ALEXANDRIA — Virginia officials knew that Amazon would go elsewhere if the frenzy over attracting the company’s new headquarters turned into a competition of who would write the largest check.
Virginia Economic Development Partnership CEO Stephen Moret said he was not going to play that game.
Instead, the state put together a radically different proposal that substituted some of the typical cash handouts for the one thing no booming tech company can have too much of — talent.
Virginia Tech was the cornerstone of that part of the bid, as the state and university promised Amazon that it would build a new campus within walking distance of the proposed headquarters site. It would hire top researchers, offer degrees tailored to Amazon’s needs and help create a vibrant academic neighborhood around the company’s new home.
Moret said Amazon has intentionally not told anyone why it chose Northern Virginia this week over the more than 200 other localities that yearned for the prize, but the Virginia Tech Innovation Campus was key to the state’s strategy.
“It would be hard to overstate the impact they [Virginia Tech] had on our success, in my view,” Moret said. “We decided early on if this was going to be just about incentives, we were not going to win. We were not going to compete on that basis.”
Virginia’s bid for HQ2 was not the most lucrative Amazon could have chosen, as the state has promised direct subsidies of $573 million if Amazon creates at least 25,000 jobs with an average salary of $150,000.
New York, which split the prize with Virginia, is giving Amazon $1.525 billion in direct incentives, while others that weren’t chosen offered even more. Maryland’s bid included an $8.5 billion package.
But what was included in the state’s first response to Amazon in October of 2017 was a general outline of Virginia Tech’s new campus. It came just one month after the company launched its nation-wide search.
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If that seems like an unrealistic timeline for a university to design and commit to a new $1 billion, 1-million-square-foot campus, that’s because it is.
Virginia Tech had been planning some sort of campus near the nation’s capital since President Tim Sands arrived at the university four years ago. Tech didn’t have a location in mind or much more than a general sense of what the Innovation Campus could be.
“If the first time we had thought about it had been 14 months ago, this probably wouldn’t be what it is,” Sands said during the gauntlet of interviews after Tuesday’s announcement. “We were ready and the timing was perfect.”
Moret was unaware of Sands’ Northern Virginia ambitions when he first reached out to schedule a conference call with college and university leaders around the state last year.
He discussed the HQ2 bid with everyone and laid out early plans to roughly double the number of computer science graduates the state produced each year as part of the HQ2 bid.
He also asked if anyone was interested in the possibility of opening a campus near Amazon in the Washington, D.C., area.
“Virginia Tech reached out right away and said, ‘Hey, we’ve actually been working on this idea for a few years. And we’re prepared to put in a very large investment to make this happen,’” Moret recalled.
Sands said he was imagining a more typical decade-long timeline before Amazon was involved. But suddenly what was once a slow-moving academic endeavor became an all-hands, state-wide initiative moving ahead with the pace of a limber technology giant.
“There’s nothing typical about what we just went through,” Sands said with a laugh.
Asked what would have happened if Amazon had chosen not to come after this year-long sprint, a group of Tech administrators looked at each other around a stately conference table.
They agreed they had assumed some level of risk when they competed against 200 other applicants, but Brandy Salmon, Tech’s associate vice president for Innovation and Partnerships leading daily operations of the Innovation Campus, said the university would have continued on with its plans one way or another.
“We thought a little bit about that,” Sands added. “It’s hard to know. Now it doesn’t matter.”
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Amazon first set off the HQ2 frenzy in September of 2017 when it posted a request for proposals from localities interested in landing the company’s second headquarters.
The company, which employs more than 600,000 people worldwide, had outgrown its home in Seattle’s South Lake Union neighborhood, where traffic backs up for hours each evening.
However, property values have surged to new highs and the battle for technology workers is fierce.
“A highly educated labor pool is critical and a strong university system is required,” the company wrote in the RFP.
An Amazon spokesman declined to comment for this article.
Moret said he knew Northern Virginia had an attractive technology-ecosystem, but that wasn’t the perception around the country. Early on, some questioned internally whether or not the state stood a chance at all against more well-known industry hubs.
“In the beginning we actually had a number of prominent state leaders — not the governor but some other state leaders — who actually questioned whether it was even worthwhile for us to compete for this,” Moret said.
