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

Amazon has requested its first round of economic incentive payments from Virginia, the company and state officials have confirmed, kicking off a process that means it could receive more than $152 million in state money by summer 2026.

According to the terms of a deal negotiated four years ago, the tech giant stands to receive up to $773 million in performance grants from state and local officials for the second headquarters it is building in Arlington. (Amazon founder Jeff Bezos owns The Washington Post.)

The first phase of that large campus, a set of 22-story towers on the edge of Crystal City and Pentagon City, is to open in June. Company executives said last month that they would pause the second phase of construction, which includes three more towers as well as a futuristic Helix just across from the Pentagon.

Virginia’s incentives for Amazon are based on how many people the company has hired toward its stated goal of creating 25,000 new jobs in the commonwealth. Under the deal, state officials will pay the company $22,000 for each full-time job that pays an average salary of $150,000.

Amazon has consistently been ahead of schedule on hiring — as of last month, it had taken on more than 8,000 employees to work at HQ2 — and 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, as the Washington Business Journal first reported in February.

Amazon spokesman Zach 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.

Goldsztejn said the company requested payments for 6,939 jobs and submitted requests only for incentives for new positions that meet standards laid out in the contract.

Incentive grants from Arlington, which were expected to total about $23 million, have yet to be paid out. Assuming the new headquarters would boost local hotel stays, the county agreed to pay the company part of an increase in tax revenue from hotels and short-term rentals.

That increase in Arlington revenue has yet to materialize, Arlington says. 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 year 2025 at the earliest.

The company’s request for payment from Virginia come just months after Amazon announced two rounds of layoffs totaling 27,000 job cuts 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 a 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.

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