Alexandria: ‘Fiscal Slam Dunk for City’?

Alexandria: ‘Fiscal Slam Dunk for City’?

City leaders promise significant, but unspecified, economic growth from new Virginia Tech campus.

Local government leaders reiterate their belief that Virginia Tech’s “Innovation Campus,” planned for northeast Alexandria in connection with Amazon’s HQ2 in Arlington, will prove an economic boon.

“Having Virginia Tech as part of the Amazon project in Alexandria was a huge win for our community,” said Stephanie Landrum of the Alexandria Economic Development Partnership, during a Feb. 21 virtual panel. The billion-dollar campus intends to focus on graduate and post-graduate education and industry-partnered research in computer science and software engineering. At full build-out, it’d occupy about two million square feet of mixed-use space in Alexandria’s Oakville Triangle area — adjacent to Route 1 and Potomac Yard.

While opposition groups raise myriad concerns — traffic, housing affordability, increasing tax assessments — proponents say the Innovation Campus would spur needed economic growth.

“Universities play a really important part of innovation ecosystems,” said Brandy Salmon, the Innovation Campus’ chief administrator. In “places like Silicon Valley or Boston with a really high concentration of universities, that’s a big part of the recipe that they have for such vibrant economies.”

About a third of the Innovation campus would go to academics, according to Virginia Tech’s published project vision. Roughly a third would go to corporate and startup tenants, and another third to housing and retail. Virginia Tech, tax-exempt by law, would own the academic space, costing the city about $1 million in foregone taxes. But “the rest of the Innovation Campus will be developed in partnership with a private developer and will all remain taxable,” said Landrum.

Tenants could include corporations partnered directly in research or that want “just to be part of that ‘halo effect,’” said Landrum.

She reiterated that Alexandria gave “no incentives” in direct cash to Virginia Tech or Amazon. Though not-now doesn’t necessarily mean not-ever. According to November’s memorandum of understanding between the city and Virginia Tech: “City financial support/incentives … may come in the form of, including but not limited to, foregoing real estate taxes for parcels/buildings owned by Virginia Tech, facilitating tax-exempt bond financing, one time grant payments and forgiveness of required developer contributions associated with site(s).”

The city may “consider direct financial contributions after a final site in Alexandria is secured and planned, and after the fiscal and financial details of the project are analyzed,” according to Northern Virginia’s HQ2 proposal web site.

The Innovation Campus comprises “the catalyst and the anchor that is encouraging development to happen at quicker pace, frankly, than the market would have encouraged,” said Landrum. “Sixty percent of the city’s budget is paid for by real estate taxes, and real estate taxes are generated through new development and the increased assessment of existing development. … The impact of all of the development that will follow [the Innovation Campus] … creates enough positive real estate tax revenue alone to make this a slam dunk deal. You pile on top of that business taxes, personal property taxes, for other businesses that will be moving in, meals tax, hotel tax, people living in houses, etc. … Fiscally this was a slam dunk for the city.”

The Amazon/Virginia Tech deal would also bring in big state money for transit, housing and education.

Asked for ballpark estimates of the city’s future potential financial support and net new city revenues, Landrum and Salmon didn’t respond by the press deadline. They also didn’t respond when asked what effect, if any, Amazon’s pulling out of New York might have on Amazon’s plans in Crystal City — specifically, whether Amazon might double down in Virginia and whether local governments here might feel added impetus to negotiate concessions with citizen groups who aren't happy with the proposal.

“We very much are still figuring out the logistics of how and where the campus will build out, the timeline, etc.,” Landrum said. The same goes for a much-publicized partnership with Alexandria’s public schools to enhance the region’s so-called tech-talent pipeline: “We don’t have a plan that we can deliver to the community yet.”

The city government plans to hold its initial community engagement meeting development on April 1, tentatively. That’ll kick off an “intensive community outreach,” providing “plenty of opportunities for dialogue,” said Karl Moritz, the city’s planning and zoning director.

Salmon anticipates about a year of planning, building construction over roughly five years, and full program implementation over roughly 10 years.

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