Bacon's Rebellion

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Virginia, Maryland and D.C. Collaborating on Amazon Pitch

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James A. Bacon
in

Metro Washington: multiple government jurisdictions, one economic organism

As much as Maryland Governor Larry Hogan wants Amazon.com to locate its HQ2 in Montgomery County, he’d be delighted if the tech giant picked anywhere in the Washington metropolitan area. Accordingly. Maryland, D.C., and Virginia are working to pitch Greater Washington to Amazon as a unified region, he said Wednesday.

Hogan’s remarks, reports the Washington Business Journal, follow disclosures that officials from multiple Greater Washington jurisdictions have been discussing regional issues relating to the project, which could bring $5 billion in investment and more than 5,000 jobs to the region.

“Now, we all had our individual bids, and we’re still hoping,” said the Republican Maryland governor. “We think that Maryland had made a very, very attractive offer, one of the best in the country, and we’d love to have them here, but if that was the decision that Amazon made, to bring it to the Washington area and share, mix jurisdictions, we certainly would be supportive of that as well.”

If I were Amazon, one of my biggest concerns about locating in the Washington metropolitan is the division of government between two states and the district — an arrangement that has proven dysfunctional for regional organizations such as the Metropolitan Washington Area Transit Authority (which operates the Metro) and the Washington Metropolitan Airports Authority. I would be greatly heartened to see any sign that the states were willing to work collaboratively.

I think the Washington metro has a serious shot at bagging the Amazon HQ2. It only makes sense for the jurisdictions to collaborate because the impact would be so huge that, no matter which specific location Amazon selected, there would be big spillover effects everywhere.

I remain highly ambivalent about the desirability of winning the Amazon project, given that (a) in a labor market experiencing labor shortages, newly created jobs can be filled only by people coming from outside the region, which would mean (b) state and local governments would have to absorb big new costs for schools, services, and transportation, (c) Amazon would be extracting such huge subsidies and tax concessions that it won’t help pay for much of that growth, and (d) non-Amazon taxpayers would get hosed.

However, Amazon would help diversify a regional economy that is dangerously dependent upon federal expenditures, would turbocharge the regional tech economy, and would give Washington huge bragging rights for winning more tech companies and corporate headquarters. In the balance, I share Hogan’s view that HQ2 would be a good thing for the Washington region whichever jurisdiction it chooses.

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10 responses to “Virginia, Maryland and D.C. Collaborating on Amazon Pitch”

  1. LarrytheG Avatar
    LarrytheG

    Geeze! … The Jim Bacon school of economic development: ” Come here if you want but we ain’t doing nothing special for you cuz you’re just going to hose up folks”

  2. Steve Haner Avatar
    Steve Haner

    Well if they can make peace in Korea, I guess anything is possible. It is possible to devise an intergovernmental compact that shares the cost of the incentive package in exchange for disbursing the long-term tax gains. Ah, the billable hours for that law firm!

    That won’t solve all the other problems with poor cooperation between the localities, and as with all economic development programs – you can’t do it for one without being ready to do it for the next one.

    I still think proximity to DeeCee is high on Amazon’s shopping list and if I were Amazon I’d want the jurisdictions bidding against each other, not engaging in the government version of anti-trust conspiracy!

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      I brought this article to Bacon’s attention. I consider Maryland’s outreach as window dressing, but likely important window dressing for all concerned.

      One very important aspect of the article and related articles referenced therein is the claim that the White Flint regional shopping center mall on Rockville Pike deep in the center of suburban Montgomery County to be the proposed location of Amazon HQ2 location. The Lerners, owners of DC baseball team, still own this site I presume. This sites location would further isolate that HQ building from both Virginia and DC, allowing Md to capture most all of the benefit of HQ site, though it is on the subway line going out to Rockville and beyond toward Md I 70 tech corridor.

      1. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        The site with proper road improvements also could provide excellent access to BWI airport, although as a Crow Flies, the site is very much closer to Dulles Airport. But Alas, never the twain shall meet, apparently. Yes, this White Flint site is an inspired choice for Amazon’s 2nd HQ.

        The site armed with the Amazon HQ #2 sits amid a power house of opportunity for all involved in the transaction.

      2. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        Fairfax County now can revert to the Confederacy. And the Nation’s Capital at long last can rid itself of the plague.

      3. djrippert Avatar
        djrippert

        That site would be very out of character with Amazon’s thinking in regards to its recent relocation of HQ1 in Seattle. My guess is that Gov Hogan is trying to show flexibility. He’s saying, “Hey, Maryland will work with other jurisdictions. We have a number of options. If you have issues with our initial proposal, come talk to us before deciding against us.”

  3. LarrytheG Avatar
    LarrytheG

    I think the individual parts of DC METRO are not as big or competitive as other urbanized areas so combining puts them on a more level playing field.

    And if NoVa and Va are ever going to grow in a way that they are not so dependent on the Feds.. they’re probably going to achieve that better and quicker if they actually compete with other regions and that pretty much means giving incentives.

    Incentives these days are structured with “performance” benchmarks. Fredericksburg attaches performance benchmarks to most of the incentives it offers. In other words, they have to “deliver” to receive their incentives…which are reductions in taxes. Even then the other existing businesses are not lovers of helping new businesses and not the existing businesses… it’s a tight path.

  4. LarrytheG Avatar
    LarrytheG

    I actually think Amazon may have some issues similar to what the FBI had in trying to decide where to relocate in the METRO Washington Area.

    I suspect regional transportation congestion is a barrier – not only to Washington METRO but most candidate urban areas.

    So here’s a wild hypothetical…. Maryland agrees to a new bridge that then
    opens up a site that will then “work” for Amazon.

    I had earlier felt that no new bridge was possible because Maryland had long been opposed but now the Gov of Md is making noises about a “regional” approach and I’m trying to think what those things might be…. or not…

    Would something like that – on that scale – be appealing to Amazon?

  5. djrippert Avatar
    djrippert

    I continue to cite Amazon’s new HQ in Seattle as emblematic of what they are seeking. The HQ is a brand new operation right in downtown Seattle. High labor costs and traffic congestion did not dissuade Amazon from going straight to the urban core in Seattle. Why would they choose a different approach for their next HQ?

    The only places in the DC metro area that correspond to the Seattle location are Alexandria, Arlington, DC proper and the western edges of Montgomery County – places like Bethesda and Silver Spring.

    My bet is still on Atlanta.

  6. djrippert Avatar
    djrippert

    I am a property owner in Maryland (as well as Virginia). In Virginia I live a heck of a lot closer to the Maryland border (about 8 miles) than Richmond (over 100 miles). So, I pay attention to what’s happening in Maryland.

    Larry Hogan is a very good governor. He’s something Virginia hasn’t seen in a long time – a moderate Republican. He quickly reversed the worst of his predecessor’s many bad ideas and has Maryland on as reasonable a path as is possible in that state. Unlike Gov Two-face Northam he does his best to make good on his campaign promises.

    Of course, in a state where the governor can run for a second consecutive term it’s important to spend the first term trying to make progress rather than thinking about your next political endeavor.

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