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The Arlington County Board is set to vote on a $23 million incentives package for Amazon this Saturday. The package doesn’t include any requirement that the company pay union-level construction wages or contribute to affordable housing fund — two demands made by local activists.
The plan, which would go into effect in 2020, would last 15 years. In 2035, though, what will Northern Virginia and the rest of the region look like? And what will happen along the way?
We sit down with an Arlington County Boardmember and the cohost of the podcast Prime(d) to talk about how the region might change in expected and unexpected ways. We’ll look back on Seattle’s history with Amazon and discuss how our local governments can navigate their relationship with the company. Plus, we’ll hear from a policy researcher on how the DMV’s housing market will shift over the next two decades as Amazon gets settled in the region.
Produced by Cydney Grannan
KOJO NNAMDIWelcome back. On Saturday, the Arlington County board will vote on a $23 million incentive package for Amazon. It's tied to an expected increase in hotel taxes. It will span 15 years. Local activist groups have been pushing Arlington to include some asks of Amazon in exchange for the incentive package. Joining me in studio to talk about this, we've already introduced Matt de Ferranti, who's an Arlington County board member. Michael Spotts is the president of Neighborhood Fundamentals. Michael Spotts, thank you for joining us.
MICHAEL SPOTTSThank you for having me.
NNAMDIAnd joining us from studios at KUOW in Seattle, Washington is Carolyn Adolph. She's a reporter and co-host of the podcast Primed, on KUOW. Carolyn, thank you for joining us. Good to talk to you again.
CAROLYN ADOLPHHey, it's a pleasure, Kojo.
NNAMDIMatt, let me go back to you for a second. What are the requirements for Amazon to qualify for this incentive package?
MATT DE FERRANTISo, they have to incorporate and then get a certificate of occupancy, a building permit, and then occupy space within Arlington -- office space within Arlington. And there's a schedule of the different benchmarks that they have to hit, the different levels that they have to hit over years. And unless they hit that in one preceding year -- they also have to be current on all taxes, real estate, business, professional license, all taxes, they have to be current. So, they're paying us first, and then we're paying them -- if they meet those targets, we're paying them 15 percent of the growth in the hotel tax.
MATT DE FERRANTISo, earlier, the Seattle City Councilwoman Ms. Mosqueda, she referred to callback provisions. And I have the glory or the infamy of having been a lawyer previously in my life. And it's not the way that it's structured. Those are preconditions, so when you have preconditions, callbacks don't work. So, I think we are very well protected financially, and in that way, pretty different from where Seattle was.
NNAMDIHow much revenue is Amazon's moving to Crystal City supposed to generate for the county?
FERRANTIWell, there are two estimates, and I think it's important to mention that getting down to the precise dollar is difficult when you're talking about -- over the course of 12 years -- 25,000 employees and some of the growth. But the estimates are 174 million over 12 years and 342 million over 16 years. And that difference between those four years is because they're ramping up. Not all employees are coming in year one. As you get towards years 12 to 16, you have significantly more office space occupied.
NNAMDICarolyn Adolph, let's get back to the story that the Seattle Councilmember shared about the head tax in Seattle. How exactly did Amazon make its displeasure known to the council?
ADOLPHWell, one of the things that they did is they threatened not to move into a building in downtown Seattle where they intended to place more than 4,000 employees. And they threatened not to complete the construction of another building that they were going to fill with employees. So, it sounded to people like 7,000 jobs in total were hanging in the balance.
NNAMDIAmazon ended up not moving into one of those buildings even though the city of Seattle repealed the head tax. What does that indicate to you about Amazon's threat in the first place?
ADOLPHWell, that it was a hollow one, or that things are said that are not meaningful. So -- and we see this pattern frequently. You think it's one thing. For example, you guys think you're getting 25,000 employees, or you think it's another thing. Hey, maybe you're actually getting, you know, 37,850 employees. But no, it'll be something else. It's like it's a triangle. You think it's this, you think it's that, no, it's something else.
NNAMDIAre you concerned that Amazon will be able to force Arlington County's hand in a way similar to what Teresa Mosqueda described?
ADOLPHWell, I think the only way to avoid it is to get everything in writing and pay attention when they don't want to put things in writing.
NNAMDIMatt, how is Arlington County positioning itself, in your view, differently?
FERRANTIWell, I think they are a number of differences. One area that I'd love to see is Washington state has some additional protections for labor and making sure that workers are paid fully and fairly that I'd love to see in the state of Virginia. We don't have that, so we have been working -- we have all -- all the members of the county board have been talking about the importance of protection, so that the construction of the buildings is done fairly. And I'm hopeful that there will be progress. Certainly, my experience has been positive in talking and working with Amazon.