He rejected the criticism, but also recognized that adding tens of thousands of new jobs would strain any locality. Virginia would still need to show Amazon that it could grow its worker pipeline.
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Initial responses to the RFP were due about a month after the September announcement, and by that time Virginia Tech was a pillar of the application — though only in conceptual terms at that point.
That’s around the time Amazon began referring to the effort as Project Cooper. Several economic development officials said it was named after Amazon CEO Jeff Bezos’ dog. Moret confirmed the code name, but said he was never told the significance.
Amazon, the state and Virginia Tech all wanted to keep things quiet in the beginning, so the circle was kept tight.
It grew over time, but Sands said even weeks before the announcement some of the people who had helped lay the groundwork for the Innovation Campus before Amazon came along had no idea their vision had been fast-tracked.
“I think those who had spent hours and hours and hours over years helping us build those plans were really anxious about when are you going to actually do this?” Sands said. “We couldn’t talk to some of them during this process.”
As the bid progressed and Amazon made in-person visits to Northern Virginia, the university’s plans grew more and more specific.
By early spring, university officials were ready to meet with the company and present their thoughts.
“I remember talking to the Amazon folks and they said we don’t really need a campus, per se. We need a neighborhood, kind of an innovation neighborhood,” Sands said. “We said, ‘That’s what we’ve been planning to do, so it’s perfect.’”
On Nov. 3, Virginia Tech signed a memorandum of understanding with Alexandria, the city that will host the Innovation Campus on property known as Oakville Triangle.
Stonebridge Associates Inc. is developing the site, though details are still being sorted out about how that relationship will work. It’s possible Virginia Tech will not pay to build all of the facilities itself.
To get started, the state will contribute $250 million and Virginia Tech will match with another $250 million in non-state funds. The other $500 million is an estimate for the coming years, but Sands said he expects total investment to climb above $1 billion in the coming decades.
On Monday, Moret said he got a 2 p.m. call from Amazon informing him that Virginia was selected.
Amazon initially said it would choose one city for a 50,000-employee site and $5 billion of investment. But it ultimately selected two localities — Northern Virginia and Long Island City in New York. Each were promised 25,000 jobs and $2.5 billion invested.
In addition to the investment in Virginia Tech’s campus, the state and Northern Virginia localities promised almost every university in the state offering computer science degrees would expand enrollment, money would go to K-12 school systems and improving public transportation.
Moret said Amazon has not said what made Virginia so attractive.
“But I will tell you from where I sit, Virginia Tech had a singular contribution to this that was really profound,” Moret said. “They deserve a lot of credit.”
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Tech’s Innovation Campus will sit on a 15-acre site less than two miles from where Amazon plans to build. Salmon said she wanted it to be close, but also have its own identity. She doesn’t envision a typical university campus, but rather a porous neighborhood where it’s hard to tell where public spaces end and Virginia Tech begins.
There will be offices, restaurants, retail, residential and startup spaces mixed in with classrooms and laboratories.
The campus will house masters and doctorate degree programs, some new and others altered versions of what the university already offers.
Tech already has seven facilities in the Washington, D.C., region, which will stay open. The university may be able to use those spaces to welcome its first masters students in 2019 or 2020.
The plan is to break ground on the 1-million-square-foot campus in 2020 and to grow to a master’s degree enrollment of 750 by 2025.
Back on the Blacksburg main campus, undergraduate enrollment is set to grow by about 2,000 degrees in computer science and related fields.
“We need to really think through exactly what that means,” Tech Engineering Dean Julia Ross said. “We certainly want to think about our expansion in enrollment around Amazon’s needs, but also the tech sector needs more broadly because we’re not just serving one company.”
Even after the announcement, not all of the details have been finalized.
Tech officials stress that the Innovation Campus, while most of the plans were made with Amazon in mind, was not designed for one company alone. Instead, it’s part of a larger vision to tie Blacksburg closer to the economic engine that is the nation’s capital.
Sands calls it a “portal” that will shuffle talent, research projects and funding from one side of the state to the other.
“We’re looking at this as not dividing up the pie further, but growing the pie dramatically,” Sands said. “We’re going to see huge investments in the Blacksburg operation as a result of growing our presence in Northern Virginia. And it’s going to go both ways.”