Amazon to receive first public dollars from Arlington for HQ2

Arlington County will pay Amazon more than $81,000 this month, officials said, giving the company its first cut of taxpayer subsidies for the headquarters that the tech giant is building in the Northern Virginia suburb.

The deal to bring the HQ2 project to Arlington, announced in 2018 following a kind of beauty pageant for cities across North America, promised an economic transformation that would recast a largely underutilized area near the Pentagon and across the river from downtown D.C.

In exchange for hundreds of millions of dollars in taxpayer subsidies, the company promised to gradually add 25,000 high-paying tech jobs at its new offices by the end of the decade. (Amazon founder Jeff Bezos owns The Washington Post.)

Seven years later, the company has filled less than a third of those positions. Two soaring office towers have been erected in the Crystal City neighborhood, but the company does not appear to have broken ground on the largest phase of development across the street.

Arlington’s incentives for Amazon were set up with the expectation that its massive new offices would drive more people to stay within the county on business trips and boost tax revenue from hotel stays or short-term rentals such as Airbnb. Local officials promised to give the company 15 percent of any increase in that stream of funding.

That figure did not surpass a pre-pandemic baseline - just under $25 million - until the most recent fiscal year, when Arlington collected about $25.5 million in hotel tax revenue, county officials said. The county’s check to the company later this month will total $81,745, government officials said.

An Arlington spokesperson said in a statement that the county “is committed to our collaborative relationship with Amazon, and we look forward to continued innovation and growth within our community because of the company’s presence.”

Economic development experts have said that the delayed start of the incentive payments points to a more nuanced reality: Arlington’s deal with the company was well designed, they said, to ensure the company would only receive public dollars once the county started seeing benefits to the company’s presence.

That it took nearly seven years to get to that point shows that the transformation once hailed by company executives and county leaders alike is not what it was made out to be in 2018, they said.

Arlington predicted making about $14 million in additional hotel tax revenue and giving the company about $2.5 million in annual revenue five years into the deal, according to a 2019 county presentation.

The much larger subsidies promised to the company from Virginia - a figure that could total as much as $750 million - have also been delayed along with overall plans for the HQ2 site.

The company requested $153 million from the commonwealth in 2023, just a few weeks after abruptly hitting pause on its plans to break ground on the largest part of the new headquarters. County officials earlier this year gave the tech giant a three-year extension to begin development.

After declining to request funds in 2024, Amazon asked for another $6.5 million this year - though it said that its confidence it would meet the 25,000 jobs target had dropped to a “moderate” level. (Every previous report detailing job growth at HQ2 noted a “high” level of confidence in that goal.)

The state will not pay its first check until 2026 to ensure that the company maintains the jobs it had created, under the terms of Virginia’s deal with Amazon.