FERRANTIBut I think to Carolyn's point, in a broader sense, the way we structured our agreement, we published this agreement about ten days ago. It's on the website for anyone to see. And the way it's structured is just very different. First of all, the state is putting in 95 percent of the resources, and second, every year, they have to hit targets in order to get any benefits. So, I understand the concern, but I actually feel like we're in a different circumstance.
FERRANTIThe only other brief point I'll make is that this is the start of a process. After this performance agreement -- which we're considering on Saturday -- then the site plan process steps forward. And that's where the Arlington way and our Arlington values will also continue to be applied.
NNAMDICarolyn, you've covered Amazon for a long time in Seattle for KUOW, including in a podcast you co-created call Primed. First, tell us about that podcast and how it came about.
ADOLPHYes. It came about -- we decided that it was definitely a podcast the day that Amazon announced that it was going to be funding a, quote, "full equal headquarters somewhere else in North America." And it's interesting, because at the time, we believed that, that another headquarters was going to be created of 50,000 people, that that seemed to be entirely within the realm of the possible for Amazon. And, of course, that hasn't quite happened, has it? You guys bid for a full, equal headquarters, and you got half or three-quarters or something. We don't know what you have.
NNAMDIMatt, care to respond?
FERRANTISure. So, I don't think the growth, in Seattle, of Amazon was so rapid. I don't think anyone could've precisely predicted how that would occur. But I also feel as though, for us, we lost 24,000 jobs out of the Crystal City area, where this will be.
NNAMDIWith the (word?) headquarters closing?
FERRANTIThat's exactly right. So, we lost so many federal jobs out of that area, that we think actually this is -- we also have -- we can -- we have a lot of talent. And I think that's a key reason why Amazon chose us, with 238 other applications. I hear and understand why there could be concern, but I really feel as though we have the land use plans for that area, and we have solid plans. And we're going to have to, of course, stick to what has made Arlington great, education, affordable housing and sustainability. But I actually feel like there is space, and we can't know precisely what will happen between years 11 and 17, down the road.
NNAMDICarolyn, you mentioned some downsides to Amazon's HQ2, but what are some positive things that the company could bring? What are the ways that Amazon has helped to improve Seattle, if you will?
ADOLPHOh, my goodness. To live in a city of the future, oh, you never go back. It's an amazing time and place. You know, you sit in a bus or you sit in a streetcar and you listen to people talk and what they're puzzling through and the questions they have and what they're trying to rewire. And you realize, in the city bus, that the economy that you know is being utterly changed beneath you. And if you don't get goosebumps, I mean, thrill-of-excitement goosebumps, you know, you may not have a pulse. It's very exciting to live here.
NNAMDIWell, Amazon is going to be bringing 25,000 tech workers to Crystal City. What's been Seattle's experience about where those workers come from? Was there enough homegrown tech talent? Are most workers from outside of Washington state, or are they local?
ADOLPHOh, it's very much coming from the outside. Amazon had appetites that well exceeded the output of local universities. And so, yes, it spanned the world. You could easily meet somebody from Uzbekistan who had just come out of a technical college there. I mean, Amazon really did have to look far and wide. So, in a way, we all understood why it needed to set up somewhere else to make use of a fresh pool.
ADOLPHI just want to address this idea that, you know, everything's going to go in Crystal City. I mean, yes, the office buildings are, but I just want to remind you that an average $150,000 income means there are people who will be making 300 and 600K. And they're not living in the national landing footprint. They're living all across the DC region in established neighborhoods where they can get their kids into great schools. And so you have to -- I just want to make sure everybody understands that the footprint in terms of where people will live and where their influence will be felt will be far and wide.
NNAMDIHow about the cultural impact? Amazon is known for its intense work culture. What is that like, and how does that culture infiltrate the rest of the city?
ADOLPHOh, well, I think we just all go, oh, you poor kids. I mean, Amazonians do work incredibly hard. The company is first. I'll give you an example from a building very, very close to Amazon's headquarters, the McKenzie, where we have a happy hour at 9:00 p.m. with little bits of -- little plates of food. And these are very well-attended, because this is when people finally get to eat something, and just before they crash, you know, crash for the night. And then they're up early. It's go, go, go. It's a very, very tough atmosphere. Lunch is half an hour or less. So, this is a very regimented lifestyle.
NNAMDIMatt de Ferranti, have you heard any concerns from Arlington residents about how the culture of the city might change?
