The Amazon Effect on Planning and Zoning

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Online retail giant Amazon recently shortened the list of potential locations for its future second corporate headquarters, referred to as Amazon’s “HQ2”, to twenty locations around the country. Three of those 20 locations for the potential new HQ2 site are located in the Maryland, District of Columbia and northern Virginia region. Regions that made the “short list” for the potential future HQ2 are all anxious to have Amazon select their area for the future HQ2 site, which Amazon estimates will bring 50,000 jobs and $5 billion of investment to the selected area.

In hopes that Maryland will be selected by Amazon as the ultimate location for the new HQ2,in its recently concluded Regular Session for 2018, the Maryland General Assembly approved a package of economic, financial and tax incentives worth up to $8.5 billion. The legislative incentive package includes $3 billion in tax incentives, $2 billion in transportation and infrastructure improvement funding, and $924 million in local tax credits. The legislation is now being sent to Maryland’s Governor Larry Hogan for signature.

The Maryland site, if selected, would be located in Montgomery County, Maryland. In hopes and anticipation that Amazon HQ2 may come to Maryland, the Montgomery County Council is considering an amendment to its zoning ordinance to accelerate and streamline the development review process. As proposed, the zoning amendments would shorten the site plan and sketch plan review period by up to half, from the current 120 and 90 days, respectively, to just 60 days, for companies that bring more than 25,000 new employees to an area near a Metro station in the county. The County Council’s objective with the amendment is to make is easier for a “signature business headquarters” to locate in the county. Even if Amazon is not specifically named in the Council’s legislation, the “signature business headquarters” vision is clearly a result of the Amazon effect.

Will the Amazon effect on local land development, planning and zoning stop there? One could reasonably anticipate that the Amazon effect would create further “ripple effects.” With 50,000 anticipated new employees, the need for additional housing for all of those employees and their families will certainly arise, requiring additional residential development and school construction for their children. And while $2 billion in transportation and infrastructure improvements have been approved by the State, the development of those roads and infrastructure will also involve planning and development submittals, review and approvals. It is reasonable to anticipate that the review and approval processes for that new development ultimately may also be amended, accelerated and streamlined to accommodate the inevitable new growth and land development that the arrival of Amazon HQ2 will cause. And what about the demand for new service businesses that will inevitably be needed in and around the new neighborhoods to support and provide services to all of those new employees and residents? Development of those new commercial areas will also require development review and approvals. Will those approval processes be amended as well in response to the Amazon effect?

So without yet even selecting its ultimate HQ2 site, the anticipation of the Amazon “rock” being cast into the pond is already having quite an effect on Maryland’s  legislation and the land development approval process. And it is easy to anticipate that the continued ripples of the Amazon effect could spread in a wide circle.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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