The Economic and Fiscal Impacts
of Locating Amazon’s HQ2 in Arlington County, Virginia
By
Stephen S. Fuller, Ph.D.
Dwight Schar Faculty Chair and University Professor
Director, The Stephen S. Fuller Institute
and
Jeannette Chapman
Deputy Director and Senior Research Associate
The Stephen S. Fuller Institute
The Schar School of Policy and Government
George Mason University
Arlington, Virginia
Prepared for
The Virginia Economic Development Partnership
November 8, 2018
1
Executive Summary
The location of Amazon’s HQ2 in Arlington County would generate significant
impacts to the benefit of the County’s and Commonwealth of Virginia’s economies.
These economic and fiscal impacts would be seen in job and income growth
including the HQ2 workforce and the supporting jobs and personal and business
earnings that would be generated annually by HQ2, its workforce, and their families
by their spending for goods and service within the Arlington County economy and
throughout the Commonwealth of Virginia. This new economic activity would
generate substantial new revenues in excess of new public expenditure
requirements for both Arlington County and the Commonwealth of Virginia.
These economic impacts would be generated by the construction and related
activities to supply the 8 million square feet of office space needed to house up to
50,000 jobs planned for HQ2. These outlays would occur over a proposed base-case
period of 20 years (see Appendix II Table C for details). With the occupancy of
renovated and newly constructed office space, Amazon’s outlays to operate its
business functions at HQ2, daily spending by its workforce and household spending
by Amazon workers’ households residing in Arlington County would generate
economic benefits in support of the County’s local business base spanning the
breadth of the local economy with these benefits recurring annually.
The magnitudes of these economic impacts would be a function of the number of
workers comprising the HQ2 workforce in any year building up to the planned total
of 50,000 jobs and the number of Amazon workers’ households choosing Arlington
County as their place-of-residence. In this analysis, total impacts are estimated for
the build-out year. These economic impacts can be annualized or calculated for
intervening years by prorating the end-period totals according to the projected pace
of hiring for the intervening years.
The direct outlays associated with HQ2 construction, operations, and daily worker
and annual household spending would generate additional impacts on the Arlington
County economy as these outlays are recycled through the County’s economy
generating new payroll supporting non-Amazon jobs and generating business
transaction that further expand the County’s and State’s economies. Some of these
impacts would also extend into the economies of the District of Columbia and
Maryland; for example, it is projected that approximately 30 percent of HQ2’s
workforce would choose to reside outside of the Commonwealth of Virginia.
The economic and fiscal impacts accruing to Arlington County, as the headquarters
site for Amazon, are summarized in Table 1 while the economic and fiscal impacts
flowing to the Commonwealth of Virginia, inclusive of Arlington County, are
reported in Table 2.
2
The key findings of these analyses are:
Construction outlays associated with building out the office space
requirements totaling 8 million square feet to house Amazon’s HQ2 in
Arlington County, including site preparation and on-site infrastructure, soft
costs, renovation and new construction and tenant improvements, would
total approximately $5.5 billion and contribute an estimated total of $6.5
billion to Arlington County’s economy over the construction period.
These direct construction outlays would also generate up to $521.8 million
in new labor income over the construction period to the benefit of workers
residing in Arlington County, supporting up to 5,072 jobs in the County and,
in total, would generate $3.4 billion in new personal earnings and as many as
50,112 full-time, year-round equivalent jobs within the Commonwealth of
Virginia.
Table 1
Summary of Amazon’s HQ2 Economic and Fiscal Impacts
on Arlington County at Build-Out
(economic impacts in millions of 2030$s; fiscal flows in millions of 2017$s)
____________________________________________________________________________________________
Source Direct Total Personal Jobs
Outlay Output
1
Earnings
1
Supported
1
____________________________________________________________________________________________
Construction
2
$5,474.8 $6,476.4 $521.8 5,072
Post-Construction (annual)
3
$2,622.9 $3,339.3 $248.6 2,310
Post-Construction (annual)
4
$2,643.9 $3,366.0 $251.8 2,321
___________________________________________________________________________________________
Revenues - Expenditures = Fiscal Impact
____________________________________________________________________________________________
Fiscal Flows
@ $150,000 (annual)
5
$203.985 - $151.157 = $52.828
@ $200,000 (annual)
5
$196.770 - $144.488 = $52.282
____________________________________________________________________________________________
Source: The Stephen S. Fuller Institute at the Schar School, GMU
1
See Table 3 or 4 for column notes.
2
total impacts over construction period
3
impacts recur annually, assuming $150,000 average salary; dollars need to be adjusted
for inflation past 2040.
4
impacts recur annually, assuming $200,000 average salary; dollars need to be adjusted
for inflation beyond 2040.
5
calculations based on the residential and indirect job differences associated with
alternative average salary levels for HQ2’s employees.
3
The direct new annual spending in Arlington County generated following
completion of construction is estimated to total $2.6 billion and to contribute
$3.4 billion to the Arlington County economy.
HQ2’s projected 50,000 on-site jobs would support a payroll ranging
between $10.0 and $13.3 billion annually with an estimated fifteen percent
of these jobs (8,218 to 7,265 depending on average salary level) held by
workers residing in Arlington County and 69.5 percent (34,727 to 34,578
depending on average salary level) living in the Commonwealth of Virginia.
Direct post-construction spending would support an estimated 2,310 to
2,321 indirect and induced new jobs in Arlington County and from 44,321 to
49,498 new jobs statewide spanning the breadth of the economy.
This new economic activity would generate annual fiscal benefits of $52.3 to
$52.8 million for Arlington County and from $328.6 to $471.9 million for the
Commonwealth (in 2017$s).
Table 2
Summary of Amazon’s HQ2 Economic and Fiscal Impacts
on the Commonwealth of Virginia at Build-Out
(economic impacts in millions of 2030$s; fiscal flows in millions of 2017$s)
____________________________________________________________________________________________
Source Direct Total Personal Jobs
Outlay Output
1
Earnings
1
Supported
1
____________________________________________________________________________________________
Construction
2
$5,474.8 $10,686.1 $3,384.1 50,112
Post-Construction (annual)
3
$5,053.4 $9,780.8 $3,039.2 44,321
Post-Construction (annual)
4
$6,165.1 $11,932.6 $3,707.8 49,498
___________________________________________________________________________________________
Revenues
5
- Expenditures
6
= Fiscal Impact
____________________________________________________________________________________________
Fiscal Flows
7
@ $150,000 (annual) $438.341 - $109.729 = $328.612
@ $200,000 (annual) $592.946 - $121.038 = $471.908
____________________________________________________________________________________________
Source: The Stephen S. Fuller Institute at the Schar School, GMU
1
Column and tables notes 1-4 the same as for Table 1.
5
Individual income tax and sales and use tax revenues
6
required educational expenditures in support of HQ2-related increases in K-12 school
children, direct, indirect and induced, in Northern Virginia.
7
based on respective average salaries of HQ2 workers residing in the Commonwealth
and the average salaries of indirect and induced jobs in the State generated by HQ2-
related spending adjusted for job location in Northern Virginia or elsewhere in the State.
4
Table of Contents
The Analytical Dimensions of Amazon’s HQ2 .............................................................................. 5
The Economic Impacts of Locating Amazon’s HQ2 in Arlington County and the
Commonwealth of Virginia ................................................................................................................. 6
Construction-Related Economic Impacts of HQ2 ......................................................... 7
Post-Construction-Related Economic Impacts ............................................................. 8
The Fiscal Impacts of Locating Amazon’s HQ2 in Arlington County and the
Commonwealth of Virginia ................................................................................................................. 9
Amazon’s HQ2: Jobs and Population, Direct, Indirect and Induced ................... 10
Arlington County’s Fiscal Impact Analysis Methodology ....................................... 10
The Fiscal Impact of Amazon’s HQ2 on Arlington County ..................................... 12
The Fiscal Impact of Amazon’s HQ2 on the Commonwealth of Virginia .......... 13
Fiscal Impacts Summary ..................................................................................................... 16
Implications of Demographic, Economic and Fiscal Impacts ............................................. 17
Arlington County Growth Implications ......................................................................... 17
Commonwealth of Virginia Growth Implications ..................................................... 20
APPENDIX I: The Residential Impacts of Locating Amazon’s HQ2 in Arlington
County ...................................................................................................................................................... 23
APPENDIX II: Annual Tables ............................................................................................................ 29
5
The Economic and Fiscal Impacts
of Locating Amazon’s HQ2 in Arlington County, Virginia
The objectives of the analyses reported herein are to calculate the demographic,
economic, and fiscal impacts of constructing and operating Amazon’s HQ2 with its
proposed 50,000 worker employment base, 8 million square feet of office, and
annual payroll total ranging from $9.9 to $13.3 billion at build-out on Arlington
County and the Commonwealth of Virginia (see Appendix II Table C for the build-out
schedule).
