The culture and polity that is Arlington, Virginia

Arlington officials say Amazon’s arrival will boost the number of visitors staying in hotels, motels and other lodgings. Starting in June 2019, 15 percent of any increase in its “transient occupancy tax” would go to Amazon, if the company meets specific targets for how much office space the new headquarters facility occupies.

The agreement says Amazon needs to occupy 64,000 square feet of office space by July 31, 2020, in order to qualify for the 15 percent payment. The required amount of space increases to 252,800 square feet by July 31, 2021, and to 5.576 million by July 31, 2034, the last year of incentive payments.

Here is more from WaPo.

Comments

[/Sigh] We need to rediscover the 'uniform duties' clause. And then incorporate it against the states.

--- "15 percent of any increase in its “transient occupancy tax” would go to Amazon"

... that's consistent with the standard American view of taxation -- politicians seize money from some people and "distribute" it to other private entities/people.

And just what is the broad ethical principle justifying any local hotel/tourist tax ?
The owners of hotels/motels already pay of taxes.

Should long term renters of houses and apartments also pay a special "Renter Tax" in addition to the property taxes already paid by the owners of the houses/apartments ?

renters usually can vote locally ... but not tourists

"And just what is the broad ethical principle justifying any local hotel/tourist tax ?"

The ethical principal is that it's easier to tax people that can't vote you out of office.

The broad ethical principle is 'I can buy votes by stealing money from tourists with no possible repercussions'.

How is it stealing? Presumably staying in a hotel is an optional voluntary elective activity. The tax is simply part of the cost, known in advance, to all travelers.

No, there is a strong ethical/economical/esthetical argument to tax tourists.

Tourists bring with them a lot of negative externalities. They use a lot of resources paid by the residents without participating to their cost (public transportation, walk path, sanitary systems). They weaken the play of the free market which would naturally eliminate bad restaurants because they choose there place to eat about randomly. They crowd the most beautiful part of the locality they visit. Their travel, especially if they come from a farm, produces a lot of CO2. And, last but not least, they are a sore for the eye.

Looking at the desolation they have made of, for instance, maybe half of Venice, and of certain neighborhoods in my hometown, Paris, brings an inconsolable sadness.

Tax them dry.

Renters should pay a tax, yes. As it stands, absentee landlords like myself pay huge property taxes in Arlington but because we don't live there, we can't vote on such ill-conceived notions as "affordable housing" (a lottery) and NIMBY proposals.

And no doubt you would NEVER consider passing those taxes along to your tenants.

And tell me, why should absentee landlords have voting rights, exactly? Should shareholders have the right to vote in Delaware?

Our rates are competitive. For example one place we rented, a dilapidated slum in most of the country (the house is 70 years old), was $3200 for four bedrooms, which is below market since it's near a Metro stop (I even had a GMU employee inquire about it). Landlords should have voting rights since decisions impacting their property are made. You do believe in the sanctity of Fee Simple Absolute don't you?

Competitive pricing doesn't mean zero tax incidence for tennents

And NIMBY benefits current landlords since it drives up rents.

@Anon7 - yes it does, but it still annoys me since it adds a layer of bureaucracy that cuts down on real estate activity and ultimately, IMO, decreases the price of real estate (offset a bit by increasing the rent). Put another way: our rentals, all teardown properties, near the DC Metrorail should be commercial or multi-dwelling if the absence of NIMBY but instead are zoned R-5, One-Family and Restricted Two-Family, which cuts into their present value. Do you think I enjoy being a slumlord? We're getting a return of 2% (net of capital appreciation), which is a nice dividend, but I don't like dealing with a constant stream of tenants, though to be honest it's kind of interesting dealing with so many people over the years, I have some good stories to tell, one former tenant in particular ended up getting rich setting up his own business, another was a blond bombshell that worked for a famous company, and a couple of tenants were just plain crazy, one in particular had a unique way (I found out much later, after he moved out) of stealing people's personal property. And we get the occasional royalty from Africa too (real princes of Bel Air!) Sitcom material but frankly I rather just have paper investments at my age. I blame NIMBY.

5 and 1/2 million sq feet of office space seems like a boatload.

The Pentagon, the largest office building in the world, has 620k m2 or 6.7M sq.ft, so 5.5 M ft2 is less than the floor space in the Pentagon.

I saw this blurb about the second largest skyscraper in DC, in Rossyln, and subsequently, in 2017, Nestle became the anchor tenant in 1812 North Moore St. in Rossyln:
Rosslyn’s office vacancy rate tripled from 10 to more than 31 percent between 2011 and 2014, and 16 government defence agencies left Arlington County between 2005 and 2015. In 2015, the vacancy rate in Arlington was close to 21 percent, which was a historic high (DC never went above 12 percent).

See here for a list of commercial buildings and floor area:
https://en.wikipedia.org/wiki/List_of_largest_office_buildings
A rough rule of thumb is 1 sq. meter = 10 sq. ft

I’m surprised it’s enough for Amazon to bother.

