published Wednesday, December 1st, 2010

Council gives OK on Amazon package


by Cliff Hightower
Audio clip

City council meeting - 11/30/2010

The Chattanooga City Council voted 9-0 Tuesday night to give an incentives package to Amazon.com as the Seattle-based company continues to decide on whether it wants to locate to Hamilton County.

"The transaction is not complete," said Fred Kiga, director of policy for Amazon.com. "We still have a few hurdles to overcome."

Representatives of Amazon.com appeared before the City Council on Tuesday night for the first time to discuss a payment-in-lieu of taxes agreement between Chattanooga and Amazon.com.

The world's biggest Internet retailer is being offered more than $30 million in government incentives to build distribution facilities in Hamilton and Bradley counties, which combined could employ more than 3,900 full-time and temporary workers during peak holiday periods.

The council unanimously agreed to forgo any city taxes on the proposed $91 million complex through 2022. The distribution complex is to be built on an 80-acre site the city is giving to Amazon near the new Volks-wagen automobile assembly plant.

Kiga said after the meeting he is hopeful of soon finalizing an agreement to build two million-square-foot distribution centers, one each in Hamilton and Bradley counties. The new distribution sites should be in operation in time to help with the Christmas holiday rush of online purchases in late 2011, Kiga said.

  • photo
    Staff Photo by Jake Daniels/Chattanooga Times Free Press Fred Kiga, Amazon director of policy, speaks to the media in the City Council Building on Tuesday evening after making a short presentation to the City Council. Mayor Ron Littlefield, left, and County Mayor Claude Ramsey stand behind Kiga.

He said the Hamilton County center would handle smaller items, such as books, DVDs and electronics, while Bradley County would handle bulkier items.

Combined, the two facilities will employ 1,476 full-time employees and up to 3,900 employees during peak holiday seasons, Kiga said.

"Potentially, that could happen," he said.

Mayor Ron Littlefield said an influx of temporary jobs during the holidays would be welcome.

"We think our students will have Christmas jobs," he said.

The council agreed to an 11-year abatement of any city property taxes to an Amazon subsidiary -- a Texas real estate firm known as US Real Estate Limited Partnership LLC. Hamilton County commissioners will consider the tax plan today and the Bradley County Commission will take up tax breaks in that county on Monday.

The site of the proposed Chattanooga complex will be graded and prepared, in part, with $4 million provided through Tennessee's Fast Track assistance program.

Under a 12-page agreement adopted by the city Tuesday night and scheduled for approval today by the Hamilton County Commission, the Amazon affiliate will pay only the educational portion of local property taxes for the first 11 years that the facility operates, or about 27 percent of what would otherwise be paid.

On the $91 million complex, the company would pay $429,624 a year in school taxes at the current tax rate. But the company will save nearly $1.2 million a year, or $12.7 million over the 11 years of the tax abatement.

Amazon will be eligible in Tennessee for job tax credits worth $4,500 for each new job to offset up to 50 percent of the company's franchise and excise taxes.

Littlefield said the tax breaks granted to Amazon are similar to what the city and county provide to any business making major investments and adding jobs in the community.

"We have a matrix we go by so that we are fair to everyone," he said.

But Tim Price, owner of JAT Systems Inc. and a former Hamilton County Board of Education candidate, said he objects to having to pay property taxes, while other companies do not.

"Seventy percent of the jobs are created by small businesses, and I'm tired of having to pay taxes while companies like Volkswagen and Amazon do not," he said.

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KWVeteran said...

Pretty darned generous of the city to give away the taxes that I pay and then still have to use the taxes to pay for city government. Likely within a couple of years the city comes begging for a tax increase. Strange bedfellows, these people who play with tax money as if it's just a silly game.

December 1, 2010 at 8:51 a.m.
nowfedup said...

Now we need a TOTAL amount of tax welfare, what the cost PER JOB works out, what the estimated taxes paid per worker will be, AKA when is the welfare paid off? Note most howl about GM-bank bail outs,that saved millions of jobs, but not a word here. Note step two is to go feds, remember them, the evil ones, and beg for funds, while cutting education, health care, etc. ' Not against jobs as desperately needed but seems a big mortgage on future for what seems less then even trade. Last, ask who is making the profits? this taz welfare for new firms hurts established firms,as it is a government subsidiary-bail out and getting way out of control. Pay us now or pay us later, and looks like the "kids-Grandkids will have to make up" the lost taxes and yet not a word from those that usually bay about such things, Tea Party/Crocker/A,ex very quite. Congrats on jobs, but at what real cost and who profits?

December 1, 2010 at 11 a.m.
Allison12 said...

As an existing business owner in Chattanooga, I resent the corrupt public official requiring me to subsidize VW and Amazons share of property taxes, and in VW's case, my business must also pay this large corporation's stormwater fees. Ron Littlefield and Claude Ramsey administration are out of control, corrupt lame ducks. They have attorneys running private practices out of the courthouse, EAC directors launching an LLC, and the Knowles Clan all in upper management, and ALL on the taxpayer’s dime. I am sick of these lazy, no vision government political hacks treating our tax dollars as their own private money. Especially, forcing small local business to subsidize these foreign corporations, VW and Amazon, and 20 others, and forcefully take money from my business to give to them.There is so much to tell. This is not free enterprise, if the City and County government are forcefully taking money from exisitng business. This is government funding the private sector. Cheer the 6 figure players at the Chamber for shafting existing business, and watch, there are consulting contracts for them. VW consulting netted them an extra $900,000 a years for 5 years. Pay attention people, these people are corrupt. http://www.youtube.com/watch?v=EP54U1vecKQ

December 1, 2010 at 11:54 a.m.

Is Edna Taylor still alive?

Geez folks. Stop your complaining. This is another business that's being incented to build in our area who will dump money back into our ecomomy and employ our citizens for many years. They will require local products and support services on an ongoing basis who will then need to hire additional people. And with VW and Amazon, they will be employing highly paid technical wokers which are scarse careers in our city today.

But I guess there are some folks who still can't be convienced the Aquarium was a good investment.

December 1, 2010 at 4:03 p.m.
Amos_Ives_Root said...

There is absolutely no way Allison12 owns a business with as much as she's on here.

I'd guess own a business these days is an aphorism for "Tupperware sales" or perhaps unemployment check recipient.

December 1, 2010 at 6:03 p.m.
Allison12 said...

Amos_Ives_Root My profession is indeed writing and I enjoy blogging on TFP. Facebook is for chumps. Not all small businesses are retail. Your focus on little ol me and my love of blogging, does not address the concerns I have presented regarding small business subsiizing the property taxes and stormwater fees for VW. You betcha, as long as they are forcefully taking money from me through taxation to givew to a corporation, I will object often, loudly, and blog every opp, cuz I can and will excerise my free speech at every op. XOXO

December 1, 2010 at 6:23 p.m.
Humphrey said...

this is blogging?

December 1, 2010 at 7:38 p.m.
Allison12 said...

Posting comments on any thread of comments is blogging, on a very reliable site with quality content. I believe that Clay Bennets masses of posts would be considered a blog.

December 1, 2010 at 8:44 p.m.
Humphrey said...

I thought a "blog" was a "web log" - I don't think there is really much esteem in a "blog" or anything, but I'm pretty sure posting comments on a newspaper site isn't "blogging" - :"blogging" implies one has some control over the posting of content. Or maybe this is your blog - if so, you can go ahead and delete my comment.

December 2, 2010 at 9:10 p.m.
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