
How Virginia Won Amazon's HQ2 - howard941
https://www.washingtonian.com/2019/06/16/the-real-story-of-how-virginia-won-amazon-hq2/
======
rayiner
> One local figure spoke to Metro general manager Paul Wiedefeld and urged him
> to make sure Amazon got to ride on one of its newest, 7000-Series trains.
> Wiedefeld, who says he can’t recall whether the official was from Virginia,
> Maryland, or the District, responded by explaining that public
> transportation doesn’t work that way.

Wiedefeld, incidentally, is a total bad-ass. He was hired at the end of 2015.
In 2017, the first year they started measuring end-to-end travel time, on-time
performance was a dismal 66%. In Q2 of 2019, it was 87%. In 2016, he shut down
the entire system for days, and entire lines for weeks at a time, for
emergency repairs. He's steam-rolled over NIMBYs, dramatically shutting down
entire stations all summer so crumbling platforms can be completely rebuilt:
[https://ggwash.org/view/72561/metro-reasons-loud-yellow-
and-...](https://ggwash.org/view/72561/metro-reasons-loud-yellow-and-blue-
line-construction-is-bothering-residents). (Accomplishing in three months what
took years of delays and disruptions during prior, partial shut-downs.) He's
brought the hammer down on the WMATA union, controlling costs and resisting
calls to overtax the system by extending service:
[https://wamu.org/story/17/04/27/transit-union-turns-back-
met...](https://wamu.org/story/17/04/27/transit-union-turns-back-metro-
leadership-stages-walkout;)
[https://www.bizjournals.com/washington/news/2018/09/18/metro...](https://www.bizjournals.com/washington/news/2018/09/18/metro-
will-outsource-operation-of-silver-lines.html;)
[https://wamu.org/story/16/11/03/wmata_board_struggles_to_rea...](https://wamu.org/story/16/11/03/wmata_board_struggles_to_reach_consensus_on_fare_hikes_late_night_trains).
Not all heroes wear capes.

~~~
wanderer2323
The linked article paints a slightly less heroic picture of someone who used a
loophole in the ordinances to allow construction crews to jackhammer after
10PM in the residential areas and got away with it. So while families with
small children were kept up in the long hours of the night, the loopholing
hero was enjoying his quiet 9 hours of Zzzs.

All hypothetical of course, I am not from the area.

here's the paragraph describing the loophole:

""" “The parking areas, all the travel areas…the pedestrian walkways…that’s
all considered inside the station,” Kirst added, explaining what the noise
waiver granted to Metro covers. Crews working in those areas aren’t allowed to
perform “excavation, demolition, saw cutting, and jack hammering” between 10
pm-6 am on Sunday through Thursdays, and 10 pm-8 am on Friday and Saturday.
Those restrictions don’t apply to the tracks outside the stations, however.
"""

~~~
rayiner
One of the reasons America can't build infrastructure is that we elevate the
temporary inconvenience of a few "families with small children" over the long-
term good for hundreds of thousands of people in the region. It's also the
underlying basis for the myriad ways in which we let individuals and special
interest groups sue to stop development that benefits everyone.

~~~
wanderer2323
yes, this state of affairs where you can buy a property and then expect to not
be inconvenienced by corporations or governments in a myriad ways and then to
sue if your peace is threatened is called 'civilization'.

it seems that what you imagine is a 'temporary inconvenience of a few
families'. what I imagine is a world where every day there is a new 'temporary
inconvenience' which you are supposed to endure 'for the good of the many',
over and over again -- because that is what will happen when 'heroes' like the
one in the article are allowed to run amok.

~~~
londons_explore
It really depends what "few" means.

A benevolent dictator would do a nationwide cost-benefit analysis, and decide
if 30 families having no sleep for a week outweighs 100,000 people getting to
work 10 minutes faster for the next decade.

While sometimes our existing legal system makes the same choice as our
fictional benevolent dictator, sometimes it doesn't because rather than
looking at the big picture, it gets tied up with nuances of wording of
ordinances and precident written decades earlier without knowledge of the
current situation.

Whenever that happens, on average, people's lives get worse and the economy
weaker, compared to an identical country which made the benevolent dictator
choice.

~~~
Tempest1981
Or the dictator could put them up in a hotel for that week.

------
sremani
There was an hacker news item, where some one analysed stackoverflow metrics
and Amazon requirements (of sort) and predicted NOVA is going to be the
location of HQ2 months if not a year ahead.

I disagree that VA was pre-decided, the way I see it is, they kind of knew
what the front horses are but wanted what others can surprise them and/or
improve their negotiation position.

* Austin had something given Whole Foods * Dallas is said to finish #3 for HQ2 (probable rumour) until a tell all from some one in search committee.

------
projektfu
I'm not sure I believe any after-the-fact reporting on this. Amazon has a lot
of incentive to make it seem like there was ever a genuine competition.

