for construction—our Capital Improvement Plan—persuades me this fits into our plans. This also fulfills the Crystal City Sector Plan and the Pentagon City Phased Development makes this a good deal on transportation.
On our schools, this agreement will help provide the additional revenues we need to help catch up on our school capacity challenge. I acknowledge that the 73 to 98 students estimated to be added to our school system by Amazon’s workforce annually does not capture the full impact of the increase in students that is likely to result from Amazon coming here: that is up to nearly 1,000 students over 10 years. But I still think net revenues of $151 million provides more revenue than cost in building our schools.
Third, I said that as we implement this agreement we must fully consider small business. I acknowledge that the jury is still out on this item.
Fourth, I said that we must have a fair and transparent process. I believe we have met this standard. We did five online sessions, two listening sessions, and I am very proud that we did 27 meetings with civic organizations and civic associations. We posted the full Performance Agreement 11 days ago. I respect those who disagree, but believe the community has had a fair chance to consider this Performance Agreement. The site plan review process is still to come.
I also said I hoped for a once in a generational, transformational, win-win. I identified three key investments to reach that higher standard:
First, affordable homeownership and rental housing. This Performance Agreement does not include the significant, tangible investment I had hoped for on housing, but, to be fair, the site plan process that will proceed over the coming months is the logical place for such investments. I want to specifically note the importance of early action to invest in housing and look forward to both the Chair’s Housing Arlington initiative and partnering with Amazon on housing.
Second, energy efficient buildings and renewable energy. We do not have the upfront net zero commitment we might have hoped for, but I believe that in this area the site plan process is indeed the right time to discuss this. With Amazon’s commitment to post progress toward renewable and carbon emissions later this year, I believe we will reach this goal as well.
Third, fair pay for those who work on, and in, the buildings that will be built. This is very important to me. I believe the parties involved—not Arlington County, as we are prohibited by law from being a party to a contract on this—made progress, but there is much more work to do. I am disappointed that we do not yet have a signed agreement, but I am hopeful that we will get there. I also want to ask that all parties to continue to work over the coming weeks to come to a stronger commitment to fair pay for those who will build these buildings.
We will need to commit to equity and Arlington ideals in education, affordable housing, and renewable energy, among others, every day going forward, just as we have so far this year.
As we look forward to the partnership that I hope and expect this will become, all of us will need to commit tomorrow and every day after that to Arlington values. I acknowledge that in the perfect world, we would not even offer the slice of future revenues in the performance agreement to the wealthiest company in the world but it is also true that there are238 other communities would love to be in our place.
We must work to close the distance between the perfect world—the world as it should be—and the and the world as it is. I look forward to that work and to investing the increased revenues that will result from this agreement in the people and ideas that make Arlington special for the benefit of all Arlingtonians, particularly those most in need. I welcome Amazon to our community and look forward to building the transformational, win-win partnership that I honestly believe we all want and I know we can deliver.