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Arlington, Va., board approves $23M incentive for Amazon's HQ2 plan

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Arlington, Va., board approves $23M incentive for Amazon's HQ2 plan Inc. has cleared a hurdle for its planned second headquarters after local officials in Arlington, Va., approved a proposed financial incentive package of approximately $23 million for the e-commerce giant.

On March 16, the Arlington County Board approved a proposed annual pay-for-performance grant of approximately $23 million for Amazon, conditional upon the company meeting targets of occupying 6 million square feet of office space over the next 15 years.

The incentive will be taken from a portion of Arlington's revenue collected from taxes on hotel rooms or other paid lodging.

The county has also committed to investing a projected $28 million for public infrastructure projects in Pentagon City, Potomac Yard and Crystal City. Arlington plans to source the investment from tax increment financing-related revenues over ten years.

The five-member board of Arlington County unanimously voted in favor of the financial package following an hours-long public hearing.

"Only 5% of the incentives are paid directly to Amazon, and only if they are successful in contributing to revenue growth while fulfilling their commitments to invest in Arlington," Arlington County Board Chairman Christian Dorsey said in a statement.

In addition, Arlington and the city of Alexandria also committed to investing up to $570 million in transportation projects, including rail connections, transit facilities, multi-modal streets and transportation technology serving Amazon's headquarters, according to the release.

The state of Virginia has also committed to ramping up its investment in transportation projects to $195 million of non-general fund money to improve mobility in the region. The initial investment will be used to make improvements in metro stations and airports, as well as for a transitway expansion supporting Pentagon City, Crystal City and Potomac Yard in both Alexandria and Arlington.

If Amazon creates more than 25,000 jobs, the state pledged to provide more transportation funding. The company initially planned to create more than 25,000 jobs over 12 years, with 400 to 500 jobs anticipated in the first year.

Virginia also proposed creating a more than $1 billion Tech Talent Investment Fund that will produce 25,000 graduates in computer- and science-related fields, apart from providing statewide access to computer science resources.

The county has also highlighted the impact of Amazon's planned HQ2 on affordable housing. Arlington said the county and Alexandria will fund affordable housing, workforce housing and public infrastructure with new revenues generated by Amazon. The two communities plan to invest a combined $150 million over the next 10 years in affordable housing in and around the Crystal City, Pentagon City and Columbia Pike areas and throughout Alexandria.

The state also committed to investing $15 million per year for five years to support housing affordability in areas impacted by Amazon.

The Crystal City area of Arlington remains as Amazon's only choice for its plan, dubbed HQ2, after the company canceled its plan to establish a new headquarters in New York following opposition from state and local officials. The company would have received performance-based direct incentives of $1.53 billion from New York had the plan gone through.

Amazon has earmarked $2.5 billion for its planned headquarters in JBG Smith Properties-owned National Landing in Arlington. The HQ2 is expected to occupy 4 million square feet of office space, with an option to expand to 8 million square feet over the next 12 years.