Fresno and Visalia are competing against each other for a Nordstrom packaging and distribution center for online purchases that could bring at least 1,000 full-time jobs – and possibly more in the long term – to the winning city.
News of the distribution center competition broke Wednesday when Fresno officials said the city was a finalist with an unnamed second city. Visalia officials confirmed they were the other city.
“We are extremely thrilled to be in this position,” Fresno Mayor Ashley Swearengin said.
The Seattle-based retailer initially approached Fresno in June, and since that time work has proceeded on site selection and other aspects of the proposal. The city has worked with the company and has cleared each hurdle. Now just one remains – the City Council on Thursday will be asked to approve a sales-tax-sharing deal that will return up to $10 million to the Seattle-based retailer, based on the number of jobs created.
Visalia isn’t as far along in the process, but City Manager Mike Olmos said the proposal’s details are the same as in Fresno.
“We know we’ve been shortlisted with Fresno,” Olmos said. “We received the same request – for the city to consider monetary incentives.”
Down the road, a possible second development phase would create a distribution center that would supply brick-and-mortar Nordstrom stores. That would come with a similar sales tax-sharing agreement that would return up to $8.75 million to the company that, again, would be based on the number of jobs created. The distribution center would create an additional 875 jobs for the winning city.
Swearengin said landing Nordstrom would create a “substantial upside” for Fresno, both in job creation and additional money for the city’s general fund.
Added Economic Development Director Larry Westerlund, who worked with Nordstrom on the proposal: “This agreement is really tied to jobs.”
The 1,000 full-time jobs would have a starting salary of at least $12.52 per hour. Many of those jobs would pay more than that, Westerlund said. One of Fresno’s selling points, he added, is that it has the workforce to meet Nordstrom’s demands. The first phase is what Nordstrom calls its “West Coast E-Commerce Fulfillment Center.” Workers would take online orders, fill them and then ship them to their destination. Beyond the 1,000 full-time jobs, there would be an additional 200 to 450 seasonal jobs, as well as construction jobs getting the site ready.
Nordstrom has identified 55 acres of land in the North Pointe Business Park in southwest Fresno where it would build a $110 million, 1 million-square-foot building. In Visalia, the targeted property is in the Visalia Industrial Park, close to the interchange of highways 99 and 198. Both UPS and FedEx operations are in the vicinity.
According to Fresno officials, Nordstrom “conservatively projects” retail sales of $100 million in the first year at the Fresno site and expects e-commerce sales to continue to grow each year by 10 percent. Last year, Nordstrom reported $2.4 billion in Internet sales from its four existing distribution sites.
The city hired an outside firm – Impact DataSource – to determine economic benefits associated with the project. Impact DataSource determined that Fresno would receive more than $34 million in additional sales tax revenue over the next 20 years.
Fresno City Council Member Paul Caprioglio said that kind of analysis gives him peace of mind in supporting the sales tax-sharing deal.
“Visalia always seems to get the drop on us,” Caprioglio said. “Perhaps this will encourage other major corporate businesses to join in the greatest city in the state.”
Council President Oliver Baines predicted the sales tax proposal will have no problem gaining council approval.
“I think it’s a great opportunity for the city of Fresno to expand its job market,” he said.
In competing for the project, Fresno officials think they have several advantages that will give the city an edge over Visalia. For one, there are direct flights from Fresno to Seattle, site of Nordstrom’s corporate headquarters. In addition, there is the available workforce. The Fresno site is part of a pilot project for tax credits on wages paid above the minimum wage. And Fresno County has a New Employment Opportunities Employment Subsidy Program that city officials say would be attractive to Nordstrom.
Visalia does not appear to be as far along in the vetting process. Mayor Steve Nelsen said city officials met a few months ago with site selectors representing an unnamed company, and learned later that it was Nordstrom.
Just as in Fresno, the Visalia City Council would have to approve the sales tax rebate incentive Nordstrom is requesting. Olmos, the Visalia city manager, said Nordstrom has asked the city to respond by the end of the year. The final council meeting of the year will be held Monday and it’s not likely the item will be on the agenda, so a special council meeting would have to be scheduled.
“We are still evaluating the proposal,” Olmos said.
Nordstrom tax-sharing deal
If the Fresno City Council approves a sales tax-sharing agreement with Nordstrom on Thursday, here is how it would work:
- When Nordstrom reaches 700 full-time employees (or the equivalent based on part-time jobs) Fresno would start rebating sales tax revenue to Nordstrom.
- The rebate would be 75 percent of the sales tax revenue generated at the site for the first three years of the program.
- After that – and until the $10 million was reached – the sales tax rebate would be 50 percent of the annual sales tax revenue received from the Nordstrom site.
- When $10 million or 30 years is reached (whichever is first), the agreement would end.