It’s Amazon, and it’s jobs, so Fresno City Council says yes to tax rebates

BY TIM SHEEHAN

DECEMBER 15, 2016 5:32 PM

A 30-year program of property tax rebates was approved Thursday by the Fresno City Council as incentives to convince internet retail behemoth Amazon.com to establish a large order-fulfillment center in the city’s southern industrial area.

The council voted 6-0 to approve the incentives. Councilwoman Esmeralda Soria was traveling in Israel.

Golden State FC LLC, a wholly owned subsidiary of Amazon, has identified property in the North Pointe Business Park near Orange and Central avenues as “the preferred site” for a $200 million, 855,000-square-foot warehouse that could employ 2,000 or more workers, according to Larry Westerlund, the city’s economic development director. That workforce would be augmented by many seasonal employees at peak times of the year, and future expansion of the center could boost the number of employees by several thousand.

An economic analysis of the project forecasts that the initial average wage at the center would be $26,000 per year – a rate of $14.85 per hour based on 1,750 work hours in a year, or about 34 hours a week.

“This literally represents eight years of work,” Mayor Ashley Swearengin told the council. “To get to this point, we had to change land-use plans and change regulations. … It has been our ambition for almost two decades to have shovel-ready land so we can recruit companies like this.”

Swearengin estimated that about $12 million to $15 million has been invested in infrastructure, including water, sewer and other utilities, “to get this site shovel-ready.”

Amazon and Golden State FC already have fulfillment centers sprinkled across California in Patterson, Tracy, Stockton, Newark, Redlands, San Bernardino and Moreno Valley, according to research by Avalara Inc., a sales-tax software company.

The incentive package calls for Fresno to rebate 90 percent of the city’s share of property taxes that Golden State FC would pay on the increased value of the site for the next 30 years, as well as a rebate of the city’s entire share of sales-and-use taxes paid by the company on purchases it makes in Fresno. But Golden State FC is required to create at least 750 new full-time jobs at the center to qualify for the incentives.

The incentives come with a hard cap of $30 million, depending on the number of jobs created by Golden State FC. An economic analysis by the city estimates that the actual property tax rebates would amount to about $15.3 million over 30 years, plus about $750,000 in sales tax rebates.

One Fresno resident, Janet Slagter, told the council during public comments that she was disappointed with the incentive package, describing it “as an instance of corporate welfare.”

Slagter decried what she said will likely be low wages. “These are people who are going to be living right at the poverty line,” she said. “Can we hope for something that’s more livable, like $15 an hour?”

But council members said they supported the package.

“We struggle with persistently, stubbornly high unemployment,” said Councilman Oliver Baines, whose district includes the proposed Amazon site. “I share the same concerns about quality employment. (But) we in Fresno are not in a position to not go after opportunities like this one for our community. We do in fact need these jobs here.”

The Amazon project is the second one for which the City Council has approved a major package of financial incentives since Councilman Lee Brand – who will become mayor next month – wrote his Economic Expansion Act and it became law earlier this year. The act includes tax rebates and other economic lures for major job-creating projects, as well as lesser incentives to help existing businesses grow.

“I always look at this as net new jobs, net new tax revenue,” Brand said. “Whether it’s $12 or $13 an hour, our cost of housing is substantially lower here (than other cities with Amazon centers). There’s a lot more bang for your buck here.”

Added Brand: “I believe there are a lot of cities who would love to have Amazon and the 2,000 jobs.”

In November, the council approved property and sales tax rebates worth up to $18 million for Ulta Inc., a major retailer of cosmetics and fragrances, as the company considers developing an e-commerce fulfillment center with up to 1,200 employees not far from the proposed Amazon site. Westerlund said Ulta has yet to make a decision on whether to build in Fresno or another city.

Brand’s economic act sprang from the city’s efforts in 2015 to entice clothing retailer Nordstrom as the company weighed sites in Fresno, Visalia and elsewhere for a major warehouse. Officials in each city were offering sales tax rebates amounting to as much as $12 million. That was before Nordstrom earlier this year put its plans on hold. The would-be Nordstrom property is the site now being considered by Amazon, Westerlund said.

“Between this agreement and the one a few weeks ago, we’re soon to see 3,000 job,” Swearengin said of the Amazon and Ulta incentive agreements. “We did the rough math. Just on this site and Ulta, we’re looking at shaving three-quarters of a percentage point off unemployment rate in city of Fresno.”

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