The Analytical Dimensions of Amazon’s HQ2
Amazon’s HQ2 represents a significant source of demographic, economic and fiscal
impact to the benefit of its host jurisdiction. These direct impacts would be a
function of HQ2’s magnitude of operations and the payroll and non-payroll
expenditures associated with the construction of the facilities to house HQ2’s
workforce, HQ2’s continuing expenditures for its annual operations, and the payroll
of its workforce and where these outlays are likely to be made and for what goods
and services and the fiscal effects (demands of public services and generation of
new revenues) that these new jobs and related households would have at the local
and State levels.
HQ2, as proposed, would generate up to 50,000 new headquarters jobs in Arlington
County at build-out, currently proposed by 2040, occupying a total of 8 million
square feet of office space. For this analysis, two annual payrolls for this workforce
are considered: one averaging $150,000 per job and one averaging $200,000 per job
with respective build-out payroll totals of $9.9 billion and $13.3 billion (in 2040
dollars).
It is estimated that fifteen percent of these new Amazon workers (8,218 to 7,265)
would choose to reside in Arlington with sixty-nine percent of these workers
(34,727 to 34,578) residing in the Commonwealth. The remainder would largely
reside in Maryland and the District of Columbia. These new households—ranging
from 7,100 to 8,000 in Arlington County and approximately 34,300 in Virginia—
would generate a total household income ranging from $7.9 to 9.5 billion (in 2017
$s) representing new demand for locally provided goods and services and housing,
supporting the growth of the local and statewide economies as well as expanding
the host jurisdictions’ tax bases while correspondingly increasing the demand for
publicly provided services.
The impacts of locating Amazon’s HQ2 in Arlington County would accrue to the
County’s and to the Commonwealth of Virginia’s economies and tax bases during
HQ2’s construction phases—soft and hard costs, site development and tenant
improvements, and continue annually thereafter from outlays to support HQ2’s
operations as well as from daily on-site spending by HQ2 workers for food and
6
beverages, retail sales and transportation. These annual outlays related to the place-
of-work of Amazon’s workforce would be complemented by these workers’
household spending within their jurisdictions of residence.
As this new HQ2 employee and household spending circulates within the local and
State economies, it would generate additional business transactions and support the
payroll of local workers and workers located more broadly with this re-spending
generating additional income and supporting additional employment within the
economy. These economic effects can be measured using “multipliers” calculated by
the U.S. Bureau of Economic Analysis for Arlington County and the Commonwealth
of Virginia to derive the total contribution of this new spending to these respective
economies, the new personal earnings (labor income) generated to the benefit of
workers residing in Arlington County and the Commonwealth and the total jobs this
new spending would support locally, within the State and beyond.
For construction outlays, these economic impacts would be those spanning the full
period of the construction activity; these impacts are calculated based on the totals
and do not continue beyond the construction period. The post-construction
outlays—HQ2’s operations, employee on-site spending, and workers’ household
spending by place-of-residence—would be annual outlays and would recur each
year as long as Amazon retains its headquarters in Arlington County. All of these
economic activities and the growth that they support would have important fiscal
implications for Arlington County and the Commonwealth of Virginia.
The Economic Impacts of Locating Amazon’s HQ2 in
Arlington County and the Commonwealth of Virginia
The location of Amazon’s HQ2 in Arlington County would impact the County’s
economy throughout the construction period; with the completion of construction,
these impacts would have been realized. These economic impacts would span the
pre-construction and construction periods including design and engineering
services and other soft costs, site development and landscaping, and building
renovation or new construction and pre-occupancy improvements including tenant
improvements; that is, all direct outlays required to produce the move-in-ready
product.
Post-construction economic benefits would recur annually as the office space is
delivered over the 2020-2040 period for the lifetime of Amazon’s HQ2 in its
Arlington County location. These economic benefits would reflect the continuing
expenditures for building and headquarters operations, the on-site spending by
HQ2’s workforce and the disposable income that the new HQ2 workers’ households,
those choosing to reside in Arlington County and more broadly in the
Commonwealth, would bring into the County and State to spend on consumer goods
and services.
7
Construction-Related Economic Impacts of HQ2
The economic impacts generated by the construction of Amazon’s HQ2—its hard
and soft costs inclusive of site development, infrastructure and tenant
improvements but excluding land acquisition, taxes, insurance and financing costs—
are reported in Table 3 for build-out spanning the FY 2019-2037 period. During this
period direct outlays for the hard and soft costs and tenant improvements
associated with the renovation and new construction of 8 million square feet of
office space and preparing these structures for occupancy are projected to total $5.5
billion (construction costs are inflated at 1.5 percent per year and averaged over the
18-year construction period).
Table 3
The Economic Impacts of Amazon’s HQ2 Total Construction Spending
on Arlington County and the Commonwealth of Virginia
(economic impacts in millions of 2030$s)
_____________________________________________________________________________________________
Source Direct Total Personal Jobs
Outlay Output
1
Earnings
2
Supported
3
_____________________________________________________________________________________________
Arlington County $5,474.8 $6,476.4 $521.8 5,072
Virginia $5,474.8 $10,686.1 $3,384.1 50,112
_____________________________________________________________________________________________
Sources: VEDP and The Stephen S. Fuller Institute at the Schar School, GMU.
1
total contribution to the Arlington County and State’s economies.
2
generation of new personal earnings beyond HQ2’s payroll accruing to workers residing
in Arlington County and the Commonwealth of Virginia.
3
jobs supported by the construction and related outlay over the construction period.
The build-out of HQ2’s office space requirements, up to 7 million square feet of new
construction and including the outlays for the renovation of up to 1 million square
feet of existing office space, over the base-line period of 20 years represents major
direct outlays that would generate even greater contributions to these economies,
as shown in Table 3. The $5.5 billion in total construction spending over the
construction period would add $6.5 billion to the Arlington County economy and
$10.7 billion to the Commonwealth of Virginia’s economy over the full construction
period. These direct construction outlays would generate significant new taxable
personal earnings to the benefit of workers residing in Arlington County and
elsewhere in Virginia. For the base-case construction period, these new earnings
would translate into 5,072 and 50,112 year-round, full-time equivalent jobs,
respectively, for the County and Commonwealth spanning the construction period.
8
Post-Construction-Related Economic Impacts
The economic impacts generated during the development period, as presented in
Table 4, would represent significant contributions to the economies of Arlington
County and the Commonwealth of Virginia and to generate significant levels of local
and statewide labor income and employment. While these impacts would be fully
realized with the completion of construction activity, the daily operations of HQ2,
the spending by its workforce, and the spending by the new workers’ households
choosing to reside in Arlington County and the Commonwealth would continue to
generate annual economic benefits as long at Amazon retains its HQ2 in Arlington
County. These continuing economic impacts are presented for Arlington County and
the Commonwealth in Table 4.
Table 4
Economic Impacts of Amazon’s HQ2 Annual Post-Construction Outlays
on Arlington County and the Commonwealth of Virginia
(economic impacts in millions of 2030$s)
_____________________________________________________________________________________________
Source Direct Total Personal Jobs
Outlay Output
1
Earnings
2
Supported
3
_____________________________________________________________________________________________
Arlington County
HQ2 Operations
4
$2,167.0 $2,722.7 $195.4 1,554
Employee Spending
5
222.9 295.5 26.6 411
Household Spending
6
233.0 321.1 26.6 345
Totals $2,622.9 $3,339.3 $248.6 2,310
Totals
7
$2,643.9 $3,366.0 $251.8 2,321
Commonwealth of Virginia
HQ2 Operations
4
$2,167.0 $4,086.0 $1,205.6 13,717
Employee Spending
5
222.9 441.6 141.5 2,660
Household Spending
6
2,663.5 5,253.2 1,692.1 27,944
Totals $5,053.4 $9,780.8 $3,039.2 44,321
Totals
7
$6,165.1 $11,932.6 $3,707.8 49,498
_____________________________________________________________________________________________
Sources: VEDP and The Stephen S. Fuller Institute at the Schar School, GMU.
1
total contribution to the Arlington County and State economies.
2
generation of new personal earnings beyond HQ2’s payroll accruing to workers residing
in Arlington County and the State.
3
jobs supported by the post-construction outlays annually at the end of the period.
4
based on 50,000 employees.
5
on-site daily spending for food and beverages, retail sales and transportation.
6
local spending for goods and services by households of HQ2 employees residing in Arlington
County and the Commonwealth of Virginia with $150,000 average salary.
7
total post-construction spending reflecting an average salary of $200,000.
