Demand Better From Amazon

Virginia didn't need to settle for Amazon's affordable housing peanuts.

As part of the continuing rollout of its second headquarters in northern Virginia — known as HQ2 — Amazon this week donated $300,000 to a nonprofit focused on affordable housing and homelessness, which follows a $3 million donation to another affordable housing effort earlier this year.

One of the main negatives of Amazon’s move into the greater D.C. metro area was the inevitable housing cost spike: Home prices are up significantly in the year since its announcement, rents are on their way up too, and, as I noted here in an earlier piece, 10,000 people will likely be displaced by the new headquarters. So Amazon is trying to gin up some goodwill with its donations, showing that it cares about the effect it’s having on local housing affordability.

But don’t buy it. Amazon is actually proving, once again, the folly of the giant subsidy package the state of Virginia and Arlington County granted it.

Let’s set aside the fact that Amazon clearly wanted to be in the greater D.C. metro area for reasons that had nothing to do with incentives, thus making the case for incentivizing it at all quite weak. In exchange for the oodles of taxpayer cash being dropped on its front porch — more than $750 million when it’s all said and done — Virginia could have demanded that Amazon meet certain affordable housing requirements.

But it didn’t. It’s depending on simple goodwill from Amazon instead.

Just peruse the document laying out Amazon and Virginia’s responsibilities in the deal. Housing literally isn’t mentioned. Neither does it merit a mention in the legislation authorizing all of Amazon’s tax giveaways.

Arlington County OK’d its own portion of the Amazon deal before deciding how much money the company would contribute to a local affordable housing investment fund. The county’s incentive deal also does not lay out any responsibilities for Amazon in terms of housing.

Reading this article from the city of Alexandria, Virginia, regarding how the area plans to respond to Amazon when it comes to the housing crunch does not make for encouraging reading.

This situation occurs far too often when corporations are being given tax incentives: States and localities, scared of chasing away whatever business they’re courting, fail to demand that companies do right by local communities in exchange for the money they’re receiving.

Another example of this dynamic occurred recently in Chicago, where Mayor Lori Lightfoot was lamenting that the city didn’t drive a hard enough bargain with the big box retailer Target. And she was right: The city was giving Target tax incentives to open new stores on the city’s north side at the same time that it was shuttering them on the poorer south side.

“If you take our money, then you’ve got to invest in our neighborhoods and you’ve got to stay,” Lightfoot said. “When Target closed, there was no notice. There was no communication. They just said, ‘We’re done’ and left. ... I hope to establish better relationships, but also have more accountability in the contracts.”

I get the hesitation on the part of local lawmakers, of course: Cities think making demands means the corporation in question will simply go to another city that has fewer requirements.

But most corporate location decisions have little to do with tax giveaways; at least 75 percent of those deals had no bearing on the company’s choice regarding where to locate. After all, there are lots of reasons corporations settle where they do, almost all of which have nothing to do with tax breaks.

So plenty of locales — though far from enough — have successfully used agreements with companies to at least lay out in concrete terms some of what the community expects in terms of corporate behavior.

This is fundamentally a question about power. Political leaders often think they have none against big corporations. Because of the big lie we’ve all been told about economic development — that granting concessions to giant corporations in a zero sum game with every other city and state in the country is the only way to create jobs — companies are able to push communities around, taking money without having to do anything to ameliorate the damage they cause.

But it doesn’t have to be that way: Communities can say, “no, it’s a privilege for you to do business here, so you’ll do it on our terms or not at all.”

As my colleague s.e. smith recently noted, tech companies on the West Coast have been working overtime recently to prove they’re concerned about the affordable housing problems to which they’re contributing. But the amounts they’re spending don’t come close to offsetting the damage they’ve caused, or make up for the handouts they’ve received.

It’s the same for Amazon in Virginia. And Virginia didn’t have to settle for it.

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FYI: I was recently on WAMU, D.C.’s NPR station, talking about the city potentially building a new stadium for Washington’s football team. I am against it, of course. Read more here.

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— Pat Garofalo