Council gives OK on Amazon package

Council gives OK on Amazon package

December 1st, 2010 by Cliff Hightower in News

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.

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.

Staff Photo by Jake Daniels/Chattanooga Times Free Press Fred...

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.