Amazon Likely To Win Nine-Figure Tax Break To Build Western New York Warehouse

The deal has been two years in the making, but it’s been a secret for most of that time.

Julia Rock   ·   August 9, 2022
The proposed $124 million in tax breaks to build a warehouse in the town of Niagara would be among the largest subsidies Amazon has ever received. | Scott Lewis

This article was published in partnership with the Albany Times Union.

Amazon is expected to clear a final hurdle this week to receive more than $124 million in tax breaks to build a warehouse in the town of Niagara in western New York, among the largest subsidies the company will have ever received.

The tax breaks are part of an incentive package that the Niagara County Industrial Development Agency (IDA), tasked with promoting industrial development in the region, is offering Amazon to build a $550 million warehouse and create 300 temporary construction jobs and over 1,000 permanent warehouse jobs.

Those taxpayer dollars would in large part be redirected from the revenue stream for the Niagara Wheatfield Central School District, which receives nearly half of its revenue from local property taxes.

Critics warn that the facility could cost more jobs in the community than it would create, as Amazon warehouses have done elsewhere by adversely affecting local retail industries, and would offer a lower wage than the vast majority of existing jobs in Niagara County.

“A deal that doesn’t at least require one of the largest, richest corporations in the world to pay for community benefits, livable wages, and to mitigate clear environmental impacts, is no deal at all,” a coalition of labor unions and corporate watchdogs wrote in a letter to the Niagara County Industrial Development Authority, signed by the independent Amazon Labor Union, the Office and Professional Employees International Union (OPEIU) Local 153, and five state and local corporate watchdog groups.

The Niagara Building Trades Council is supporting the deal despite the lack of a collective bargaining agreement, which the labor groups requested but Amazon was unwilling to provide, council president Paul Brown told New York Focus. The project will create “a lot of jobs for a lot of people,” Brown said.

Local officials have been positioning Niagara for the warehouse for two years, mostly in secret. In recent months, four county and municipal boards have all unanimously approved the deal. But the public has had a short window to weigh in, and some key stakeholders – including the school district and the state teachers union – have remained on the sidelines.

“Project Fifi”

In August 2020, Amazon withdrew a proposal to build a warehouse in the town of Grand Island, near Buffalo, in the face of massive public opposition centering on issues like traffic and pollution.

Niagara officials reached out to pitch their town as a building site after the Grand Island project was pulled, according to both Amazon and the developer.

But the fact that the town was attempting to bring an Amazon warehouse was not made public until March.

Critics say that was by design.

“There has been very noticeable pushback to Amazon at the local level across the country recently,” said Pat Garofalo, director of state and local policy at the American Economic Liberties Project, one of the groups that signed the letter. “Amazon is increasingly turning to secrecy as a tool to get these projects approved by local governments.”

A proposal to build a $550 million warehouse in Niagara was developed under the name “Project Fifi,” and Amazon’s identity as the developer was revealed just weeks before the Niagara County Planning Board approved the project.

In the ensuing months, components of the project were also approved by the town Planning Board, Zoning Board of Appeals, and the Town Board — all unanimously.

In July, all eight members of the IDA board — who are appointed by the Niagara County Legislature and not term-limited — who were present at the meeting voted in favor of a resolution to consider Amazon’s bid for tax incentives (one member was absent) and signaled they would likely approve it.

The board announced a public hearing on the project on Aug. 3, at which point the project faced its first real pushback.

Susan Langdon, the executive director of the Niagara County IDA, opened the hearing by arguing that the county’s expenditure would pay for itself many times over. “Based upon our cost benefit analysis program, for every $1 in tax incentives provided to Amazon, the local community receives $11 in benefit. The approximately $124 million in incentives will generate approximately $1.3 billion in local benefit,” she said.

Langdon was referring to the cost-benefit analysis the IDA conducted using a calculator devised by the consulting firm MRB, which has contracts with state IDAs to provide such analyses for projects. (MRB had also been hired by Amazon’s developer in Grand island to write a report assessing the economic impacts of the proposed warehouse project for the Grand Island Town Board.)

That analysis attributes $1.3 billion in benefits to private individuals in the form of wages from Amazon, $57.7 million to the town from property and sales taxes, and $69.6 million to the state from income and sales taxes.

The unions and watchdog groups argued that analysis doesn’t take into account “the very knowable downsides.” Their letter cites a 2018 report from the Economic Policy Institute which found that when a new Amazon warehouse opens, overall employment in the county does not increase — suggesting that the jobs created in the warehouse and storage sector are offset by losses in other industries.

It also asserts that Amazon warehouses have suppressed wages for local retail workers and that the $15-an-hour wage Amazon would pay at its Niagara warehouse is below the living wage for the region.

Michael D’Nolo, who works on the calculator as MRB’s director of economic development services, told New York Focus that these issues were beyond the scope of the analysis required for the IDA.

“There are clearly jobs that are shifting from brick and mortar to e-commerce, and it’s very well-documented. That doesn’t change whether or not this project gets an IDA inducement, it’s happening already,” D’Nolo said.

“A Lot of Work For My Members”

At the brief public meeting last week, people raised concerns about traffic, low wages, and high job turnover.

Some of the few voices at the meeting in favor of the project were members of the locals for the insulators and electricians union. 

“It's going to be a lot of work for my members, and there will be good-paying jobs with benefits,” said John Scherrer, business manager for the International Brotherhood of Electrical Workers Local 237.

Asked why the union is supporting a project without a collective bargaining agreement, Scherrer pointed out that Amazon used about 70 percent union labor when constructing its Rochester and Syracuse warehouses, and labor leaders assumed the same would be true in Niagara.

But labor did ask for an agreement. “[We] did present Amazon with a project labor agreement, but they didn’t agree to it,” Scherrer told New York Focus. “There has been pushback from some of the trades, but most of the trades overall are in support.”

“We knew Amazon wouldn’t accept but we always request a project labor agreement,” Brown said.

Scherrer declined to say which unions were opposed. “I wouldn’t want it held against them when Amazon is hiring for the project,” he said.

Project opponents also point out that the property tax abatements for Amazon would come at the cost of public school funding, estimating that the local school district has already lost about $980 per student each year from economic development tax abatements over the last five years.

That number is calculated from local tax abatement disclosures indicating foregone revenue, which local governments and school districts have been required to file since 2016.

While local school districts in New York are typically hesitant to weigh in on subsidy deals that will cut into their budgets, the state Legislature passed two bills this year designed to engage schools on corporate subsidy deals.

The state’s largest teacher’s union, the New York State United Teachers, supported that legislation but declined to weigh in on this particular deal.

“This obviously is a huge project, but it’s just one project that is emblematic of a larger issue we have concerns about, where school districts aren’t given a voice in these agreements that ultimately impact their resources,” said NYSUT press secretary Matthew Hamilton.

Gov. Kathy Hochul has not yet indicated whether she will sign the legislation, which would require local IDAs and businesses requesting property abatements to notify school districts of proposed incentives that might affect their revenue streams.

In April, NYSUT signed a complaint to state Attorney General Letitia James calling for an investigation into Amazon's potential violations of labor law, which would violate the terms of its subsidy agreements with the state.

Amazon declined to answer questions for this article.

Julia Rock is a reporter for New York Focus. She was previously an investigative reporter at The Lever.
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