When you let Amazon in the door, they take over your whole house:
Amazon and its developer won’t have to use local labor for some construction jobs as they build a massive new warehouse and distribution center in Gates [suburb of Rochester], under a deal approved Tuesday by Monroe County’s economic development arm.
The County of Monroe Industrial Development Agency previously awarded the project $134.7 million in property, mortgage, and sales tax exemptions on the condition that the developer, Trammell Crow Co., use local labor for all of the construction work – a requirement typical of such tax incentive packages.
But after an hour-long closed-door session, the agency’s board voted 4-3 to partially waive the labor requirement, allowing Trammell to hire non-local labor for up to 30 percent of its construction workforce.
Trammel and Amazon had requested the waiver, citing problems finding enough local contractors to pour the concrete for the project.
The local industrial development agency model is rotten in so many ways. Either they have bidding wars between cities to offer big corporations tax breaks for projects that would probably be built anyway, or they offer tax breaks to local businesses for job growth that never materialize. Once the big corporation gets their tax break, they weasel out of the conditions they don’t like by threatening to cancel the project (which I’m sure is what happened in the closed-door meeting). I’ll also bet that there would be some local company that would pour concrete, but they wanted more money than the developer wanted to pay, and/or they were a union shop.
The smartest thing NYC did was to reject Amazon’s HQ2 bullshit, because Amazon expanded there anyway. Similarly, Amazon is building warehouses everywhere in Western New York. Rochester is a well-situated location for an Amazon warehouse. I wonder if they would have built here anyway, but we’ll never know.
Raven
Yo
Doug R
Waaaaay back in the 70s-80s, Fiberglas Canada got Mission, BC to give it huge tax breaks to build a fiberglass plant. Fiberglas got bought out by another company and one of the first things they did was shut down the plant and transfer jobs back east.
I understand giving a discount for a year or so, but huge tax breaks usually don’t pay off for the towns that do it.
Ken
@Doug R: “We will be glad to give you three years of tax breaks. Those will be in years 5, 10, and 20 after your plant opens.”
No One of Consequence
@Ken: One would think that a business on the up and up would think, those tax breaks at 5 10 and 20 would be worth more than 3 years right now. Sounds good!
Peace,
NOoC
Doug R
@Doug R:
Owens-Corning Milestones (pdf)
Roger Moore
These kinds of tax breaks are another reason it’s a mistake to have local government funded through local taxes. If the state collected and doled out the taxes for local government, the companies would be in a much weaker position to play cities off against each other, and the overall tax burden would be much more fair. You’d still have problems with things like the Amazon HQ2, but they would be the exception rather than the rule.
Le Comte de Monte Cristo, fka Edmund Dantes
I’ve represented traveling commercial masonry companies in the past. Local quality for those kinds of jobs can be spotty, or they may not have the capacity in terms of equipment or rental availability. Large hydraulic scaffolds for an Amazon size warehouse were 100K apiece for purchase 10 years ago – and rentals aren’t exactly plentiful (particularly right now). You’d need several for that job. Throw in time devoted to training cycles on erection and operation, and that factor alone requires a specialty contractor (the operator has to control two separate mechanisms while keeping them in balance, and given that they rise by six floors, people can die on the platform and on the ground if they collapse).
It ain’t about Harry’s Foundations secondhand cement mixer, skidloader and backhoe on a job like that.
Ruckus
Here’s the thing that pisses me off.
The big corps spend a lot of money to get tax breaks and so on to build and open, say a warehouse and are given huge breaks and concessions, even though they have far more money and could build anywhere and all with union/local labor and the cost difference, while significant to mere mortals, is a rounding error to them. And if their fee fees get ruffled in the least they will shut it down and walk away.
They are fucking economic bullies. And they know it. Their role model is Scrooge McDuck.
And with our worship of the almighty dollar, and the ability to hold on to more of them than someone else, they manage to get their way, and fuck over anyone and everyone who doesn’t bow on their knees to them. This is not only an American concept, it happens the world over, no matter the currency name. But we seem to have taken it to new lows, building an entire class of wonton assholes
And the rest of us suffer.
Ruckus
@No One of Consequence:
Those tax breaks might also be better for them. But they don’t think that far ahead, in the quest to get more and more dollars into their pockets now. Hell they may decide before the building is done to move their operations 20 miles down the road, for one or no reasons.
Feathers
@Roger Moore: Local government is a huge part of the American problem, starting with education and policing. In practice, local governance means zero accountability and immense corruption. It made sense when communication was difficult and knowledge could be broadly applied. But to use Massachusetts as an example, why should each town of 50,000 be required to contain the knowledge of how to contract and build a new school or library. They don’t, so consultants and contractors take over.
If you want to know why infrastructure is in such terrible shape and costs many multiples more than the rest of the world, this is a large part of the problem. And the system ends up being run for the benefit of generational wealth.
OzarkHillbilly
Over the years I worked a number of such jobs being built for large corporations. It is common enough for them to have a core crew that is familiar with the peculiarities of these cookie cutter projects and they hire locally to fill out the rest. 30% is a bit high (depending on the project) but not entirely out of line. this however:
Strikes me as bullshit. Rochester, NY isn’t some one horse town in a hayseed county that has never had a large building erected. Hopefully the union locals will scream bloody murder and contest the waiver in court. Delays cost money too.
VOR
The Foxconn debacle in Wisconsin ought to be a cautionary tale. Billions of tax breaks, 100s of millions public money spent on roads and infrastructure, and very little to show for it.
Ohio Mom
On the micro- level, aka my neighborhood, property tax abatements for tearing down a perfectly good 60 year old, not quite $200K house and replacing with a $450K “modern farmhouse” that is so big it barely fits in the lot.
I’d be fine if tax abatements were used for truly affordable housing — we have a huge shortage of affordable units in our metropolitan area.
Instead, people who can afford more house than I can are getting a break?!! It’s worse in the City of Cincinnati itself, there they give abatements to million+ houses and condos.
evodevo
Greed, desperation and ignorance about how they are being played….I was on a Planning Commission for 4 years in KY, and no matter how tightly we held the developers’ feet to the fire, the city commission would inevitably give in, and they were the ones with the final say. Same old, same old…
Neldob
Probably if they paid more they’d get more people.