9
Arlington County’s continuing economic benefits from hosting HQ2 would be
realized by a broad base of its local businesses both in support of the business
operations of Amazon’s HQ2 and its workforce’s daily consumption requirements—
its on-site spending for food services, retail sales and transportation including
parking. The approximately 15 percent of Amazon’s workforce who would choose to
reside in Arlington County, accounting for from 8,054 to 7,139 households and
8,218 and 7,265 HQ2 workers respectively (depending on HQ2’s average salary
level), represent a major source of consumer outlays. These households would
represent a total household income projected to range between $1.4 and $1.7
billion. Based on an average household consumer spending profile, developed by the
U.S. Bureau of Labor Statistics, and adjusting for consumer spending that is likely to
be captured locally, Arlington County’s businesses would likely captured 17.9
percent of average, after tax, consumption spending by these new Amazon workers’
households with the State’s share being 37.3 percent.
Annual outlays associated with Amazon’s operations and workforce spending are
estimated to slightly exceed $2.6 billion annually in Arlington County (in 2017 $s)
contributing up to $3.4 billion to the County’s economy, reflecting a multiplier of
1.27. This annual spending would generate new personal earnings of $249.8 million
that would accrue to workers residing in the County and represent County-based
employment—full-time, year-round equivalent—ranging from 2,310 to 2,321 jobs.
These same levels of post-construction spending would generate even greater
magnitudes of economic benefits when measured for the Commonwealth of
Virginia. The multipliers for the State economy are larger than for Arlington County
reflecting its larger and more complex economy, which retains more of these outlays
and provides a greater proportion of the services and labor required to service HQ2
at its Arlington County location. As a result the economic impacts, new personal
earnings and jobs supported per dollar of outlay would be substantially greater for
the Commonwealth than reported for Arlington County.
With all 50,000 HQ2 employees in place in Arlington County, annual spending to the
benefit of the Commonwealth’s economy would range from $5.0 billion to $6.1
billion. The total contribution of this new spending to the Virginia economy, with a
multiplier of 1.94, would range from $9.8 billion to $11.9 billion, generate new
personal (and taxable) earnings ranging from $3.0 billion to $3.7 billion annually
and support from 39,415 to 44,041 indirect and induced jobs being held by workers
residing in Virginia.
The Fiscal Impacts of Locating Amazon’s HQ2 in
Arlington County and the Commonwealth of Virginia
The framework for the fiscal impact analysis of Amazon’s HQ2 is provided by the
per capita and per employee fiscal impacts calculated for Arlington County based on
its FY 2017 Comprehensive Annual Financial Report as summarized on Table A in
Appendix II. These per capita averages for public expenditures and revenues
10
provide the basis for calculating the fiscal impact of Amazon’s HQ2 reflecting its mix
of at-place jobs and HQ2 workers and related indirect and induced workers likely to
reside in Arlington County.
Amazon’s HQ2: Jobs and Population, Direct, Indirect and Induced
The data inputs to the fiscal impact analysis for Amazon’s HQ2 on Arlington County
and the Commonwealth of Virginia include the HQ2 jobs and Amazon workers’
households (number of residents and number of school-age children) residing in
Arlington County and the Commonwealth of Virginia. These inputs are presented in
Table 5.
Table 5
Direct and Indirect Jobs and Population Generated by
Amazon’s HQ2 Location In Arlington County
________________________________________________________________________________
Development Period Jobs Population School-Age
________________________________________________________________________________
Arlington County
Direct Impacts
Build-out @ $150,000 50,000 17,585 1,513
Build-out @ $200,000 50,000 15,240 1,377
Indirect Impacts
Build-out @ $100,000 2,310 2,358 182
Build-out @ $200,000 2,321 2,546 195
Commonwealth of Virginia
Direct Impacts
Build-out @ $150,000 50,000 96,870 16,196
Build-out @ $200,000 50,000 97,654 17,593
Indirect Impacts
Build-out @ $150,000 44,321 125,472 22,133
Build-out @ $200,000 49,498 140,339 24,765
_____________________________________________________________________________________
Sources: VEDP and The Stephen S. Fuller Institute at the Schar School, GMU
Arlington County’s Fiscal Impact Analysis Methodology
The objective of this fiscal assessment is to answer the question: If Amazon’s HQ2
was already built-out in Arlington County during the 2017 budget year would it and
its employee’s households residing in Arlington County have generated more
County revenues than the cost burden of the public services it and its resident
workers would have required; that is, would hosting HQ2 generate a fiscal benefit to
the County? In order to answer this question, Arlington County’s fiscal impact
analysis is based on the expenditure and revenue data presented in the most
11
current Arlington County Comprehensive Annual Financial Report (CAFR). All data
utilized in this fiscal analysis are for 2017. This analysis divides the County’s
expenditures and revenues into those that serve or are generated by the residents of
the County (its population) and those that are related to or generated by the
County’s non-residential functions (as represented by its employment base, its
workers). This assignment of expenditures (demands for County services) and
revenues is expressed for the County’s 222,800 residents on a per capita basis and
for the County’s non-residential functions based on its estimated 173,002 at-place
jobs across all sectors (private and public) on a per employee basis that existed in
2017.
This analysis of the County’s revenues in FY 2017, including all taxes, fees, permits,
fines, user charges, and intergovernmental transfers, found that these were divided
between residents (population) and non-residential functions (jobs in the County),
respectively, on a 62.3% and 37.7% basis. An analysis of the County’s expenses
(demand for services) for FY 2017 found that these were distributed between
residents and non-residential functions, respectively, on a 78.1% and 21.9% basis.
These differences in the percentage shares for revenues and expenditures between
residents and non-residential functions explain why it is fiscally important for the
County to balance residential and non-residential growth. These revenue and
expenditure distributions are shown in Table 6.
Table 6
Fiscal Flows in Arlington County for
Resident and Non-Residential Functions, FY 2017
(in 2017 dollars)
_______________________________________________________________________________
Source Per capita
1
Per Job
2
Expenditures:
County-wide average $4,207.04 $1,515.96
Education Only
3
2,135.09
All Other Expenditures 2,071.95
Revenues:
County-wide average $3,356.98 $2,610.72
Real Property 2,281.51 1,101.63
All Other Sources 1,075.47 1,509.09
Net Fiscal Impact -$850.06 $1,094.76
_______________________________________________________________________________
Source: The Stephen S. Fuller Institute at the Schar School, GMU.
1
the County’s population in 2017 totaled 222,800 (CAFR, page 247).
2
the County’s at-place employment in 2017 totaled 173,002 (BLS).
3
educational costs per student in FY 2017 were $18,015.46 based on
enrollment of 26,405 (CAFR page 247).
12
For this analysis, the real estate tax revenue generated by multifamily structures has
been included on the residential side of the equation (these data are normally
reported as commercial revenue). While tax-exempt properties do not generate real
estate tax revenues, these facilities and their employees do place demands on the
County’s services. In this fiscal analysis the workers (jobs) accommodated in these
tax-exempt properties are included on the non-residential side of the fiscal
equation. All educational expenditures, the largest single source of County
expenditures, are assigned to the resident’s (population) side of the equation. Other
assignments are based on the identified sources, where these are identified, or
based on access or use patterns in the County. Where service patterns cannot be
identified, such as for General Government, it is assumed that every resident and
every worker in the County has equal access to these services and, therefore, their
costs are assigned equally to all residents and workers in the County.
For the fiscal analysis of Amazon’s HQ2, this fiscal model has been tailored to reflect
the differences between Amazon’s HQ2 as a place-of-employment and its workers’
households (and HQ2’s indirect and induced jobs and their households) and the
averages reflecting all current residents and workers in Arlington County as shown
in Table 6. These adjustments include an estimate for the real estate tax revenues
that would be generated by 8 million square feet of renovated and new office
buildings, with a construction value of $5.5 billion, including estimated land value, in
2017 dollars to house HQ2’s planned 50,000 workers. Additionally, the cost of
educating the new school-age children of HQ2 workers’ household and households
associated with indirect and induced jobs linked to HQ2 and locating in Arlington
County is calculated in this analysis at the per student cost of $18,015.46. All other
average values, based on the FY 2017 budget, are used even though they may
overstate demands for public services given the above-average incomes and
demographic profile of the new HQ2 and related households projected to reside in
Arlington County should Amazon select the County for its HQ2 location.
The Fiscal Impact of Amazon’s HQ2 on Arlington County
These analyses of Amazon’s HQ2 fiscal impacts on Arlington County show that the
location of HQ2 in Arlington County, with its job base and related tax base, would
generate a substantial fiscal benefit to the County that would more than compensate
for the fiscal costs associated with the new HQ2 workers’ households who would
choose to locate in the County as a result of HQ2’s location there and the households
related to the indirect and induced jobs generated by HQ2-related spending
choosing to reside in the County.
