Amazon reaps billions of dollars in government incentives

Editor's note: This is part of an ongoing series of stories on the impacts of Amazon's rapid growth in Florida, covering effects on real estate, small businesses, the job market, politics and more.

Amazon and its subsidiaries have reaped billions of dollars in state, county and local incentives over the years nationwide in return for having a presence in a community.

The Washington, D.C.-based nonprofit organization Good Jobs First has tracked those economic development subsidies over the years. It found that government subsidies awarded to Amazon.com Inc. since 2000 have totaled more than $4.87 billion for its warehouses, data centers and film productions, and to its subsidiaries, such as Whole Foods Market, Zappos and Audible.

Philip Mattera, research director for Good Jobs First, said Amazon often has been given incentives for locating in a particular community — even when they were not necessary.

Because Amazon is seeking to form a national network of distribution centers in its effort to offer customers next-day or same-day deliveries of orders, "there's no need to lure them," Mattera contends.

"They're coming anyway," he said. "They want to be everywhere. They need to be closer to the customer. Amazon is trying to cover the whole country with an enormous distribution network. There is no reason to entice them. They should be paying communities" for the opportunity to open their distribution centers in a particular market.

Mattera said, among incentive-seeking corporate America, "certainly, with the number of deals that Amazon makes, they are near the top of the list. They stand out for their aggressive use of subsidies."

"They seem to be somewhat preoccupied with getting incentives," Mattera said. "They're getting them all over the place. They don't seem very fussy."

Amazon officials did not respond to multiple requests for comment for this story.

The Good Jobs First Amazon Tracker lists 13 subsidies to the company within Florida totaling $43.24 million. But that's far from the largest statewide total.

In Virginia, Amazon was offered 20 incentives totaling $824.29 million, with $750 million of that for luring Amazon's "second headquarters" project to Arlington County, joining Amazon's initial headquarters in Seattle.

In Illinois, Amazon was offered 16 incentives totaling $731.97 million.

In all, 19 states offered higher total incentives than Florida did, according to the Good Jobs First database.

Volusia County's efforts

But some Florida communities have used incentives to sweeten the pot to attract Amazon.

No economic incentive money was required when Amazon opened its first logistics facility in Volusia County three years ago — a 66,000-square-foot "last-mile" delivery station in Daytona Beach.

That wasn't the case for the 1.4 million-square-foot regional fulfillment center that the e-commerce giant opened exactly one year later in Deltona.

Volusia County's most populous city dangled a carrot of $2.5 million in performance-based incentives if Amazon were to make good on its pledge to create at least 500 jobs that paid at least $15 an hour plus benefits within three years of the massive Deltona facility's opening.

Amazon already has made good on its hiring promise and then some, according to Deltona City Commissioner Anita Bradford.

"They employed a thousand workers within just months of opening (in September 2020) and are now over 1,500," said Bradford, who represents the district that includes Amazon's Deltona facility. "They've also increased their starting pay to $18 an hour."

"They're not just providing jobs," Bradford said. "They're also involved in community activities and in sponsoring community events."

Amazon's Deltona facility includes a mezzanine level, and stretches an entire half-mile along the east side of Interstate 4. It currently is the largest distribution center in Volusia County.

The city of Deltona has also benefited from Amazon's presence in other ways, according to Bradford.

They include improvements that the project's developer, Seefried Industries, made to the surrounding roads, such as additional lighting along both Normandy Boulevard and Graves Avenue. Amazon also agreed that its trucks would use only the Interstate 4/State Road 472 interchange directly to the north.

Amazon also has served as a magnet for other businesses that are bringing much-needed services, as well as jobs to the city, which was originally developed as a bedroom community, according to Bradford.

"If you look around, we have development all around the area," Bradford said. "We've got restaurants and plazas and multifamily housing" being built or in the works, she said.

Construction now is well underway on a third Amazon logistics facility in Volusia County: a five-story, 2.8 million-square-foot robotic fulfillment center just south of Daytona International Speedway that is set to open in 2023. The complex is expected to cost $200 million to build.

The city of Daytona Beach has agreed to pay Amazon $4 million in performance-based economic incentives. To receive the incentives, the e-commerce giant must make good on its promise to create at least 1,000 jobs paying at least $15 an hour by 2028.

