Amazon Lands $5M in Cash Incentives for Detroit Airport Plant

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Alex Ebert

A Michigan development board is delivering up to $5 million in cash incentives to Amazon in exchange for jobs the company has pledged for a new Detroit airport plant.

The Michigan Strategic Fund approved the grant June 27 as part of Amazon.com Inc.'s deal to invest $140 million in developing a new fulfillment center in the city of Romulus, a stone’s throw from the Detroit Metropolitan Airport.

The cash incentives are pegged to the number of jobs Amazon creates at the new plant, according to the deal’s term sheet. The agreement will provide $2.6 million for the creation of 850 jobs by 2021, an additional $1.1 million for another 360 jobs, and a further $1.3 million for another 390 jobs.

This is the second such cash grant awarded to Amazon within the last year. In December, the Michigan Strategic Fund approved up to $7.5 million in cash incentives if the company creates 1,000 jobs at a new plant it’s constructing in Livonia, Mich., also within the Detroit area.

Incentives Giant

The Michigan grants are intended to assist with the expense of developing infrastructure to make the new plants feasible. However, additional taxpayer funds might also be funneled into infrastructure development. According to the latest term sheet, Wayne County Aerotropolis is considering capturing state and local taxes to assist with infrastructure improvements.

The Aerotropolis and Amazon didn’t immediately respond to requests for comment.

An analysis of subsidy data shows that Amazon could surpass Wal-Mart Stores Inc. this year for the record amount of state and local tax subsidies. A conservative estimate by the progressive economic policy research and advocacy group Good Jobs First suggests Wal-Mart has captured more than $1.2 billion in tax abatements, credits, exemptions, infrastructure assistance, and financing deals over four decades.

To contact the reporter on this story: Alex Ebert in Columbus, Ohio at aebert@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

Text of the term sheet is at http://src.bna.com/qiL.

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