HQ2

JBG Smith CEO Matt Kelly discusses the importance of transit infrastructure in bringing Amazon to Arlington during a legislative briefing hosted by the Northern Virginia Transportation Commission and the Potomac and Rappahannock Transportation Commission.

Now that the initial rush of emotions and hype has settled down, Northern Virginia leaders are starting to digest the full implications of Amazon’s announcement that it will locate part of its second headquarters in Crystal City.

After a breathlessly publicized search that lasted more than a year and involved dozens of localities around the U.S., the Seattle-based online retail company revealed on Nov. 13 that it will split its anticipated HQ2 between Crystal City in Arlington County and Queens in New York City.

Most Northern Virginia public officials and business leaders lauded Amazon’s selection of Arlington as a boon for the region’s economy with the company promising to bring more than 25,000 full-time jobs and approximately $2.5 billion in investment to the area, resulting in an estimated $3.2 billion in tax revenue over the first 20 years.

In exchange, Arlington County and the Commonwealth of Virginia offered millions of dollars in tax incentives and cash grants to Amazon. Some elected officials and community members have decried such concessions, citing crowding and gentrification concerns and criticisms of the tech company’s labor practices.

While one attendee asked what can be done to keep expected rent and real estate price increases from driving away longtime Arlington residents, the overall tenor of the Northern Virginia Transportation Commission and Potomac and Rappahannock Transportation Commission’s annual legislative briefing was one of cautious optimism.

Held on Dec. 10 at the Embassy Suites by Hilton in Springfield, the briefing featured JBG Smith CEO Matt Kelly as its keynote speaker to discuss the importance of transportation infrastructure in luring Amazon to Crystal City and what Northern Virginia needs to do as a region to prepare for an anticipated influx of workers that will place new demands on existing services.

A real estate developer and investor with 19 million square feet of property in the Washington, D.C., region, JBG Smith is responsible for rebranding Crystal City along with portions of Pentagon City and Potomac Yard in Alexandria into a new neighborhood called National Landing. It has partnered with Amazon to develop the tech company’s new headquarters there.

According to JBG Smith’s National Landing website, the developer owns 6.2 million square feet of existing office space, 2,850 multifamily units, and 7.4 million square feet of additional land in the neighborhood, excluding the 12 million square feet that Amazon has proposed purchasing for a 4 million square-foot campus that could later expand to 8 million square feet.

Kelly told the NVTC and PRTC annual legislative briefing that Amazon’s selection of National Landing for HQ2 has motivated JBG Smith to prioritize the transportation and transit projects it has planned for the neighborhood.

“Amazon was attracted to National Landing in part because of its close-in location and in part because of its access to a deep and educated employee base, but also, its in-place and promised infrastructure,” Kelly said. “The sub-market has incredible transportation assets, but Amazon was focused on what could be done to accommodate its future growth and how we could leverage what’s in place today by adding connections and improving service.”

In addition to three existing Metrorail stations at the Pentagon, Pentagon City, and Crystal City, National Landing has the only bus rapid transit system currently operating in the region with the Washington Metropolitan Area Transit Authority-operated Metroway.

The Fairfax Connector, Arlington Transit, Loudoun County Transit, Driving Alexandria Safely Home, Metrobus, and OmniRide local and commuter bus systems all have stops in the area, and two Virginia Railway Express lines pass through the Crystal City Metro Station.

National Landing also has 21 Capital Bikeshare stations, according to NVTC.

Along with that existing transit infrastructure, Amazon was interested in a number of upcoming projects designed to improve mobility in the neighborhood, according to Kelly.

In conjunction with Amazon’s prospective arrival, the Commonwealth will invest $195 million in infrastructure projects in National Landing, including a new pedestrian bridge connecting the neighborhood with Washington National Airport and additional entrances for the Crystal City station and the City of Alexandria’s planned Potomac Yard Metro Station.