Stacy Cantu is one of the Daytona Beach city commissioners who voted late last year to approve $4 million in incentives.

"We've got a thousand people moving here (to Florida) a day. We need the jobs," Cantu said.

Bradford believes the Amazon facilities in Volusia County more than pay for themselves, even counting the economic incentives. That assertion is backed up by looking at the increase in property values of the three Amazon facilities in the county.

"Amazon pays their taxes to the county, and the city gets a percentage back," said Bradford, who added that the investment in the form of incentives to the company will continue to reap dividends for the city for many years to come.

"We never expected to get a company like Amazon in Deltona," Bradford said. "We didn't expect the big fish to grab the bait."

But, in some other parts of Florida, Amazon did not seek incentives.

For example, Amazon has not received any government incentives for projects in the Naples-Fort Myers markets. All of its projects have been built outside city limits, in unincorporated areas, and neither Collier nor Lee counties gave the company any inducements.

In the city of Fort Myers, Mayor Kevin Anderson said it's not clear whether Amazon ever planned to seek any incentives to build the once-secretive project known as "Project Rainforest." Or whether the city would have been open to the idea.

"I don't know if it ever got that far along," Anderson said.

What would have been a nearly 1.5 million-square-foot warehouse and distribution center on privately owned land has been canceled. It could have created more than 1,000 full-time and part-time jobs in the city. Construction was expected to start within three years of its zoning approval in February.

In Brevard County, Cocoa city officials say Amazon never sought any incentives for a distribution center project in their city that is completed, but not yet open. The same is true for a distribution center in nearby Melbourne that is under construction.

Concerns from Rick Scott

Former Florida Gov. Rick Scott — who made job creation a top priority while in office — initially rejected state incentives to lure Amazon's first major fulfillment centers to the state back in 2013.

As part of the deal, Amazon agreed to start paying state sales taxes on internet purchases made by Florida customers, but Scott viewed that commitment as a tax increase on residents. The governor — who now is a U.S. senator representing Florida — later changed his mind on the incentives, giving no clear reason for reversing course.

The state's first 1 million-square-foot Amazon fulfillment center opened in Lakeland, Polk County, in August 2014 with 500 workers. At last count, the location had more than 700 employees.

Florida's economic development portal shows that Amazon got $744,000 in state incentives for that project through a now-defunct Qualified Target Industry — or QTI — tax refund program.

Under the QTI program, companies could get $3,000 to $6,000 in tax breaks for each high-wage job created and verified — at a cap of $7 million per project. Amazon received QTI tax breaks for several projects in Florida, including its second fulfillment center that opened in the Hillsborough County community of Ruskin in 2014.

Local governments had to provide a match equaling 20% of the total refund.

$123M deal in upstate New York

Among the largest recent incentives approved for Amazon was a $123.55 million deal approved in August by the Niagara County Industrial Development Agency in western New York for Amazon to build a 1,000-employee fulfillment center. The facility will be built on a 217-acre site near Niagara Falls International Airport in the town of Niagara, and will cost an estimated $550 million.

The deal includes a package of property tax, sales tax and mortgage recording tax exemptions for Amazon, which is building the Niagara facility as a center for coordinating distribution of products to smaller centers for ultimate delivery to customers.

Under a "payment-in-lieu-of-taxes," or PILOT, agreement with the Niagara County Industrial Development Agency, Amazon will pay an amount equal to 10% of the normal county, municipal and school taxes on its 3 million-square-foot warehouse project for the first seven years of its operation. Amazon then will pay 20% in Year 8, 30% in Year 9 and so on, until it pays its full share of taxes in Year 16.

Industrial Development Agency officials argued that the tax breaks are worth it, considering the future jobs Amazon will create in the county, as well as added state, county, town and school taxes the project will generate on formerly undeveloped land.

Greg LeRoy. executive director of Good Jobs First, submitted testimony to the Niagara County Industrial Development Agency critical of the Amazon grant and the agency's cost-benefit study.

"There is no indication that the cost-benefit calculator accounts for job destruction in the bricks-and-mortar retail sector caused by the rise of e-commerce/Amazon," LeRoy said. "That job destruction will offset warehouse job gains to an unknown degree. Just because people have another way to shop does not mean they have more money with which to shop."

