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What did Virginia spend to woo Amazon HQ2?

Here’s an article from pilotonline.com summarizing Virginia’s efforts to attract Amazon. The quick look shows the Commonwealth spending $2M+ plus later expenditures on infrastructure improvements when the contract is awarded. Virginia Beach spent $66,666 to offer up Town Center, Suffolk spent $66,666 for Harbour View, and Hampton spent $66,666 for Ft. Monroe.

Virginia spent more than $2 million on its pitch to land one of Amazon’s second and third headquarters, largely to employ global consulting firm McKinsey & Co. and a D.C.-based public relations firm. And if Hampton Roads had drawn the online retailer inside its borders, the state was prepared to offer up $60 million to improve the region’s flight traffic.

These numbers offer one of the first glimpses into how the state worked to land the high-paying jobs that Amazon was offering for its new headquarters. Ultimately, the online retailer split its choice between Northern Virginia and Queens, N.Y., for new campuses.

The announcement came after the company spent a year hosting a Willy Wonka-esque contest across the United States and Canada.

“Even if we hadn’t won, the investment would have been well worth it,” said Stephen Moret, CEO of the Virginia Economic Development Partnership, the agency that led the state’s effort.

With his agency saddled with finishing a strategic plan and fulfilling requirements levied by the Joint Legislative Audit & Review Commission on time, Moret said they were in particular need of outside help in pursuing Amazon.

According to invoices from the Partnership, massive firm McKinsey & Co. – fresh off developing the Partnership’s strategic plan – was paid $1.35 million for about seven weeks of work. The public relations firm Subject Matter was paid more than $600,000.

Moret said the two were chosen by competitive bid for unrelated projects when the Amazon effort cropped up. And, until this week, the agency declined requests to say who they had working for them or how much they were spending on the effort.

“The less your competitors know, the better,” Moret said Wednesday, adding that he didn’t want any of them poking around their consultants for intel. If it had been the other way around – a city or state revealing who they had hired, for how much and what they were doing – “we would have absolutely used it,” he said.

He also noted that there’s never been a competitive economic development process bigger than this one.

Among the other costs toward the Amazon effort was $1,250 for a “war room” at the Hilton Virginia Beach Oceanfront during the 2017 Virginia Economic Developers Conference and $3,060 to keep the lights and other utilities running overtime in the agency’s headquarters as the team worked into the night.

The figures are based on documents and invoices released Wednesday to The Virginian-Pilot based on a public records request made several months ago. The agency had initially denied the request but later, in  settling a potential public records lawsuit, agreed to release the information after Amazon made its decision.

While other cities and states sent cactuses to Amazon’s Seattle doorstep and mimicked Bezos’ Washington Post with faux front pages lauding the locale (before the newspaper issued a cease and desist), Virginia’s pitch wasn’t particularly flashy.

“We focused on the substance, really,” he said. Amazon wanted a talent pipeline and infrastructure and a stable business climate. “That’s really where we put most of our energy.”

The agency mobilized quickly. Less than two weeks after Amazon made its call for submissions on Sept. 7, 2017, Virginia had registered six new websites: hamptonroadswelcomesamzn, rvawelcomesamzn and novawelcomesamzn – each with a corresponding .com and .org domain – for $86.97 each. Later in the month, it had chartered a helicopter out of Norfolk for $3,230 to get aerial views of sites across the state.

The first big pitch happened on Feb. 27-28, when two catered events were secured. One involved celebrity chef-led restaurant Volt in Frederick, Md., delivering five three-course meals for $1,167 to the Torpedo Factory Art Center in Alexandria. Another included three chefs serving chicken tandoori, coconut-encrusted tilapia and black sesame salmon with clementine glaze for a lunch event at developer JBG Smith’s CEB Tower in Arlington ($1,340). The agency had earlier ordered 22 canvas tote bags with the slogan: “Innovation Lives Here Northern Virginia” for $515.

How was it all paid for? Moret said prior Governor Terry McAuliffe wanted the state’s regions to share in the costs with the Commonwealth. So the Hampton Roads Economic Development Alliance (Virginia Beach, Suffolk and Hampton put in $66,666 each) and the Greater Richmond Partnership each contributed $300,000. Economic development groups in Arlington, Alexandria, Fairfax County and Loudon County all gave $100,000 each.

Virginia Tech added $150,000, while nearly half ($1 million) came from the governor’s discretionary fund, according to the Partnership.

Moret said the state’s offers of incentives in Northern Virginia were virtually identical to what was offered for the Richmond-area and Hampton Roads, with transportation being the main difference. While the state is going to spend $195 million to improve Metro access and nearby roads in the Crystal City area, its offer in Hampton Roads involved using $60 million to encourage airlines to add more flights and new routes.

“We knew that was going to be a challenge,” Moret said.

Hampton Roads, which generally lacks the mass transit of most big-city hubs and available land, was ruled out early. But before it was, Virginia Beach offered up Town Center as a possible site, Suffolk pointed to its Harbour View development and Hampton pitched Fort Monroe, its 200-year-old fortress, complete with a moat.

The only insight prior to now into how much Virginia and some of its individual cities, spent wooing the company, was available in invoices obtained via freedom of information act requests filed by The Pilot and others.

Virginia Beach spent $3,000 commissioning a sand sculpture of the Amazon logo during its 2017 Neptune Festival on the Oceanfront that was photographed and included in its pitch. It also paid $18,884.50 to engineers with Kimley-Horn for site-planning and exhibit work through October 2017.

Suffolk sought help from Chesapeake-based Land Planning Solution for two conceptual layouts, charging the city $2,500, a 60 percent discount, according to the invoice.

Anyone saying that Amazon’s pick of Northern Virginia and Queens, were foregone conclusions should rewind to more than a year ago, Moret said.

“Everytime I hear that, I just laugh,” he said. “That was not the case last fall.”

He said multiple state leaders were questioning whether Virginia had any meaningful shot, “that basically, we could be spending a lot of effort and not have any chance at all.”

At the time, he was hearing Boston, Austin, Atlanta and others were likely picks. Las Vegas odds, he said, put Virginia somewhere near the top of the middle.

“It may seem obvious now, but it was not back then,” he said.

Source: pilotonline.com

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