Yahoo Finanza Amazon losing out on Arlington HQ2 cash incentives due to coronavirus
Arlington County won't be dolling out a cash payment to Amazon this year for its second headquarters in Northern Virginia due to the stifled tourism industry, according to a new report.
Arlington Economic Development announced that the shopping behemoth, won't recieve the first of 15 planned incentive payments on Aug 31, according to the Washington Business Journal, which obtained an email confirmation.
The problem is that the funds were directly tied to the tourism industry, which was battered by the spread of the novel coronavirus in mid-March, just ahead of Washington's busy spring tourism season.
Representatives for Amazon and Arlington Economic Development did not immediately respond to FOX Business' requests for comment.
Last year, the Arlington County Board approved a $23 million incentive package in an effort to bring the company to the area, the Journal previously reported. As part of the deal, 15 payments will be disbursed to Jeff Bezos' company through 2034 as long as it hits its yearly office square footage goals.
In total, Amazon is projected to occupy about 6.06 million square feet of commercial office space in Crystal City and Pentagon City through 2035. The company’s presence in Arlington "will continue to diversify our economic base and solidify our community as a leading technology hub," the agreement read.
The money, however, is supposed to come from an increase in revenue collected from the county hotel tax, otherwise known as a transient occupancy tax, meaning tourists are the key driver in generating this cash flow.
"The Transient Occupancy Tax is a tax on the total cost paid on hotel rooms or other paid lodging," the agreement states. "This tax is paid by tourists or business travelers, not Arlington residents."
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So even though Amazon pulled its weight of the bargain by reaching 64,000 square feet of office space for the year, hotel occupancy in the area dwindled when the local governments issued stay at home directives to keep residents from spreading the virus, the outlet reported.
And although Virginia is in its third phase of reopening, hotels in the area remain quiet. What's more, the industry's recovery is further impeded by another round of closings and layoffs triggered by a resurgence of the coronavirus in communities around the nation.
Hotels in Arlington had done pretty well prior to the pandemic, according to the Journal. In fact, in February, Arlington collected $17.6 million in taxes for the first nine months of the fiscal year, representing a nearly 8 percent increase from the year prior, the outlet reported.
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