LeRoy also questions the positive impacts on property tax revenue from the project.

"Retail property values, occupancy rates and tax assessments all decline as e-commerce sales increase — with Amazon comprising almost half of e-commerce," LeRoy said. "Also at risk are residential property values along the routes serving the warehouse. Having hundreds of trucks traversing those streets every day may harm home resale values, as air quality declines and noise increases. Lower resale values mean lower assessments and lower property tax revenues."

The Good Jobs First Amazon incentives tracker lists the Niagara County tax break to Amazon as the sixth-largest ever provided to the company. The top 5 are:

Arlington County, Virginia: $750 million for a headquarters project.

Markham, Cook County, Illinois: $322 million for a distribution center project.

Texas: $269 million for distribution centers.

Hermison, Umatilla County, Oregon: $176 million for five data centers.

Gates, Monroe County, New York: $150.93 million for a distribution center project.

Legislators seek incentive crackdown

Earlier this year, New York State Sen. Sean Ryan, D-Buffalo, and New York State Assembly Deputy Majority Leader Michaelle Solages, D-Elmont, introduced legislation designed to prevent industrial development agencies (IDAs) in New York from providing further subsidies to Amazon and other companies like it.

"This bill would prohibit New York's IDAs from offering subsidies for e-commerce storage and transfer facilities, putting an end to incentives that often go to large, multibillion-dollar corporations with dubious economic growth projections," they said in a joint statement issued in March. "IDAs in New York have diverted nearly $400 million in subsidies to Amazon alone since 2013. These subsidies often produce warehouses with mostly part-time jobs that pay $15 an hour — or about $31,000 a year — well below the median wage of many municipalities across New York."

In the Niagara project, for example, Amazon said 950 of the 1,000 jobs created would warehouse and logistics jobs that have an annual salary averaging $31,200 — or $15 an hour. The other 50 jobs would be management jobs that have an annual salary averaging $60,000 — or $28.85 an hour.

Solages said that "each year, industrial development agencies issue millions of dollars in tax exemptions with little oversight — and create too few jobs to justify them. This bill will reduce the massive loss in revenue local governments have to endure when IDAs provide these tax write-offs. E-commerce companies which bring in hundreds of billions of dollars in revenue each year must pay their fair share in taxes if they wish to build their facilities in New York State."

However, the bill did not get out of committee before the legislative session ended in June, and is expected to be reintroduced next year.

Tax breaks run the gamut

Initially, Mattera of Good Jobs First said, Amazon had a tendency to put together deals under which it agreed to collect state and local sales taxes from online customers — something the company at one time had been resistant to — in return for some type of financial incentive.

"It was kind of a quid pro quo," Mattera said.

Now, the incentive deals run the gamut, including outright cash grants; property tax abatements; sales tax rebates; and special tax or regulatory adjustments if Amazon establishes its facilities in so-called enterprise zones set up by a state, county or municipality.

"Since we began collecting and exposing subsidies the company has received, we have encountered greater secrecy surrounding the packages awarded to Amazon," Good Jobs First reports. "This sometimes makes calculating such costs difficult. Secret project names, nondisclosure agreements and a reluctance by public officials to fully disclose costs — even after a deal has been awarded — suggests Amazon and public officials know these deals have become controversial."

Dave Berman is business editor at FLORIDA TODAY. Contact Berman at [email protected]. Twitter: @bydaveberman.

Biggest states

for Amazon deals

These are the states with the highest total amount of incentives to Amazon and its subsidiaries, according to a Good Jobs First database.

These figures are based on offered – not actual or awarded – incentives. All offered incentives may not have been counted, because of the secretive nature of taxpayer-based subsidies and Amazon projects.

Virginia: 20 incentives totaling $824.29 million.

Illinois: 16 incentives totaling $731.97 million.

Washington: 10 incentives totaling $608.64 million.

New York: 16 incentives totaling $550.93 million.

Oregon: 19 incentives totaling $375.54 million.

(Florida ranked 20th, with 13 incentives totaling $43.24 million.)

Source: Good Jobs First