These net fiscal benefits for HQ2 at build-out with its planned 50,000 jobs on site,
the new households choosing to reside in Arlington County, and the additional
indirect and induced jobs generated within the County’s economy and their related
households, as enumerated on Table 5, are estimated to range between $52.8
million and $52.3 million (in 2017 dollars) reflecting two average salary levels, as
presented in Tables 7a and 7b. The annual, inflation adjusted value of these
13
revenues and expenditures are presented in the Appendix II reflecting the
differences generated by two average salaries for HQ2’s workforce: $150,000 and
$200,000.
Table 7a
The Fiscal Impact of the Amazon’s HQ2 on Arlington County At Build-Out:
Direct, Indirect and Induced—Average Employee Salary of $150,000
(in millions of 2017 dollars)
___________________________________________________________________________
Source Residents Non-Residential
___________________________________________________________________________
Revenues
Other Than Real Estate $45.500 $78.940
Real Estate Tax 21.448 58.097
Total Revenues $66.948 $137.037
Expenditures
Public Schools $30.536 --------
Other Expenditures 41.321 $79.300
Total Expenditures $71.857 $79.300
Fiscal Impact -$4.909 $57.737
___________________________________________________________________________
Combined Fiscal Impact $52.828
___________________________________________________________________________
Source: The Stephen S. Fuller Institute at the Schar School, GMU
The Fiscal Impact of Amazon’s HQ2 on the Commonwealth of Virginia
The fiscal impact of Amazon’s HQ2 location in Arlington County would generate
demands on the Commonwealth of Virginia for services and, at the same time, this
growth would generate new revenues that would flow to the State. For the
purposes of this fiscal impact analysis, the one mandated increase in State-level
spending that would result from the location of Amazon’s HQ2 in Arlington County
is the increase in per student contributions to the counties experiencing increases in
enrollment tied directly or indirectly to this location decision.
HQ2’s direct employment would add approximately 34,300 new households and
between 16,200 and 17,600 new school-age children at build-out to the
Commonwealth. In addition, HQ2’s spending in the Commonwealth would support
from 44,321 and 49,498 indirect and induced jobs and related households. These
households, combined with HQ2’s resident workers in Virginia, would generate an
estimated total increase in school-age children ranging between 27,100 and 29,980
in Northern Virginia jurisdictions. Based on the State’s FY 2017 contribution to each
14
jurisdiction, the required costs of this additional enrollment (assuming that all of the
school-age children identified attended public school) would range from $109.7
million to $121.0 million, depending on the salary profile of the HQ2 workforce.
Table 7b
The Fiscal Impact of the Amazon’s HQ2 on Arlington County At Build-Out:
Direct, Indirect and Induced—Average Employee Salary of $200,000
(in millions of 2017 dollars)
___________________________________________________________________________
Source Residents Non-Residential
___________________________________________________________________________
Revenues
Other Than Real Estate $40.579 $78.957
Real Estate Tax 19.128 58.106
Total Revenues $59.707 $137.063
Expenditures
Public Schools $28.320 --------
Other Expenditures 36.852 $79.316
Total Expenditures $65.172 $79.316
Fiscal Impact -$5.465 $57.747
___________________________________________________________________________
Combined Fiscal Impact $52.282
___________________________________________________________________________
Source: The Stephen S. Fuller Institute at the Schar School, GMU
These new residents to the Commonwealth, the holders of HQ2 jobs and the indirect
and induced jobs linked to HQ2-related spending in the State, would generate new
revenues across all budget categories. The three largest, accounting for 85.3
percent of the State’s revenues in FY 2017, include: individual income taxes
accounting for 63.3 percent of total revenues, sales and use taxes accounting for
18.0 percent and corporate income taxes accounting for 4.0 percent.
Estimates can be developed for these major sources of tax revenues. Individual
income tax revenue estimates are based exclusively on the average salaries related
to HQ2 employees residing in the Commonwealth and the average salaries of the
indirect and induced jobholders by place of residence, Northern Virginia or
elsewhere in the State. Similarly, estimates for these new jobholders’ exposure to
sales and use taxes based on their annual earnings can be calculated.
Other taxable income generated by these households are excluded from this fiscal
analysis as these sources may already have existed in the Commonwealth or are not
directly generated by the location of HQ2 in Arlington County. These exclusions
15
would include other taxable income (e.g., investment earnings) and earnings by
other wage earners in HQ2 households. The average household income (assuming
the average HQ2 salary of $150,000) of HQ2 workers who would reside in the
Commonwealth is estimated at $228,187. With the HQ2 workers’ average salary at
$150,000, this would leave $78,187 in other household earnings. These excluded
earnings would total $2.7 billion for all HQ2 households residing in the
Commonwealth. These earnings of second wage earners would generate an
estimated $122.2 million in individual income tax and $23.8 million in individual
sale and use tax revenues. At the upper end of the proposed HQ2 salary average,
these untaxed (non-HQ2 earnings) household incomes would be greater and yield
greater income and sales and use tax revenues than at the $150,000 salary average.
Table 8
Summary of Amazon’s HQ2 Annual Fiscal Impacts
on the Commonwealth of Virginia at Build-Out
(in millions of 2017 dollars)
____________________________________________________________________________________________
Revenues
1
- Expenditures
2
= Fiscal Impact
Fiscal Flows
3
@ $150,000 (annual) $438.341 - $109.729 = $328.612
@ $200,000 (annual) $592.946 - $121.038 = $471.908
____________________________________________________________________________________________
Source: The Stephen S. Fuller Institute at the Schar School, GMU
1
Individual income tax, sales and use tax, and corporate income tax revenues,
construction and post-construction spending, direct, indirect and induced.
2
required educational expenditures in support of HQ2-related increases in K-12 school
children, direct, indirect and induced, in Northern Virginia.
3
based on respective average salaries of HQ2 workers residing in the Commonwealth
and the average salaries of indirect and induced jobs in the State generated by
construction and post-construction HQ2-related spending adjusted for job location in
Northern Virginia or elsewhere in the State.
Households of indirect and induced jobholders would also generate additional
incomes excluded from this analysis shown on Table 8. These indirect and induced
jobs are estimated to have a household income of $115,169. With the average
annual wage of the indirect worker being $65,630, reflecting the weighted average
of different salaries associated with jobs in Northern Virginia and jobs elsewhere in
the State, these additional earnings income would average $49,541 and would
generate a total of $2.2 billion in taxable earnings. These earnings would yield
individual income taxes of $99.5 million and support individual sales and use taxes
totaling $19.4 million.
Other important sources of annual income tax revenues would include: direct,
indirect and induced corporate income, and construction-related earnings (direct,
indirect, and induced) and sales and use taxes on these construction-related
16
earnings and on the purchase of construction materials. The results of these
calculations for these revenue sources and the costs for the required State
contribution per new student associated directly or indirectly with HQ2 are
presented in Table 8 in 2017 dollars at for build-out. These revenues and costs are
presented in Appendix II on an annualized and current-year basis (adjusted for
inflation) for the FY 2019-FY 2039 period.
These analyses of Amazon’s HQ2 direct and indirect fiscal impacts on the
Commonwealth of Virginia show that the location of HQ2 in Arlington County would
generate revenue flows to the Commonwealth that substantially more than
compensate for the required K-12 education costs associated with the new HQ2,
workforce and associated households taking up residence within the State and the
related indirect and induced jobs and related increase in public school enrollment.
This revenue surplus would range from $328.6 million to $471.908 million
(expressed in 2017 $s) annually at build-out, depending on the average HQ2 worker
salary of $150,000 or $200,000, respectively.
Fiscal Impacts Summary
The fiscal impacts on Arlington County of locating and operating Amazon’s HQ2 in
the County with its planned 50,000 on-site employees and the new residents that
would be attracted to live in the County, including indirect and induced employment
resulting from this new spending and additional households locating in Arlington to
support this new economic activity, would generate a net fiscal benefit to the
County. These fiscal benefits for the base-case at full build-out would total $52.8
million reflecting an average HQ2 employee salary of $150,000. With an average
HQ2 employee salary of $200,000, this fiscal net benefit would total $52.3 million.
These represent the returns, revenues over expenditures, that would have been
generated for Arlington County had HQ2 been in place and built-out in Arlington
County in its FY 2017 budget year.