FERRANTIWe've done 27 forums in the community, so we have heard a lot of different questions and concerns. But we've also heard, in those conversations, a really positive sense, a certain sense of pride that the HQ2 chose Arlington. I do think, you know, it's important to know and, I think, residents are happy that not everybody is going to live in Arlington. The estimates that we've seen are about 15 to 20 percent. And, frankly, that's a good thing. We want to have folks working in Arlington, and we want to collect the net revenues that I mentioned as Amazon hits its targets. But we don't need everybody to sleep here.
FERRANTII do think that, culturally, our conversations have been great. So, Amazon has done a number of meetings with housing nonprofits and nonprofits, generally. And they have really engaged in a thoughtful way, and I look forward to how Arlington and Amazon can partner...
NNAMDI(overlapping) Any transportation changes that Arlington County is working on?
FERRANTIWell, I'm glad you asked about transportation. That's where I think we have an infrastructure that is different than Seattle, with due respect to Seattle. You know, the two metro stations that would have that much demand, they most recently had demand -- 1986 was the high watermark for Crystal City in terms of Metro demand, and then 2001 for Pentagon City. We have capacity to add here, and we're confident that as Metro gets back to great -- and after some challenges, acknowledging that -- we're going to have transportation and infrastructure that's going to make this a very good fit for sustainability in that area.
NNAMDICarolyn, you visited Arlington County and walked around Crystal City. Do you think those transportation changes will be sufficient?
ADOLPHIt's hard for me to say. It really does depend on where Amazonians decide to live. And I'm well aware that they don't need to sleep in Arlington County. My point is that market effects will be broad, and that even if Arlington County shows up and builds all the affordable housing that it wants to build, you know, the market effects will be experienced by middle class people all across the region.
NNAMDIMatt, before we go to Michael Spotts, the incentive package includes a slight change to how Amazon will comply with Virginia's Freedom of Information Act. The county will give the company two days notice of any Virginia FOIA request. We asked Arlington County Board Vice Chair Libby Garvey about this last Friday on the Politics Hour, and she said that this is what Arlington County always does. It's written in with any agreement. It's just kind of common courtesy to let someone know that there's a FOIA request and to give them a couple of days. We're totally following the law. We've always followed the law, and that is our practice.
NNAMDIBut in an article from the Washington Business Journal, Jonathan Capriel looked at five agreements with Arlington County made for companies in 2016 and 2017. None of them included this two-days notice. Why is this apparently being written specifically for Amazon, and not for other companies, and what's the purpose of this two-day courtesy?
FERRANTISo, as far as I understand, actually, in almost all cases, this language, this slight two-day notice is what we've written into all -- and I checked on this yesterday with our Arlington Economic Development staff. I do think there may be a slight tweak in that we specified the number of days. In other agreements, it may have just been we will give advanced notice. There's no desire to do anything different, here. I think that it's a recognition, in part, and we are, of course, fully complying with the Virginia Freedom of Information Act, as we absolutely should and must under the law. I think there's just a recognition here that as part of a partnership, that one or two days notice is a courtesy that is extended to all companies that want to locate in Arlington.
NNAMDIOkay. Let's take a look at how Amazon's arrival and growing within the region will affect housing. Michael Spotts, what does affordable housing look like right now in Arlington County?
SPOTTSWell, the truth is that we've had a lot of affordable housing and housing affordability challenges for a long time. And I draw the distinction between affordable housing and housing affordability. When people hear affordable housing, they tend to think income-restricted subsidizing. When we talk about housing affordability, we talk about the general attainability of market-rate housing. And Amazon's arrival will reinforce the long-term trends where market rate housing is becoming less affordable.
SPOTTSAnd Arlington does make significant investments in committed affordable housing. And those efforts are laudable, but they are not sufficient to meet the growing demand, as especially rental units for people making roughly 60 percent of area median income or below. As market rate units that serve that population continue to reduce in number, the efforts of our local governments have not been sufficient to bridge that gap.
NNAMDIHow do you think Amazon's 25,000 new employees will impact housing in Arlington County and Crystal City, specifically?
SPOTTSSo, I think that when we're talking about housing impacts of Amazon, it's important to draw the distinction you just made there between what are the regional impacts and what are the impacts locally? If we are looking specifically at the area within, let's just say, a 20-minute commute of Amazon's new headquarters, I think we will see some fairly substantial impacts on the housing market. Those neighborhoods are home to a lot of existing market rate rentals that are relatively attainable for modest income households.
SPOTTSThere's also some of our last bastions of market rate affordability on the home ownership side. So, absent policy changes, it's my opinion that we are likely to see a further erosion of that stock, and the current trends -- especially in that proximity to the new headquarters -- will accelerate.