~~~
commandlinefan
I actually have the opposite take - I've seen "the Amazon HQ is definitely at
<place>" reported so many times, with different places, that I won't believe
that they're actually putting it there until the electricity is on, people are
commuting to it, and they have a contract with a landscaping firm.

~~~
mwilcox
I think "HQ" is an intentionally overloaded term, and what will eventually
happen is that Amazon will build _something_ in most of these locations,
constantly fighting against ballooning budgets typical with massive
infrastructure projects

------
legitster
There's something to Friedman's point - that technology can let us work from
_anywhere_. But far from distributing talent, it has concentrated it. If you
can work from anywhere, why not just move to the nice coastal cities?

I think people are missing the forest for the trees - Amazon could have saved
billions of dollars a year founding it anywhere else. But we cannot seem to
break out this viscous cycle where the good jobs of the future go to tiny,
expensive areas. And the primary benefit of these areas is they are already
full of successful, well paid people.

Instead of paying 3 people in Tallahassee a decent $80,000, we are choosing to
pay 1 person in San Fransisco $240,000.

~~~
pwodhouse
That $240K person is 10x as useful as those $80k people, on average.

~~~
notfromhere
thats exactly what someone who's trying to justify a monstrous salary would
say. In reality, doubtful.

------
tssva
> The development firm JBG Smith plastered the inside of its office-building
> elevators with life-size images of the interior of Amazon’s Seattle
> headquarters—“so that when they walked in there,” says CEO Matt Kelly, “it
> felt like home.”

I assume they quickly ripped them down and plastered them with images of Apple
Park since they pitched the same space to Apple shortly after.

------
kevin_b_er
The locations were pre-selected, and Amazon was just testing the waters to
know how much free corporate welfare various government institutions were
willing to give the 18th largest company in America.

~~~
rayiner
Except the whole article is about how Virginia won despite offering less
"corporate welfare" than other places.

> All told, Virginia offered Amazon only $550 million in tax breaks and $195
> million in transportation improvements. But it pledged to plow $1.1 billion
> into tech schooling. According to Moret, it was the only place in the nation
> that made education the centerpiece of its pitch.

More than 2/3's of Virginia's investment into Amazon was in education and
transit, which benefits everyone.

Philly, by contrast, offered $4.6 billion in subsidies, just $100 million for
transit, and nothing for education:
[https://slate.com/technology/2018/11/amazon-
hq2-incredible-i...](https://slate.com/technology/2018/11/amazon-
hq2-incredible-incentives-losing-cities-offered.html). Chicago offered $1.3
billion in tax breaks and $450 million for transit.

~~~
ceejayoz
That's missing the point, though.

"We're moving to Virginia. Let's see if we can get other cities to bid and see
if that improves Virginia's offered incentives."

(Plus free business intelligence hand delivered to them, and leverage if they
want to put a distribution hub in one of the cities that didn't win. "You were
willing to part with billions, you can't spare a couple dozen million in
incentives for this warehouse?")

~~~
legitster
It didn't really seem like that's the case though. Maybe it made Virginia dump
_more_ into infrastructure and education? Is that a bad thing?

~~~
ceejayoz
It doesn't have to work for it to be worth _trying_.

Worst case you're at the cost you expected anyways.

~~~
legitster
I mean, fair. I guess I don't see the harm though. They made 20 cities seem
very attractive to other companies. It was a bit showy, but it was nice to see
the process in the open as opposed to the normal backrooms these deals happen
in.

------
tekkk
So i dont know should i feel happy for Virginia for succeeding attracting a
tax-evading megacorporation to its area. "Close to regulators", yey. Now
Amazon employees can just drive down to their office and negoatiate campaign
money directly.

~~~
mtberatwork
> Now Amazon employees can just drive down to their office and negoatiate
> campaign money directly.

Well, at least the gridlock around 395 should keep them at bay for a little
while until Bezos figures out how to bore a private tunnel under the Potomac.

~~~
ihuman
At some point there was talk of allowing Amazon to build a helipad. I'd image
that's easier than building a tunnel, due to how close HQ2 is to the Pentagon.

~~~
tssva
Approval of a helipad, which would not normally be a given because of the
close distance to a major airport, was part of the deal.

~~~
ihuman
Not only is it a no-fly zone because of the airport, its also in the special
no-fly zone around DC.

~~~
sokoloff
Airports don't have no-fly zones, they have controlled airspace. It's common
to have helicopter operations near airports. You talk to the tower and fly
fairly normally.

Similarly, the DC Flight Restriction Zone (FRZ) is not a no-fly zone, but an
area where flight operations are much more tightly managed. I (and many other
pilots) have authorization to fly into the FRZ and land at the DC-3 airports
for non-scheduled operations (in addition to the many air carriers who fly
scheduled operations in/out of the area).

------
ppcdeveloper
Scott Galloway called it along time ago on L2inc (YouTube).

