Ohio Lures Two New Amazon Fulfillment Centers With Tax Breaks

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

Here an Amazon. There an Amazon.

Ohio announced Aug. 30 that internet retail giant Amazon.com Inc. could receive more than $11 million in tax incentives to develop two new fulfillment centers in the Buckeye State, raising the number of centers in Ohio to four.

The announcement comes after the state’s Tax Credit Authority voted to provide the company 10-year refundable tax credits for a center southeast of Cleveland in the village of North Randall and a center slightly northeast of Cincinnati in the town of Monroe. Combined, the two centers are expected to create 3,000 jobs and $82.1 million in annual payroll.

Rising From Shopping Graveyard

The North Randall location will receive a 1.35 percent “Job Creation Tax Credit,” which is projected to be valued at $7.5 million over the 10-year period. The Monroe location’s credit is for 1.39 percent, for a projected value of $3.7 million. The credits are refundable and may be used toward the company’s insurance premiums tax or commercial activities tax, but are provided only if the company creates the jobs it has promised.

Recently, Amazon has been criticized for receiving tax credits while simultaneously displacing dwindling brick-and-mortar retail. In a sign of the times, the North Randall fulfillment center will be built on the razed location where the country’s largest shopping mall once stood. When the mall closed in 2009, it sent shockwaves through the 1,000-resident community that relied heavily on its commerce.

“Words cannot begin to express what Amazon’s commitment to the development of its fulfillment center means for the Village of North Randall,” Mayor David Smith said in a statement late last week. “This is a generational project that not only redefines the future of our community but the future of more than 2,000 Cuyahoga County residents who will be employed at the facility.”

Amazon hasn’t yet announced it will be building the Monroe location.

Four Previous Incentives Provided

The incentives Amazon received Aug. 30 were much smaller than the previous package agreed to in 2015, when the company announced fulfillment centers on the east and west of Columbus.

Even though those centers were only pledged to create $60 million in new annual payroll, they received a 75 percent, 15-year tax credit. That credit is worth an estimated $17.5 million.

The reduced incentive might reflect less of a national competition for the centers now than in the past. The Ohio Tax Authority releases in 2015 noted that “Ohio is competing with multiple Midwest states for both fulfillment centers.”

However, the Aug. 30 release doesn’t mention any competition. Instead, it calls Amazon a “key employer in state” and “very successful in over-performing its commitments.”

Although Amazon doesn’t report it’s job-creation figures to the Ohio Tax Authority until next spring, a company release says Amazon has already created 4,500 jobs at its two facilities, exceeding projections by 500.

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

To contact the editor responsible for this story: Jennifer McLoughlin at jmcloughlin@bna.com

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