NNAMDICarolyn, Seattle has a large homelessness problem. How much of that homelessness problem has to do with the way the city has expanded since Amazon arrived?
ADOLPHWe had a homelessness problem well before Amazon really got going. You know, as a West Coast city where people can sleep outside without fear of freezing to death, we've always been a magnet. But things have grown a lot, and what you need to understand is that when people can't make rent, they move. They move farther out. And if they don't have a car, then they have a mobility issue. And then so things start to fall apart, and as distress layers on, people can just fall right out of housing.
ADOLPHSo, the last I knew, and it may have changed, there were about 200 homeless encampments in the city. And it's been a game of whack-a-mole to try to shut them down and get people moved into some sort of housing, be it ever so provisional. These things just keep crossing up because we don't have enough housing yet.
NNAMDIAnd we heard the city councilmember talk about all of the restrictions on taxes that exist in Seattle having to do with income taxes and corporate taxes.
NNAMDIHow has Seattle been able to use, if at all, the boon from Amazon to address affordable housing?
ADOLPHThat's a good question. Of course, Seattle makes money each and every time a building gets built there. And that money has been used by politicians to accomplish very many goals, including trying to build affordable housing, having some success, but just the amount of success being completely overtaken by demand.
NNAMDIWe got a comment -- we got a Tweet from Rashon Abraham from Our Revolution Arlington: county board members continually tell us that Amazon wants to be a good neighbor and avoid the kind of relationship they developed with Seattle. That sounds like nice PR, but it's hard to believe. What do you think about that, Carolyn?
ADOLPHWell, I think that what happened in Long Island City was -- you know, I think shook up people even in Seattle. Because it becomes really difficult, you know, in a neighborhood -- in a neighbor relationship, both of you agree you're staying put, and you're going to work on the issue about that fence, or whatever it is. But here Amazon simply changed. It spun on its heel the way it spun on its heel in Seattle, really, and said, no. You know what? No. We're moving on. And so I think that there's a possibility that there is no discussion. And I think that's a really hard thing for cities and other government levels to deal with.
NNAMDIWell, Matt, Arlington County has a lot to talk about with Amazon. Activists wanted Arlington County's incentive package to include a contribution to affordable housing funds in Arlington. Why was that not included?
FERRANTIThe way the -- it has to do with our process. The way that the affordable housing investment fund, our main local funding mechanism involving loan fund for affordable housing, is really triggered at the site plan level. And so, over the coming weeks and months, when site plan is applied for, that's the stage at which affordable housing contributions would come. Certainly -- I talked to a affordable housing leader in Arlington yesterday, who has talked already three times with Amazon employees about affordable housing. And I think it actually is a good sign that Amazon wants to engage and understand the problem.
FERRANTIThey also have the partner JBG Smith, which has the Washington housing initiative. So, the way our process works, it wouldn't logically fit. The performance agreement is really structured and focused on the office vacancy rate and office occupancy, rather than, first and foremost at this stage, unaffordable housing.
NNAMDIMichael, how do you think the region can develop and maintain affordable housing with Amazon coming? What can local governments like Arlington County realistically do, and what's the role of the Commonwealth of Virginia in addressing housing issues?
SPOTTSSure. So, I want to stress that this has to be a regional approach. Each jurisdiction is going to have to adapt to the growing population in a way that meets its needs and requirements. There's different legal structures that govern the different county styles and city government structures. But it is going to be important for each of the jurisdictions to make a commitment, in their own way. And I think there's three pillars for what local governments will need to do to address these housing challenges that, again I want to emphasize, existed before Amazon, but will be magnified by their arrival.
SPOTTSAnd one is that we need to adjust zoning to allow more housing, and not just in the neighborhoods where lower and middle income families currently live, because there are some externalities associated with redevelopment. This growth has to be shared equitably. The reason for this is it's just simple math. We need more homes for more people, or else we're going to have runaway price challenges.
SPOTTSWe also need different housing types. We need to look not just on the number of housing units that are produced, but the types of housing. For the majority of the region's land area, more naturally affordable housing types, building types, are effectively banned by our zoning rules. And that's a market distortion that we could remove and that would marginally approve affordability without a dime of extra subsidy. That's an issue that we had addressed extensively in a report for the Northern Virginia Affordable Housing Alliance that we released recently, called The Building of Northern Virginia's Future.
SPOTTSAnd then I think the third pillar of this approach would be to increase our commitment to providing subsidies and housing units for families that the housing market does not or cannot reach. Our market's a little bit out of whack, now. A functioning market would reach further down the income spectrum than it currently does, but the cost of housing and land and construction is such that certain very low income families will always struggle to find housing.