The fiscal benefits accruing to the Commonwealth of Virginia from locating
Amazon’s HQ2 in Arlington County, comparing only the potential increases in
individual income tax and sales and use tax revenues generated by the salaries
associated with the new direct, indirect and induced jobs created within the
Commonwealth and several sources of business-related tax revenues (corporate,
sales and use, construction-related) with the required contributions to the local
jurisdictions where the HQ2 and related new workers would reside for the
additional K-12 enrollment generated by these new households, would result in a
net fiscal benefit to the Commonwealth. These net annual fiscal benefits of these
new direct, indirect and induced jobs and related new State residents would range
between $328.612 million and $471.908 million at build-out (in 2017$s) under the
current budget allocations. The annual, inflation adjusted value of these revenues
and expenditures are presented in the Appendix II, reflecting the differences
generated by three average salaries scenarios for HQ2’s workforce: $150,000 and
$200,000.
17
Implications of Economic and Fiscal Impacts
The scale of Amazon’s HQ2, with its up to 50,000 jobs, payroll of $9.9 to $13.3
billion and 8 million square feet of building space as projected for 2040 in the base-
case build-out would be a significant investment in Arlington County and the
Commonwealth of Virginia, even when spread out over a 20-year development
period. To put the Amazon HQ2 investment into perspective, it is worth considering
the projections for the County and Commonwealth in its absence. These are
presented in Table 9.
Arlington County Growth Implications
For Arlington County and the Commonwealth of Virginia their potential
demographic, economic and fiscal gains with the location the Amazon’s HQ2 would
account for varying shares of their projected growth over the base-case build-out
period likely extending their growth trajectory beyond current projections.
Arlington County’s small geographic scale constrains its capacity to accommodate
horizontal growth, such as single-family housing units, while it has substantially
greater capacity to add housing units vertically with these predominantly serving
the rental market and smaller households with fewer children.
Table 9
Forecast for Arlington County and the Commonwealth of Virginia
in the Absence of Amazon’s HQ2, 2019-2039
(in billions of current dollars, jobs and population in thousands)
___________________________________________________________________________________________
Metric Arlington County Commonwealth of Virginia
2019 2039 Change 2019 2039 Change
___________________________________________________________________________________________
Population 242.2 281.5 39.3 8,593.1 9,852.4 1,259.3
Households 112.3 136.9 24.6 3,289.6 4,030.0 740.4
Jobs 195.3 229.6 34.3 4,072.4 4,537.2 464.8
GCP/GSP
1
$37.4 $90.2 $52.8 $565.3 $1,314.1 $748.8
____________________________________________________________________________________________
Sources: IHS Markit, The Stephen S. Fuller Institute at the Schar School, GMU
1
gross county product/gross state product.
When compared to current forecasts for Arlington County’s growth over the 2019-
2039 period, Amazon’s proposed workforce of up to 50,000 (plus the 2,310 indirect
and induced jobs) is the one metric that substantially exceeds current forecasts: the
County’s job growth projections in the absence of Amazon’s HQ2 have the County’s
employment base adding 34,312 jobs over this period but with Amazon’s potential
addition of 52,310 jobs (including indirect and induced job growth), assuming that
these did not account for any of these previously projected jobs gains, the County’s
18
employment base would increase by 86,622 jobs or by 44.4 percent rather than by
the projected 34,312 jobs or 17.6 percent by 2039. This more than doubling of the
County’s job growth over this period would require significant growth of the
County’s capacity to accommodate this employment, well beyond the 8 million
square feet of office space required by HQ2, and result in additional investment in
new office and other commercial spaces during this period.
Table 10
Projected Growth Without and Including Amazon’s HQ2: 2019-2039
(percent change for 20-year period)
________________________________________________________________________________
Metric Arlington County Commonwealth of Virginia
Without Including Without Including
HQ2 HQ2 HQ2 HQ2
________________________________________________________________________________
Population Growth 16.2% 24.2% 14.6% 17.2%
Household Growth 21.9 29.9 22.5 24.7
Job Growth 17.6 44.3 11.4 13.7
GCP/GSP
1
growth 141.2% 246.8% 32.5% 53.7%
________________________________________________________________________________
Sources: IHS Markit, The Stephen S. Fuller Institute at the Schar School, GMU
1
gross county product/gross state product change over 2019-2039 period not
adjusted for inflation.
The current office market in Crystal City/Pentagon City and in Rosslyn, as is true
more broadly in Arlington County, has experienced improvement in 2018 following
a period of declining absorption dating back to the Sequester in 2014. These two
major submarkets have a total of 21.9 million square feet of gross office space with
4.6 million vacant as of mid-year 2018 for a 21.2 percent vacancy rate. Much of this
office space is Class B and C that would require substantial renovation to be
attractive in today’s market and some would ultimately be repositioned out of the
office market. The good news is, according to a mid-year report by
NewmarkKnightFrank, these office markets have experienced increasing absorption
in 2018 (224,617 square feet in Crystal City/Pentagon City and 548,459 in Rosslyn).
This absorption more than doubles the absorption achieved in the Crystal
City/Pentagon City submarket over the past two years and reverses the pattern of
negative absorption in the Rosslyn submarket experienced since 2014. At present,
there is no new office construction underway in these two submarkets. Still, there is
sufficient existing space to house Amazon’s short-term requirements in either
submarket; this would reduce the current vacancy rate by 50% in either assuming
that this vacant space is otherwise suitable for HQ2’s long-range purposes.
While the currently available office space could accommodate HQ2’s short-term
requirements, this availability of office space provides the capacity needed to house
19
the expanded requirements of businesses and their workers generated in support of
HQ2, the indirect and induced workforce (and opportunistic business locations)
needed to capture the full economic potentials associated with the location of
Amazon’s HQ2 in Arlington County. These currently above-normal office vacancy
rates in these two major Arlington County submarkets, which have presented a
fiscal challenge to the County over the past three years, would enable the County to
realize the ancillary economic and fiscal benefits from HQ2’s location. Alternatively,
if these office markets had been more limited, with attendant higher lease rates,
these tenants could have been discouraged from co-locating in Arlington County
with the resultant losses of these economic and fiscal benefits to neighboring
jurisdictions.
To house the new households directly and indirectly related to HQ2, Arlington
County would need between 8,233 and 9,065 housing units with 63-70 percent of
these being rentals, depending upon the average wage of the HQ2 jobs (See
Appendix I for details). While these housing requirements are not proportionally as
great as the new work space requirements, they would present a challenge to the
County due to an already constrained housing supply, an aging housing stock and
growing price pressures in the absence of the new housing demands generated by
Amazon’s HQ2. One result of this tight housing market would be shifting this new
housing demand to adjacent jurisdictions where vacant land is more available to
support single-family housing construction.
The increased economic activity that would flow to Arlington County’s business
base from the location of Amazon’s HQ2 in the County, generating construction
outlays totaling $5.5 billion and annual post-construction spending of $2.6 billion,
could increase the County’s economic growth rate during the build-out period by as
much as 3 percentage points; that is, from an average of 4% per year to more than
7% (not inflation adjusted), assuming all planned growth beyond the addition of
Amazon’s HQ2 is achieved. With the completion of construction, the annual
economic contributions from the presence of HQ2 would increase the County’s
growth rate by as much as 50% above its projected annual rate in the absence of
HQ2.
The total impact on Arlington County’s and the Commonwealth’s economies over
the twenty-year development period planned for HQ2 is captured by comparing the
projected economic growth rates projected including HQ2 and in its absence. For
the County, its economy is currently projected to grow by 141.2 percent (not
adjusted for inflation over the 2019-2039 period; with the addition of HQ2, both its
construction impacts and its annual post-construction expenditures, for operations
and by HQ2 employees, in combination with already projected growth would
increase the economy’s growth rate to 246.8 percent, a gain of 75 percent.
These demographic and economic gains are accompanied by a projected surplus of
County revenues (taxes) over expenses (demands for county-provide services)
attributable to HQ2, its workers and households living in Arlington County,
20
including indirect and induced growth effects. This budget surplus is estimated to
range from $52.3-$52.8 million at build-out (in 2017 dollars). If HQ2 had existed (at
full build-out) during FY 2017, it would have generated a surplus equivalent to 4.4
percent of the County’s total budget.
Commonwealth of Virginia Growth Implications
For the Commonwealth of Virginia the significance of these gains compared to
forecasted growth, as seen in Table 10, is much smaller than they would be for
Arlington County even though the potential magnitude of these demographic,
economic and fiscal gains from the location of Amazon’s HQ2 in Arlington County
would be much greater in absolute terms than those achieved by Arlington County.
This is due to the scale and complexity of the State’s economy in contrast to the
small geographic size of the County.
The State’s employment base is projected to increase by 464,820 jobs between 2019
and 2039, for a total increase of 11.4 percent for that 20-year period. With HQ2’s
direct and indirect jobs, if these were all net new jobs—with no displacement, the
State’s job increase would be up by from 73,705 to 78,319 additional jobs for a 13.7
percent gain for this period.
