With plans to employ up to 7,000 people at nine Chicago-area and downstate facilities, Amazon.com is well on its way to becoming a solid corporate citizen in Illinois.
You can’t beat jobs and business expansion.
Still, you know what would make global e-commerce giant Amazon an even better neighbor? If the profitable Seattle-based company didn’t press our fiscally damaged state for any more tax breaks designed to supplement its ambitious and unfolding plan to be a dominant and lightning-fast distributor of retail goodies.
That’s because Illinois is already kicking in almost $13 million in tax incentives over 10 years to Amazon in return for creating at least 1,000 new jobs. Amazon’s agreement is an especially nice perk for a company that had already decided to plow billions of dollars into capital expansion. Moreover, I’d contend Amazon was going to be in Illinois anyway because of the state’s inherent strength as the country’s premier road, rail, air and intermodal nexus.
"We think its nuts for taxpayers to do what Amazon’s stated business plan says it already must do," says Greg LeRoy, executive director of Good Jobs First, a Washington, D.C., nonprofit that tracks public subsidies to corporations. "Amazon was coming. It didn’t need to get paid by Illinois."
Nevertheless, the state’s commerce department didn’t see it that way late last year, when it allowed Amazon to take advantage of the Illinois Economic Development for a Growing Economy tax credit program, also known as EDGE. (That program technically expired last year, and the state is re-evaluating it.)
Amazon’s Aurora distribution center deal may be one of the last under EDGE program Ally Marotti and Ray Long
Amazon is bringing two more distribution centers to the Chicago area with the promise of more than 1,000 jobs in Aurora, thanks in part to nearly $12.9 million in new corporate tax breaks through a state jobs program that soon may be overhauled.
It’s the latest in a set of tax breaks that potentially…
Amazon is bringing two more distribution centers to the Chicago area with the promise of more than 1,000 jobs in Aurora, thanks in part to nearly $12.9 million in new corporate tax breaks through a state jobs program that soon may be overhauled.
It’s the latest in a set of tax breaks that potentially…
(Ally Marotti and Ray Long)
"To qualify for an EDGE tax credit, the company must show that there is a viable out-of-state option, that if not for the incentive, they would choose to locate elsewhere," wrote Jacquelyn Reineke, a spokeswoman for the commerce department, in an email to me on Amazon’s tax credits.
In documents obtained by the Tribune under the Illinois Freedom of Information Act, Amazon said other states and cities were in the running for a warehouse and fulfillment plant in Joliet, along with a fulfillment facility in Monee.
In that document, Amazon said that without the EDGE credits, it would cost too much (in labor, utilities and taxes) to build and operate the Illinois facilities and the company would "not likely be inclined" to complete the project.
But providing EDGE credits would help make the deal much more palatable to Amazon’s top brass, the document stressed. The filings didn’t mention him but, as we know, Amazon is led by Jeff Bezos, founder, CEO and entrepreneur extraordinaire.
How much was the projected cost difference between Illinois and those alleged rival states?
I can’t tell you.
That’s because the Sept. 19, 2016, EDGE agreement, for example, blacks out Amazon’s cost estimate of a Joliet facility versus Dallas and the Monee project compared to East Texas and South Florida.
As a result of the redactions, average taxpayers really have no idea how sound a deal was made.
Instead, we’re left to accept on faith that Amazon was serious about side-stepping Illinois and that Gov. Bruce Rauner, along with the state’s economic development team, cut the best agreement for the public good when it agreed to the $13 million.
This much we do know: Amazon is making a lot of money and honestly doesn’t need Illinois tax credits to execute its business plan.
Last year, sales were $136 billion, a 27 percent increase from the previous year, while annual net income was $2.37 billion — way up from the prior year’s $596 million. As noted, Amazon is already super-determined to enlarge its distribution network and meet the Bezos objective of speedier, on-site delivery throughout the country and beyond.
Be assured that centrally located Illinois was always a linchpin to that effort.
Only two years ago, Amazon had no physical presence in Illinois and now boasts plans for a total of nine within the Chicago-area, central Illinois and downstate.
On top of that, Amazon is responsible for five of 2016’s 10 largest area-based industrial leases, and warehouse space is getting tight, according to industry data. It also has a monster 1 million-square-foot fulfillment plant in Kenosha that employs 1,000 workers.
Right now, Amazon isn’t talking about going beyond the announced Illinois plants.
But considering what’s going on, it stands to reason that Amazon is not done expanding statewide. So don’t be surprised if it comes knocking on Illinois’ door seeking other incentives, observers say.
In fact, Amazon has made getting tax sweeteners, on the state and local level, an art form because it knows how to play the incentive game, argues Good Jobs First’s LeRoy.
"They are in the catbird seat," he says.
When asked, Amazon spokeswoman Nina Lindsey deferred questions about tax incentive issues to the state. Instead, she stressed Amazon’s creation of thousands of full-time jobs with competitive pay and benefits.
(Amazon’s workplace has come under fire from activists for undue stress and meager pay, which are claims Amazon strongly disputes.)
For its part, the Rauner administration feels pretty positive about Amazon’s Illinois entry and expansion.
At a time of a long-simmering state budget impasse and a backlog of $10 billion-plus in bills, Amazon’s growing presence is a political bright spot.
I get that Amazon is not alone in negotiating tax sweeteners in return for the promise of corporate expansion or much needed new jobs. I also realize the state is trying to figure out the best way to engage with companies that are always demanding tax breaks or else.
But, there’s something about this Amazon deal with Illinois that just makes me think: "Enough is enough."
roreed@chicagotribune.com
Twitter @reedtribbiz
Our editors found this article on this site using Google and regenerated it for our readers.