SPOTTSSo, we need to ramp up our commitments, and that includes taking a look at our site plan policies and see how we can make the affordability provisions more robust, or adopting plans like the Columbia Pike Form Based Code and neighborhoods plan that the Arlington County Board laudably adopted several years ago. And that has the potential to allow for more equitable redevelopment.
NNAMDIYou've said a lot there, and we're running out of time, very quickly. And, Matt, homelessness is a concern in Arlington County, also. Is that something that the Arlington County Board is keeping an eye on, as Amazon grows?
FERRANTIAbsolutely. So, a week ago Monday, I went to our continuum of care homelessness taskforce. And we are at 215 homeless individuals in a city of 230,000. That's too many, but we have brought it down over the last six years, and we were the first county in the state of Virginia to end veterans homelessness. So, we are absolutely focused on it.
FERRANTIAnd there are a number of other things. I think Michael made good points about we're bringing forward a housing Arlington initiative over the coming weeks. This is incredibly important to me, because in my professional life, I worked on housing for Habitat for Humanity and Rebuilding Together before joining the county board. So, there's a lot of things we're doing. There's also 7 million locally each year that we are earmarking to address the local impacts that Michael addressed earlier.
FERRANTIAnd lastly, there's at least 75 million in state funding that's going for affordable housing. Having looked at the numbers, we need those resources, and we'll do more with those resources than without.
NNAMDICarolyn Adolph, we hear a lot that millennials can no longer afford to buy homes in Seattle. Is that true, and what is your personal experience with one such who was living in your home?
ADOLPH(laugh) Ah, yes. Millennials go off, after 22 years. Eventually, you have to move them out. No. So, what happened, in the end, is -- so, yes, rent is very expensive. Rent has started to decline in Seattle, as rental housing has come on the market. But in order to purchase, it's a very different matter, and housing prices have really run away. And, you know, so, yes, there's a whole generation of people who don't have a ladder to home ownership. And there's this particular problem in Seattle, because there is no -- there are very few condos that are middle-class condos. They're luxury condos.
ADOLPHBut the other thing I want to address is that even people who are land barons out in the suburbs, people like me, have been surprised by how this problem has come home to roost. And why? It's because when cities and regions get expensive problems and people like me have higher house value, property taxes go up. And they've gone up enough for people to begin to be displaced, that they cannot afford the carrying cost of the place where they live. And so they sell, or they try to sell, and then they attempt to buy something with the residue. And there really isn't anything to buy.
ADOLPHAnd so that's an important thing I want people to consider, is that everybody who owns housing right now thinks that they're rich, they're rich, they're fabulously wealthy. Well, they're going to be cash poor.
NNAMDICarolyn Adolph is a reporter and the co-host of the podcast Primed at KUOW in Seattle. Carolyn, thank you so much for joining us.
NNAMDIMatt, just before we go, the vote on Saturday, some activists are hoping to postpone this Saturday's vote on the incentive package. What do you think will happen on Saturday, and how likely is it that the vote will be postponed? You've got about 30 seconds.
FERRANTISure. So, I'm looking forward to Saturday. I think we've had 20 -- we've had so many forums. I think it's highly unlikely that the vote will be postponed. I certainly don't support it. I'm not aware of any of my colleagues who support it. We had a robust process. There are those who are absolutely opposed. Also, I think, on balance, this is a benefit, and I am certainly hoping that we can get together in the last couple of days and add -- there's some work on a memorandum of understanding to make sure that JBG Smith, Amazon and all of our workers are valued.
NNAMDIMatt de Ferranti is an Arlington County Board member. Thank you for joining us. Michael Spotts is the president of Neighborhood Fundamentals. Are you hoping the vote will be postponed on Saturday?
SPOTTSI think that it's best to have certainty right now. So, I would appreciate sort of an up or down vote. That's my personal opinion, but I'm not making a comment at this time about the subsidy package.
NNAMDIMichael Spotts is the president of Neighborhood Fundamentals. Thank you so much for joining us. Today's conversation on the future of our region with Amazon was produced by Cydney Grannan. Our check-in on the student walkout was produced by Ruth Tam. Coming up tomorrow on the Politics Hour, we'll hear from Congresswoman Eleanor Holmes Norton on the latest push for DC statehood. Then we'll sit down with Maryland Congressman Jamie Raskin on voting rights and gerrymandering, and Virginia delegate Kaye Kory on why the Equal Rights Amendment failed to pass the legislature this year. It all starts tomorrow, at noon. Until then, thank you for listening. I'm Kojo Nnamdi.
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