This job growth would be accompanied by household growth. Adding this increase
of from 73,705 to 78,319 new households attributable to Amazon’s HQ2 to the
currently projected 740,380 households would bring the household growth rate to
24.7 percent for the 2019-2039 period, compared to 22.5 percent in the absence of
HQ2. While this difference may not appear significant by itself, what makes this
more significant is the household income differentials between the Amazon-related
household gains and the non-Amazon household gains.
The average household income for the Amazon-related households statewide is
projected at $167,749 (in 2017 $s) compared to the statewide average of $97,639.
This income differential has significant implications on State revenues; individual
income tax revenues accounted for 63.3 percent of the State’s total revenues in FY
2017. Sales and use taxes, taxes reflecting resident spending capacity, accounted for
18.0 percent of the State’s revenues in FY 2017. Combined, these two revenue
sources accounted for 81.3 percent of all State revenues in that budget year. For
this reason, new household growth reflecting above-average salaries (and a
correspondingly lower demand for State-provided services) would generate a
revenue surplus in the State budget and accordingly strengthen the State’s fiscal
capacity.
The result of the fiscal analysis confirms this outcome. Had Amazon’s HQ2 base-case
build-out been completed in FY 2017, its operations and the earnings of its workers
residing in the State in combination with their indirect and induced jobs would have
generated a total of $438.3 million in revenues from individual income taxes and
sales and use taxes plus several major business taxes (corporate income, sales and
21
use, and construction) and a required increase in the State’s contribution for K-12
education totaling $109.7 million (at the $150,000 average HQ2 salary level) in
2017 dollars, for a revenue surplus of $328.6 million. At the HQ2 average salary
level of $200,000, this net revenue surplus would have totaled $471.908 million, in
2017 dollars. Had HQ2 existing in FY 2017, its net fiscal benefit would have
generated a budget surplus of 2.3 percent over the balanced budget total of $20.6
billion as reported in the Comprehensive Annual Financial Report.
Amazon HQ2’s impacts on the Commonwealth of Virginia’s economy would
represent a total contribution of $10.7 billion to the Gross State Product during the
construction period (base-case 2019-2037) and, following the completion of
construction, a total annual contribution of $10.9 billion to the State’s Gross State
Product thereafter and would accumulate during the build-out period as HQ2
expands its operations. For the Commonwealth, these gains would represent a
significant increase in economic growth rate from the current projected rate in the
absence of HQ2 of 32.5 percent, not adjusted for inflation, to 53.4 percent with
HQ2’s economic impacts included for a gain of 64.3 percent.
Closing Observations
The location of Amazon’s HQ2 in Arlington County would generate significant and
enduring impacts on the County’s and Commonwealth of Virginia’s economies and
their respective fiscal conditions. These economic and fiscal impacts would be seen
primarily in: (1) job and income growth, including the HQ2 workforce and the
supporting jobs and in the personal and business earnings that HQ2, its workforce
and their families would generate annually by their spending for goods and service
within the Arlington County economy, in nearby jurisdictions and throughout the
Commonwealth of Virginia and (2) the new tax revenues and increased demands for
public services that these new direct and related economic activities and associated
new residents would generate.
A less quantifiable and important benefit that would accrue to Arlington County and
the Commonwealth of Virginia from the location and operation of Amazon’s HQ2
would be a positive shift in the County’s, Northern Virginia’s and State’s recent
domestic migration patterns. Over the past four years, Northern Virginia and the
State have been experiencing net domestic outmigration and, in the process, have
been losing highly educated workers and workers with critical skill sets to
competing regions.
A principal condition contributing to the increase of these residents’ outmigration to
other regions is that they have been able to offer competitive quality employment
accompanied with lower costs of living. This loss of talent has slowed the region’s
and State’s economic growth and could threaten its ability to achieve its future
economic growth potentials. The location of HQ2 in Arlington County would
generate a large number of high-skilled jobs directly and indirectly that would offer
well-above average salaries and, as a result, would create an employment
22
environment that would increase the retention of the talent required to support an
advanced economy as well as attract increased in-migration of these types of
workers and other talent sensing the new opportunities that would come to define
the Northern Virginia and statewide economies. Where Northern Virginia and the
State have been experiencing a downward shift in the average salaries of their
employment bases that has emerged since 2010, the additional of HQ2 and the other
business development opportunities it would attract to the Commonwealth, would
likely reverse this job-quality trend.
The analyses of the economic and fiscal impacts presented herein provide
information regarding the benefits and costs of accommodating this major private
investment in Arlington County and the Commonwealth of Virginia. The principal
conclusion from these analyses is that location and operation of Amazon’s HQ2 in
Arlington County would have a substantially beneficial and enduring impact on the
diversification of its and the Commonwealth of Virginia’s economies and their long-
term performance.
23
APPENDIX I:
The Residential Impacts of
Locating Amazon’s HQ2 in Arlington County
24
Where HQ2 Workers Would Live: The Residential Impacts of Locating
Amazon’s HQ2 in Arlington County on the County and the Commonwealth of
Virginia
The location of Amazon’s HQ2 in Arlington County, VA would result in an increase in
households living both in the County and in the Commonwealth of Virginia. These
households would include at least one worker employed at HQ2 or employed in a
job supported by HQ2 spending. Two HQ2-wage scenarios are presented here: one
averaging $150,000 per job ($150,000-wage scenario) and one averaging $200,000
per job ($200,000-wage scenario). The difference in the average wage in each
scenario would result in different household incomes and, by extension, differing
residential characteristics.
At full build-out, Arlington County, VA would have an increase of 9,065 households
in the $150,000-wage scenario and an increase of 8,233 households in the
$200,000-wage scenario as a result of Amazon’s HQ2 locating in the County. The
Commonwealth of Virginia would have an additional 73,705 net new households in
the $150,000-wage scenario and an additional 78,319 new households in the
$200,000-wage scenario if HQ2 located in Arlington County, VA.
As shown in Table 11, this net increase in households would be the result of two
sources of job growth: the Amazon HQ2 jobs and the jobs that are supported by HQ2
payroll and other operations spending.
1
The 50,000 HQ2 jobs would generate the
largest demand for housing in Arlington County, VA, resulting in 7,139 or 8,054 net
new households, depending upon the scenario. Of all the households with an HQ2
job, 16.7 percent would live in the County in the $150,000-wage scenario and 14.4
percent would in the $200,000-wage scenario. In addition to the households with an
HQ2 job, the jobs supported by HQ2-spending would generate new household
growth. Of all the net new indirect and induced jobs, approximately 40 percent
would be located inside the Commonwealth and the remainder would be located
elsewhere. This analysis only examines the households resulting from indirect and
induced jobs located in Commonwealth. In Arlington County, these Virginia-based
indirect and induced jobs would result in an additional net increase of 1,012 or
1,093 net new households in the County, depending upon the scenario. A
significantly smaller share of these households would live in the County (about 2%)
because these jobs would not be concentrated in the County, resulting in a larger
geographic distribution of the households associated with these jobs.
In the Commonwealth of Virginia, 34,278 or 34,290 net new households would have
an HQ2 job, depending on the scenario, accounting for about 70 percent of all
1
See The Economic Impacts of Locating Amazon’s HQ2 in Arlington County and the Commonwealth
of Virginia starting on page 10 of this report for more detail about the indirect and induced jobs used
in this analysis. This housing and demographic analysis only estimates the impacts of indirect and
induced jobs located in the Commonwealth of Virginia.
25
households with an HQ2 job. In the Commonwealth, households with an HQ2 job
would be concentrated in Northern Virginia; 96.1 percent or 97.5 percent would live
in Northern Virginia, including Arlington, and about two-thirds would live in
Northern Virginia, excluding Arlington, depending on the scenario.
Table 11
Households Related to HQ2 At Full Build-Out By Source
By Place of Residence
Households With an
HQ2 Job
Households With a Job
Supported by HQ2
Spending (1)
$150k
Wage
$200k
Wage
$150k
Wage
$200k
Wage
Arlington County, VA 8,054
7,139
1,012
1,093
Rest of Northern Virginia 25,388
25,817
18,631
21,108
Rest of Virginia 848
1,321
19,772
21,839
Virginia 34,290
34,278
39,415
44,041
D.C. 6,484
6,676
619
676
Maryland 7,988
8,004
2,001
2,227
Elsewhere 479
454
671
750
Total (2) 49,241
49,412
42,706
47,692
Source: The Stephen S. Fuller Institute at the Schar School, GMU
(1) Includes payroll and operations expenditures
(2) A small share of the workers holding HQ2-related jobs are anticipated to cohabitate
either with another HQ2-related worker or become part of an existing household. Therefore,
the number of households is projected to be fewer than the number of jobs. Only the indirect
and induced jobs located in the Commonwealth were analyzed.