If they did, I think they would be smarter to have an agreement that those funds go to some sort of popular amenities - say parks - or to street maintenance, or LED streetlights. And then match the funds. Something they can point to and say “Amazon did this”.

It's almost a symbolic amount, gien that it will largely come from visitors (new ones), and the amount of tax revenue we'll get from Crystal City filling up again. That will help lower property taxes. Plus we need to break the progressive monopoly on the Board, but baby steps.

I don't understand the metric. Why not full time (or equivalent) employees? Why couldn't a single employee "occupy" 1,000,000 sq ft of office? Isn't the "benefit" A) the number of warm bodies and B) the wage distribution of said bodies?

Tying revenue from hotel tax increases to square footage of owned real estate is deeply convoluted. Might as well give Amazon a tax break for the number of sunny days in May based on the total number of fake reviews for iPhone accessories. Maybe it gets you the result you want, but its the kind of thing that makes people question the competence/corruptibility of their own elected reps. Enough of these rules when combined together leads to giant loopholes for parsers of legalese to exploit. I almost suspect there will be one more law in the future that ties these unconnected objectives together for some hidden hand to benefit. Almost.

+1. This is one of weirdest incentives imagined by America's public and private sector leaders. A percentage of lodging taxes for buying up more real estate doesn't make a whole lot of sense, does it? Amazon is not only the Everything Store but also the City Hotel Tax Authority.

Its a handout to real estate firms who in turn kickback to members of the board who made this decision.

Doesn't this policy boil down to taxing hotels to subsidize office space (for Amazon)? But, Amazon's arrival is expected to boost demand for hotel space ("boost the number of visitors staying in hotels"). So, why encourage more office space and fewer hotels? Restrict/tax hotel supply while subsidizing office space demand during a period when Amazon is expected to produce positive demand shock for hotels. Paging Arnold Kling....

Good to know Virginian politicians are not trying to create a post-Catholic moral order or words to that effect.

"Virginia advocates for the poor and working-class are hoping to pressure Arlington to extract concessions from Amazon...in addition to $750 million in state incentives...based on the number of employees hired at salaries that must average $150,000 per year."

I am confused. Is the goal to target policy to subsidize poor and working class workers or upper-income workers earning $150k+/yr? The state incentives seem targeted at the latter?

Conditioning subsidies on hiring high-wage workers sounds like a wage subsidy for high-wage workers (like an EITC for high-wage workers). In turn, that sounds equivalent to a tax cut for high-wage workers. So, are the state subsidies equivalent to an income tax cut for high-wage Amazon employees? If not, how are they different?

Isn't Amazon where the piranhas come from?

Yep, which in Brazilian Portuguese also means prostitute. That's why Amazonnis getting the money.

Reykjavik, actually.

"Arlington officials say Amazon’s arrival will boost the number of visitors staying in hotels, motels and other lodgings."

Uhm, wat?

Do they think people will be coming around to visit Amazon's headquarters as tourists? Do they think Amazon does enough corporate business face-to-face that there will be a substantial percentage of people traveling to Amazon for meetings?

Or is this, as I suspect it is, a bullshit 'for-the-press' excuse to shut people up about what looks like a pretty transparent bribe?

There's this thing called "business travel"

i would imagine that, as a large company, people will travel to the company headquarters regularly. this is a new corporate headquarters after all, right??

Why don't we just give the merchants the municipalities and they can run them? Not joking.

Arlington to Amazon: here is what you need to do
Amazon to Arlington: we will nickel and dime you
Me: poor Jeff Bezos I hope he is not wasting his life ...

to restart ----
Amazon: We will nickel and dime you
Arlngton: I will show you fear in a handful of dust

and I know more than anyone you know about how beautiful Crystal City is, a heritage town on a beloved and vintage bend of the river , an archetypically American bend of the Potomac River, salt water not fresh water along those achingly beautiful shores, which I have so often seen at sunset and sunrise

orange, deep tangerine, flaming rose, I have seen it all over the waves of the Potomac

If people stay in hotels, Amazon gets a slice of that revenue. But first they need to have a large warehouse space.

Me: checks to see if it's April first.

Billionaires: why is everyone picking on us?

Underpants gnomes:
(1) Amazon leases warehouse
(2) ??
(3) Pay Amazon money

Guinness beer guys: Brilliant!

'Starting in June 2019, 15 percent of any increase in its “transient occupancy tax” would go to Amazon'

Shouldn't Amazon also get 15% of any increases in sales tax receipts? Only sounds proper, and it would prove that the Board is not being mean to billionaires

Not to mention a taste of property tax increases. Come to think of it,. they should just cut a check to Amazon for 15% of GDP.

And, apropos of yesterday's link "Boston is the most politically intolerant place in the U.S." Arlington Co. Virginia is listed as being in the top "0 percentile" meaning that 99.9 percent of counties are more politically tolerant.

64,000 SF is not a lot of office for Amazon to fill, the first hurdle should be a piece of cake. The hurdle easily could have been 250,000 and Amazon wouldn't think twice about it.

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