Take a peek inside an Amazon fulfillment center
Most California cities support a proposed law that would prohibit government agencies from kicking back sales tax revenue to warehouse retailers such as Amazon, agreeing the deals collectively reduce revenue for local services.
Mayor Lee Brand believes Senate Bill 531, authored by Democratic state Sen. Steve Glazer from Orinda, will kill one of Fresno’s best economic “weapons.”
“In the end, if SB 531 is approved, Fresno will lose a key tool in its economic development arsenal,” Brand said in a Valley Voices piece in The Bee last weekend. “And it will continue a California narrative where the rich get richer and the poor get poorer.”
Glazer’s bill targets tax-sharing deals California cities commonly offer to giant retailers. Fresno has at least four of the revenue-sharing agreements, according to records obtained through the California Public Records Act.
Sacramento County in 2015 used a tax-sharing agreement to persuade Macy’s to open a warehouse, and Bloomberg last month reported that Cupertino has returned $70 million to Apple through a tax-sharing agreement it gave the company in 1997.
Glazer’s bill would allow cities to keep their current tax-sharing deals but would prohibit them from making new agreements. The state Senate approved SB 531, and it’s headed to the Assembly floor when the Legislature reconvenes.
Fresno is one of two cities that are on the record opposing the bill. The city of Perris also opposes it.
The League of California Cities, an organization that lobbies in Sacramento for local governments, supports it.
“These kickback deals are bad public policy,” said Michael Coleman, a fiscal policy adviser for the league. “It leads (cities) to just give away public dollars on subsidies that don’t appear to have any good public benefit.”
It’s disappointing Fresno opposes the bill, Coleman said, especially since it doesn’t affect existing agreements. Prohibiting future kickbacks likely won’t prevent online retailers such as Amazon from choosing California cities for its warehouses, he said.
Plus, cities have other tools to attract business, such as building infrastructure, helping with site preparation and reducing local regulatory hurdles, Coleman said.
There’s no data that tracks how prevalent the deals are and how much money cities are losing because of them, but Coleman said it might be good for a regulatory agency to track such things.
City leaders in Fresno have touted the agreements and credited them for attracting and retaining big companies such as Amazon, Ulta Beauty and Gap. The city also has a similar agreement with Betts Spring Company, a local coil and leaf spring manufacturer, according to records obtained by The Bee through a public records request.
Brand said the three e-commerce centers employ about 4,000 people and indirectly opened up about 700 other jobs.
The city estimates through sales and property tax revenue, it will collect about $3.3 million annually on average from the three distribution centers.
“Even in this good economy, Fresno struggles to deliver the level of service expected by our residents. Our property tax and income tax bases do not create enough revenue to fund everything the city needs in order to provide public safety, parks, good streets, sidewalks and so much more,” Brand said in his op-ed. “If that $3.3 million was not in the budget, Fresno’s financial situation – and the services it provides – would definitely be much worse.”
But Councilmember Miguel Arias, who has vocally criticized the city’s deal with Amazon, agrees with Coleman in that the distribution centers would still choose Fresno, considering 1 million customers who live within 30 minutes of Fresno aren’t going to disappear anytime soon.
“I don’t think the city should be selling itself short,” he said. “Especially if our only other option is to raise taxes.”
Arias also pointed out that smaller, locally owned businesses that are the foundation of Fresno’s economy don’t receive the same kickbacks.
The city of Perris said the sales tax revenue in these deals helps the city fund public safety and parks. In Fresno, Brand is trying to negotiate a sales tax ballot measure for those exact things after he campaigned last year against Measure P, a sales tax initiative to fund parks and arts.
Not everyone agrees the Amazon and Ulta warehouse-style jobs are the kind of jobs Fresno needs.
Veronica Garibay, co-founder and co-director of Leadership Counsel for Justice & Accountability, said the warehouse-style of economic development further perpetuates concentrated poverty and pollution for communities of color.
“It’s no surprise to a lot of us that there are very deep racial inequities in the city of Fresno,” she said. “We know that black and Latino communities are disproportionately impacted. We, as a region, have always told those communities that these are the types of jobs they get. That’s unfortunate.”
The city instead should invest in the creativity, resiliency and entrepreneurship that already exists in Fresno’s low-income communities of color to create opportunities for upward mobility, she said.
“We’re at a time in Fresno where we have an opportunity to work with communities to talk about how does Fresno thrive?” she said. “As the fifth largest city in California, and the largest in the Valley, how do we lead with integrity and with community voices at the forefront? The question to our leadership is: Whose side are you on? Are you going to work with the community on this, or are you going to choose not to?”