In addition to the households with an HQ2 job, the Commonwealth would have a
significant increase in households with a job supported by HQ2 spending. The
Commonwealth would add 39,415 net new households with a job supported by HQ2
spending in the $150,000-wage scenario and 44,041 new households in the
$200,000-wage scenario. The difference in households reflects the larger number of
jobs supported by the $200,000-wage scenario as detailed in the following sections.
Of all the households with a Virginia-based job supported by HQ2 spending, about
92 percent, would live in the Commonwealth in either scenario.
Altogether, Arlington County, VA would have an additional 9,065 net new
households with an HQ2-related job living in the County at full build-out in the
$150,000-wage scenario, or 9.9 percent of all HQ2-related households (Table 12,
above). The $200,000-wage scenario would result in slightly fewer new households
in the County, at 8,233, primarily because the HQ2-related workforce with the
26
highest household incomes are projected to be somewhat less likely to live in the
County, based on the patterns of current Professional & Business Service job-
holders in the County.
Table 12
Households Related to HQ2 At Full Build-Out
By Place of Residence
$150k
Wage
$200k
Wage
Arlington County, VA 9,065
8,233
Share in Arlington County, VA 9.9%
8.5%
Rest of Northern Virginia 44,020
46,926
Northern Virginia, Total 53,085
55,159
Share in Northern Virginia 57.7%
56.8%
Rest of Virginia 20,620
23,160
Virginia, Total 73,705
78,319
Share in Virginia 80.2%
80.7%
D.C. 7,103
7,351
Maryland 9,989
10,231
Elsewhere 1,150
1,204
Total, All Locations 91,947
97,105
Source: The Stephen S. Fuller Institute at the Schar School, GMU
The Commonwealth of Virginia would have 73,705 net new households with an
HQ2-related job, including jobs at HQ2 and those supported by HQ2 spending, in the
$150,000-wage scenario. In the $200,000-wage scenario, the Commonwealth would
have 78,319 such households. In either scenario, about 80 percent of all HQ2-related
households would live in Virginia and the households would be concentrated in
Northern Virginia (57% of all HQ2 households).
Table 13, on page 28, summarizes the characteristics of the households related to
HQ, both households with an HQ2 job and households with a job supported by HQ2
operations, in Arlington County, VA and the Commonwealth of Virginia.
In Arlington County, the households associated with HQ2 would include 17,786 or
19,944 people, in the $200,000-wage and $150,000-wage scenarios, respectively.
The average household size of HQ2-related households would be about 2.2 in both
scenarios and all households would include at least one adult worker in an HQ2-
27
related job. Nearly two-thirds of these households would have more than one adult,
while the remaining one-third would live alone.
HQ2-related households in the County would primarily live in units in multifamily
buildings and rent. About 70 percent of all HQ2-related households would live in a
multifamily building. In the $150,000-wage scenario, the homeownership rate of
HQ2-related households would be 30.2 percent and it would be 36.6 percent in the
$200,000-wage scenario.
In the Commonwealth of Virginia, the households associated with HQ2 would
include 237,993 or 222,342 people, in the $200,000-wage and $150,000-wage
scenarios, respectively. The average household size of HQ2-related households
would be about 3.0 in both scenarios and all households would include at least one
adult worker in an HQ2-related job. The vast majority (85%) of these households
would have more than one adult.
HQ2-related households in the Commonwealth would be most likely to live in
single-family detached housing and own their home. More than one-half of all HQ2-
related households would live in a single-family detached home in either scenario.
In the $150,000-wage scenario, the homeownership rate of HQ2-related households
would be 65.1 percent, and it would be somewhat larger, at 67.5 percent, in the
$200,000-wage scenario.
As with all the estimates in this section, the presence of these households in the
County and the Commonwealth would be contingent upon the availability of
housing units at prices that are within the households’ budgets. Households that
cannot find a unit in their desired price range may become shift from ownership to
rental units, as possible, or downsize to a less expensive building type in order to
live in the County. Alternatively, these households may opt to not live the County or
the Commonwealth if they find a house that better suits their needs within a
commuting range that is acceptable to both the HQ2-related worker and any other
workers in the household.
The HQ2-related households’ incomes are shown in Table 13 for both the County
and the Commonwealth. In general, households can afford to spend up to 30 percent
of their household income on housing costs, either rental costs or ownership costs.
Because many of the main commuters in these households would also work in the
same jurisdiction as they reside, their transportation costs would be relatively small,
which could allow for a larger share of their incomes to be spend on housing costs
while still remaining affordable. This would be especially true for households living
in Arlington County, VA. Additionally, the household incomes of the HQ2-related
households would be larger, on average, compared to all households living their
respective geographies, resulting in a higher likelihood that they would be able to
find housing that suits their needs within their budget.
28
Table 13
Characteristics of Amazon HQ2-Related Households
At Full Build-Out, By Place of Residence
Arlington County, VA
Commonwealth of
Virginia
$150k
Wage
$200k
Wage
$150k
Wage
$200k
Wage
Households 9,065
8,233
73,705
78,319
Residents 19,944
17,786
222,342
237,993
Average Household Size 2.20
2.16
3.02
3.04
Building Type
Single-Family Detached 1,001
1,001
41,081
45,857
Single-Family Attached 1,817
1,414
16,309
16,185
Multifamily 6,247
5,818
16,315
16,276
Tenure
Owner 2,735
3,014
47,970
52,890
Renter 6,330
5,218
25,735
25,429
Owners by Income Group*
<$100k 431
307
12,279
12,938
$100-199.9k 1,049
835
16,451
15,940
$200-299.9k 772
1,217
11,633
12,566
$300k+ 483
655
7,608
11,446
Renters by Income Group*
<$75k 1,415
1,138
11,116
11,491
$75-124.9k 1,804
1,462
6,628
6,801
$125-199.9k 1,424
1,130
4,496
4,055
$200k+ 1,687
1,489
3,495
3,082
Source: The Stephen S. Fuller Institute at the Schar School, GMU *in 2016 dollars
The location of Amazon’s HQ2 in Arlington County, VA would result in household
and population growth in the County and the Commonwealth. This household
growth would be driven by the jobs at HQ2 and the jobs generated by HQ2’s
operations expenditures. At full build-out, the County would gain 9,065 households
or 8,233 households, depending upon the average wage of HQ2 jobs. These
households would primarily hold an HQ2 job, live in multifamily units and be
renters. At full build-out, the Commonwealth of Virginia would gain 73,705
households or 78,319 households, depending upon the average wage of HQ2 jobs.
These households would primarily hold a job supported by HQ2 spending, live in
single-family detached units and own their home.