Alexandria is using a variety of sources to fund the $320 million needed for the Potomac Yard station, but the $50 million that the state has now pledged to contribute will allow the project to have a south entrance as originally designed, though the Commonwealth Transportation Board still has to formally approve the funds, according to the City.

JBG Smith is working with the Metropolitan Washington Airports Authority on the planned pedestrian bridge to the airport, a project that is currently undergoing an initial environmental study, says Kelly.

In total, the real estate developer will invest $2 billion in new development in National Landing over the next decade, according to its CEO.

Another crucial factor behind Amazon’s decision to choose Northern Virginia as the location for one of its new campuses was the Virginia General Assembly’s approval of $154 million in dedicated funding for Metro in March.

Combined with similar pledges by Maryland and the District, the state legislature’s agreement established a $500 million dedicated funding source for the ailing rail and bus transit system.

“From day one of this process, Amazon was clear about the importance of transit. It was a threshold issue for them,” Kelly said. “There is no question in my mind that this unprecedented demonstration of regional commitment to transit had a major influence over the company’s decision to locate here.”

WMATA general manager and CEO Paul Wiedefeld told the local and state legislators present at the NVTC and PRTC briefing that his agency will primarily put the money toward maintenance work “to create a safe and more reliable system.”

For Northern Virginia, however, the creation of a funding stream for Metro came at a cost to other transportation and infrastructure-related projects.

To the disappointment of local officials and most of the region’s state representatives, the House of Delegates rejected hotel and real estate transfer tax increases proposed for Northern Virginia, voting 50-48 on Apr. 18 to block a measure that had already passed the State Senate.

As a result, Metro’s dedicated funding instead comes out of the budget for the Northern Virginia Transportation Authority, a governmental entity that plans and funds regional transportation projects with an emphasis on congestion relief.

NVTA lost $225 million that it had hoped to allocate as part of the $1.3 billion Fiscal Year 2018-2023 Six Year Program for project funding that the agency ultimately released in June, according to Chairman Martin Nohe.

Restoring that funding is a top legislative priority for Fairfax County as the 2019 General Assembly session approaches.

“If we can’t do it this year, next year, we need to keep trying to replenish what was taken and used instead for WMATA,” Fairfax County Board of Supervisors Chairman Sharon Bulova said. “[It’s] not that we weren’t supportive of WMATA, but it would’ve been nice to have had new funding rather than taking such a big portion out of NVTA.”

While Fairfax County lost on its own joint bid with Loudoun County to host Amazon HQ2, the company’s move to Crystal City will benefit the Northern Virginia region as a whole, says Bulova, who sees the news as an additional motivator for the county’s efforts to revitalize the Route 1 corridor.

Amazon’s potential impact on the local housing market could be a mixed blessing in that higher real estate prices mean more tax revenue for Fairfax County, but it also means that living in the area will become even more financially challenging for many.

Though Fairfax County boasts a $118,279 median household income, 7.6 percent of households and 5.9 percent of families live in poverty with under $25,000 in income, according to the county’s 2018 annual demographic report.

“Probably it will increase the value of some housing close to Amazon, which is a good thing that housing prices, the value of people’s property…is going to appreciate,” Bulova said. “But it’s also concerning that the pricing of housing will increase and maybe exacerbate our lack of lower-income affordable housing. It’s a challenge that we’ll address, that we’ll deal with.”

Bulova says the county has a task force composed of community representatives, business leaders, and affordable housing advocates that is currently evaluating local housing needs and possible funding sources.

Created by the Board of Supervisors in July, the Affordable Housing Resources Panel is the second phase of a Communitywide Housing Strategic Plan intended as a long-term outline of the resources and investments that Fairfax County needs to address affordable housing issues.

The panel first convened on Oct. 23, and its next meeting will be held on Dec. 18 at the Fairfax County Government Center. Its final meeting is scheduled for Mar. 16, 2019, in time for the panel’s recommendations to be considered in Fiscal Year 2020 budget discussions.

“Hopefully, by the time a budget is presented, we’ll have something included in the budget for affordable housing,” Bulova said.

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