~~~
crsv
And a really straightforward call at that. IIRC it was something like "Bezos
has a 25 million dollar house already in DC, he's obviously putting HQ2
there". All the tax stuff, economic fit, etc etc just seems like it could
really be fluff to occlude the simple fact that Bezos is most comfortable with
HQ2 coming to area he's already well suited to operate out of.

------
rdiddly
It's so obvious in hindsight. Amazon HAS money already. They don't need big
subsidies. What they need is people.

------
notyourloops
What happened to New York?

~~~
KingMob
We decided it was ridiculous to offer $1.5 billion in incentives when we would
never recoup that, so we protested.

Amazon paid no federal taxes last year ([https://www.washingtonpost.com/us-
policy/2019/02/16/amazon-p...](https://www.washingtonpost.com/us-
policy/2019/02/16/amazon-paid-no-federal-taxes-billion-profits-last-
year/?noredirect=on&utm_term=.4a1ffe4dd1d3)), and probably would have figured
out how to pay little corporate state tax. At the promised level of 25,000
jobs with an average $150,000 salary, the city (but not the state) would have
only seen an extra ~$150mil in income taxes.

There's lots of ways to run the projections and factor various costs/benefits,
but few of them would have resulted in a 10x improvement in the offhand
estimates.

It was a bad investment for the city the same way most sports stadiums are.

~~~
Grue3
So what is the city doing with $1.5 billion that you freed up?

~~~
TheCoelacanth
Nothing, because it's not actual money that they have. It's money that Amazon
would have owed had they moved there that they would have given back.

------
anth_anm
By being close to DC and thus having easy access to government.

Do people really think Amazon really left it up to chance? Then that chance
just somehow worked out to right next to DC and the biggest talent hub on the
East Coast.

Sure, I'll buy that to go with my new bridge.

~~~
Ill_ban_myself
The, "biggest talent hub" on the East Coast apparently sends most of its
Graduates to inferior schools in Massachusetts. More like the biggest military
hotel on the east coast

------
sonnyblarney
There's nothing here to indicate which parts were relevant or mattered to
Amazon's decision.

Big Gov is just starting in the cloud, and Amazon wants the biggest piece of
that gadzillion dollars. I can see a private wing of AWS running most of the
military, for example.

~~~
mandevil
Virginia tried very hard to make sure that HQ2 is not just more government
contracting jobs- the region is already very exposed to government work as it
is[1]. The limited tax breaks Amazon gets are directly linked to the new jobs
NOT being government related.

[1]: From 2010-2015, the Washington DC MSA was basically the only large tech
hub that lost tech workers, because of the Sequester and the constant
government budget showdowns. Virginia viewed HQ2 as an insurance against that.

~~~
sonnyblarney
What 'Virginia wants' is almost irrelevant.

"Virginia tried very hard to make sure that HQ2 is not just more government
contracting jobs"

Virginia can think whatever they want, but Amazon will do what it wants to do.

The objective is not 'contracting jobs' \- that's not Amazon's business. The
objective is to deeply entrench AWS services and products into government.

The amount of money - and especially the incumbency - provided to the winner
of 'gov cloud' will be gigantic.

Defence and civie agencies spent $6.5B on cloud services in 2018, up 35% (!)
from the year before, that's an incredible growth rate. [1]

This is going to grow like wild for some time, and that's Amazon's objective.

The lobbying/relationship efforts will be important as well.

Virginia is just the local government, they are actually not hugely part of
the equation other than the specific incentives as you point out. Even the
'investment in education' is not hugely sweet for businesses, as the majority
of workers won't come from Virginia anyhow.

The best thing Virginia can do is 'be a good government' \- make sure the
infrastructure, healthcare, schools etc. are well managed.

[1] [https://www.nextgov.com/it-modernization/2018/09/federal-
clo...](https://www.nextgov.com/it-modernization/2018/09/federal-cloud-
spending-trends-toward-all-time-high/151221/)

------
thrower123
My understanding is that they didn't actively try to lose it and protest
against something that would have brought in billions of revenue and lots of
high-paying jobs, the way NY City did.

------
linuxftw
This is a long-winded expose of northern Virginia. I only made it about half-
way through, there were some subsidies promised apparently.

In any case, I never considered locations other than Northern VA as viable for
the HQ2 business, it was 90% going there from the start IMO due to 1) Existing
Amazon Offices 2) Existing Amazon Datacenters and major internet exchanges 3)
Proximity to DC.

So, to present this as to 'How Virginia Won' is a little wishful IMO. Virginia
did nothing other than happen to be the place where other companies are doing
business.

~~~
jcranmer
Virginia won because it scored well on everything but cost of living. I think
it's quite likely that the criteria was essentially selected with NoVA in
mind.

~~~
linuxftw
Yeah, I think the criteria was "We're building in NoVA unless someone gives us
a deal we literally can't refuse." NYC tried that, but there was citizen
outrage (apparently).

~~~
ceejayoz
Well, and they're still expanding in NYC anyways.