29
APPENDIX II:
Annual Tables
30
Table A1. Amazon's HQ2 Annual Fiscal Impact
on Arlington County, VA
$150,000-Wage Scenario
In millions of current dollars, Assumes 1.5% inflation per year
Revenue Expenditures
Net Fiscal
Impact
FY 2019 1.681 1.246 0.435
FY 2020 6.740 4.995 1.746
FY 2021 15.346 11.371 3.974
FY 2022 21.900 16.229 5.672
FY 2023 34.117 25.281 8.836
FY 2024 45.278 33.552 11.726
FY 2025 53.508 39.651 13.858
FY 2026 64.606 47.874 16.732
FY 2027 79.779 59.118 20.661
FY 2028 95.393 70.688 24.705
FY 2029 108.067 80.080 27.987
FY 2030 127.486 94.470 33.016
FY 2031 139.952 103.707 36.245
FY 2032 161.943 120.003 41.940
FY 2033 180.421 133.696 46.725
FY 2034 198.892 147.383 51.509
FY 2035 223.476 165.600 57.876
FY 2036 248.753 184.331 64.422
FY 2037 274.738 203.587 71.152
FY 2038 278.859 206.640 72.219
FY 2039 283.042 209.740 73.302
Source: The Stephen S. Fuller Institute at the Schar School, GMU
31
Table A2. Amazon's HQ2 Annual Fiscal Impact
on Arlington County, VA
$200,000-Wage Scenario
In millions of current dollars, Assumes 1.5% inflation per year
Revenue Expenditures
Net Fiscal
Impact
FY 2019 1.622 1.191 0.431
FY 2020 6.502 4.774 1.728
FY 2021 14.803 10.870 3.933
FY 2022 21.126 15.513 5.613
FY 2023 32.910 24.166 8.744
FY 2024 43.677 32.072 11.605
FY 2025 51.616 37.901 13.714
FY 2026 62.321 45.762 16.559
FY 2027 76.957 56.510 20.448
FY 2028 92.019 67.569 24.449
FY 2029 104.244 76.547 27.698
FY 2030 122.977 90.302 32.675
FY 2031 135.002 99.131 35.870
FY 2032 156.215 114.709 41.507
FY 2033 174.040 127.797 46.243
FY 2034 191.857 140.880 50.977
FY 2035 215.572 158.294 57.278
FY 2036 239.955 176.198 63.756
FY 2037 265.021 194.604 70.416
FY 2038 268.996 197.523 71.473
FY 2039 273.031 200.486 72.545
Source: The Stephen S. Fuller Institute at the Schar School, GMU
32
Table A3. Amazon's HQ2 Annual Fiscal Impact on Arlington County, VA
By Component At Full Build-Out
In millions of 2017 $s
$150k
Wage
$200k
Wage
Revenues
Real Estate Property Tax 114.69
110.63
Personal Property Tax 19.62
18.92
Other Local Taxes 45.65
44.04
Licenses, Permits, Fees 2.20
2.13
Charges for Service 9.83
9.48
Fines & Forfeitures 1.20
1.16
State Grants 7.56
7.29
Federal Grants 1.84
1.78
Use of Money 1.35
1.31
Miscellaneous 2.49
2.41
Transfers (2.45)
(2.36)
Total 203.99
196.77
$150k
Wage
$200k
Wage
Expenditures
General Government 11.36
10.86
Judicial Administration 11.05
10.56
Public Safety 25.45
24.33
Environmental Services 17.46
16.69
Health & Welfare 16.40
15.67
Libraries 1.35
1.29
Planning & Community
Development
3.94
3.76
Parks & Recreation 3.97
3.79
Education 27.79
26.56
non-Departmental 13.05
12.48
Debt Service 12.23
11.69
Regional Contributions 1.41
1.35
METRO 5.69
5.44
Total 151.16
144.49
Source: The Stephen S. Fuller Institute at the Schar School, GMU
33
Table B1. Amazon's HQ2 Annual Fiscal Impact on the Commonwealth of Virginia
$150,000-Wage Scenario
In millions of current dollars, Assumes 1.5% inflation per year
Revenue
Individual
Income
Tax
Individual
Sales &
Use Tax
Corporate
Income
Tax
Business
sales &
Use Tax
Sales & Use
Tax on
Construction
Materials
Individual
Income Tax
from
Construction
Labor
Sales & Use
Tax on
Construction
Labor
Total
Revenue
Expenditures
(1)
Net
Fiscal
Impact
FY 2019
- - - - 1.93 12.33 2.40 16.67 - 16.669
FY 2020
2.64 0.51 0.15 0.22 1.96 12.52 2.44 20.45 0.918 19.533
FY 2021
10.59 2.06 0.62 0.88 1.99 12.71 2.47 31.33 3.680 27.652
FY 2022
24.12 4.70 1.41 2.01 2.02 12.90 2.51 49.67 8.379 41.287
FY 2023
34.42 6.70 2.01 2.87 2.05 13.09 2.55 63.70 11.957 51.738
FY 2024
53.62 10.44 3.14 4.47 2.08 13.29 2.59 89.62 18.628 70.996
FY 2025
71.16 13.85 4.16 5.93 2.11 13.49 2.63 113.34 24.722 88.617
FY 2026
84.10 16.37 4.92 7.01 2.14 13.69 2.67 130.90 29.215 101.685
FY 2027
101.54 19.77 5.94 8.47 2.18 13.90 2.71 154.49 35.275 119.215
FY 2028
125.38 24.41 7.33 10.46 2.21 14.10 2.75 186.64 43.559 143.085
FY 2029
149.92 29.19 8.77 12.50 2.24 14.32 2.79 219.73 52.084 167.644
FY 2030
169.84 33.06 9.94 14.16 2.28 14.53 2.83 246.64 59.004 187.638
FY 2031
200.36 39.01 11.72 16.71 2.31 14.75 2.87 287.73 69.607 218.122
FY 2032
219.95 42.82 12.87 18.34 2.35 14.97 2.91 314.21 76.413 237.800
FY 2033
254.52 49.55 14.89 21.23 2.38 15.19 2.96 360.71 88.420 272.292
FY 2034
283.56 55.20 16.59 23.65 2.42 15.42 3.00 399.84 98.509 301.326
FY 2035
312.59 60.85 18.28 26.07 2.45 15.65 3.05 438.95 108.594 330.353
FY 2036
351.22 68.38 20.55 29.29 2.49 15.89 3.09 490.91 122.017 368.890
FY 2037
390.95 76.11 22.87 32.60 2.53 16.13 3.14 544.33 135.818 408.508
FY 2038
431.79 84.06 25.26 36.01 2.56 16.37 3.19 599.24 150.006 449.232
FY 2039
438.27 85.32 25.64 36.55 2.60 16.61 3.23 608.23 152.256 455.970
Source: The Stephen S. Fuller Institute at the Schar School, GMU
(1) required educational expenditures in support of HQ2-related increases in K-12 school children, direct, indirect and induced, in Northern Virginia
34
Table B2. Amazon's HQ2 Annual Fiscal Impact on the Commonwealth of Virginia
$200,000-Wage Scenario
In millions of current dollars, Assumes 1.5% inflation per year
Revenue
Individual
Income
Tax
Individual
Sales &
Use Tax
Corporate
Income
Tax
Business
sales &
Use Tax
Sales & Use
Tax on
Construction
Materials
Individual
Income Tax
from
Construction
Labor
Sales & Use
Tax on
Construction
Labor
Total
Revenue
Expenditures
(1)
Net
Fiscal
Impact
FY 2019
- - - - 1.93 12.33 2.40 16.67 - 16.67
FY 2020
3.70 0.72 0.16 0.23 1.96 12.52 2.44 21.74 1.013 20.73
FY 2021
14.84 2.91 0.66 0.94 1.99 12.71 2.47 36.52 4.060 32.46
FY 2022
33.79 6.62 1.50 2.14 2.02 12.90 2.51 61.47 9.242 52.23
FY 2023
48.22 9.44 2.14 3.05 2.05 13.09 2.55 80.54 13.190 67.35
FY 2024
75.11 14.71 3.33 4.75 2.08 13.29 2.59 115.86 20.548 95.32
FY 2025
99.69 19.52 4.42 6.31 2.11 13.49 2.63 148.16 27.270 120.89
FY 2026
117.81 23.07 5.23 7.45 2.14 13.69 2.67 172.05 32.226 139.83
FY 2027
142.24 27.85 6.31 9.00 2.18 13.90 2.71 204.18 38.910 165.27
FY 2028
175.65 34.39 7.79 11.11 2.21 14.10 2.75 248.00 48.048 199.95
FY 2029
210.02 41.12 9.32 13.29 2.24 14.32 2.79 293.09 57.452 235.64
FY 2030
237.93 46.58 10.56 15.05 2.28 14.53 2.83 329.76 65.085 264.67
FY 2031
280.68 54.96 12.45 17.76 2.31 14.75 2.87 385.78 76.781 309.00
FY 2032
308.13 60.33 13.67 19.49 2.35 14.97 2.91 421.85 84.288 337.56
FY 2033
356.54 69.81 15.82 22.55 2.38 15.19 2.96 485.26 97.533 387.73
FY 2034
397.23 77.77 17.63 25.13 2.42 15.42 3.00 538.60 108.662 429.93
FY 2035
437.89 85.74 19.43 27.70 2.45 15.65 3.05 591.91 119.786 472.13
FY 2036
492.02 96.33 21.83 31.12 2.49 15.89 3.09 662.78 134.592 528.19
FY 2037
547.67 107.23 24.30 34.64 2.53 16.13 3.14 735.64 149.816 585.82
FY 2038
604.88 118.43 26.84 38.26 2.56 16.37 3.19 810.54 165.466 645.07
FY 2039
613.96 120.21 27.24 38.84 2.60 16.61 3.23 822.69 167.948 654.75
Source: The Stephen S. Fuller Institute at the Schar School, GMU
(1) required educational expenditures in support of HQ2-related increases in K-12 school children, direct, indirect and induced, in Northern Virginia
35
Table C. Amazon's HQ2 Job and Office Space Growth by Year
Office Space:
(000s of SF)
Jobs
(Direct)
FY 2019 64 -
FY 2020 189 400
FY 2021 314 1,180
FY 2022 230 1,964
FY 2023 426 1,439
FY 2024 376 2,665
FY 2025 263 2,352
FY 2026 353 1,643
FY 2027 480 2,207
FY 2028 480 3,000
FY 2029 369 3,000
FY 2030 575 2,305
FY 2031 336 3,595
FY 2032 624 2,100
FY 2033 496 3,900
FY 2034 480 3,100
FY 2035 648 3,000
FY 2036 648 4,050
FY 2037 648 4,050
FY 2038 - 4,050
FY 2039 - -
Total 8,000 50,000
Source: VEDP
