Businesses Incentives Are Provided Only After Jobs Created
Keith Bowers, the Director of the Office of Economic Vitality (OEV), recently provided an up- date related to the Amazon project. In a memo to Vince Long, the Leon County Administrator, Bower’s addressed concerns about the delay in activating the fulfillment center which was originally scheduled to open in late 2022.
The project – located at I-10 and Mahan Street – is a $200 million, 2.8 million square foot robotics fulfillment center. Amazon is projecting 1,000 fulfillment and management jobs at or higher than a $31,200 annual salary. Bowers noted that OEV remains in close contact with Amazon representatives during the construction phase and that company officials report an anticipated completion date in mid-2023.
Bowers reported that 100% of the exterior building is already constructed and the machinery, robots, and handling equipment are still being constructed and installed. The Certificate of Occupancy is expected to be issued within the next six months. Once the construction is completed, an opening date will be scheduled and the activation process by the company, including hiring processes for new staff will begin.
Bowers explained that the delay in fully activating the center stems from factors ranging from supply chain issues for construction parts, to lowered consumer demand related to a slight economic turndown in 2022 and Amazon’s existing network capacity to meet consumer demand for the 2022 holiday shopping season.
Bowers also addressed the parameters related to the economic incentives provided to Amazon. The $2.5 million Targeted Business Program (TBP) incentives is offered to new and existing businesses that create value-added jobs that will diversify the economy suited to Tallahassee-Leon County’s business mix and will generate revenue growth from the sales of goods and services outside the local economy. While TBP rewards job creation, it is built off a company’s local capital expenditures on land, buildings, and equipment. Funds awarded under the TBP may be used to reimburse up to 100% of the cost of eligible development fees and a portion of the capital investment of the business project based on ad valorem taxes paid. The reimbursement amount is based on a scoring system evaluated by OEV staff and the Competitive Projects Cabinet.
Once Amazon obtains the Certificate of Occupancy the incentive agreement period begins. As stated in the agreement, at the end of the first year after Amazon receives the Certificate of Occupancy, OEV will verify that the agreed-upon conditions for jobs created have been met prior to the disbursement of incentives.
Bowers stated that “Amazon’s construction delays detailed in this email has no negative impact on the incentives as the clock begins once the Certificate of Occupancy is obtained.”
Bowers also provided information about the local impact of the completed construction activities. While there was no contractual requirement to adhere to county/city MWSBE procurement goals, Amazon voluntarily, working with OEV’s MWSBE Division, committed to utilizing both local and minority and economically disadvantaged-owned firms for the construction project.
According to Amazon, 16 local firms have been utilized during the construction phase, totaling more than $27 million in awarded contracts. In addition, 25 minority and economically disadvantaged-owned firms have been used for the project’s construction totaling more than $37 M in awarded contracts.
And finally, Bowers commented on the parcel off NW Capital Circle acquired by Amazon and is in the planning process. The plan is to build a new 123,000 square foot “Last Mile” center to serve the community. The “Last Mile” facility is responsible for moving goods from the fulfillment center to the customers’ doorstep. According to Amazon representatives, site preparation is beginning, and construction will occur during the year ahead. The last mile center project does not include incentive funding by OEV
One of the primary principles of economic development is enticing employers to locate in your community by creating incentives and demonstrating the community is receptive and friendly to employers. Creating jobs is the goal. Tax and fee breaks and other sorts of regulatory waivers are standard operating procedures in economic development. Not sure why this is so hard for people to grasp. These sorts of deals are often secretive because there are generally parties who would seek to derail the project for a variety of reasons.
If Amazon is going to employee 1000 people then why is it called a “robotics” fulfillment center? That’s a lot of people to watch robots fulfill. My guess is they will only employ 200 -250 people and that would be $10,000.00 per job created.
With all the Amazon layoffs plus their new delay, this secretive $2 million deal — which will probably involve even more local gov resources — is looking worse and worse.
Not to mention the negative affects it will have on local businesses, who mind you don’t even have a chance to get these kind of incentives.