August 6—A prominent watchdog organization is again speaking out about against Amazon’s proposed Niagara County facility.
Good Jobs First, a Washington-based nonprofit that tracks subsidies that new developments receive, has issued a two-page long statement questioning cost-benefit analysis the Niagara County Industrial Development Agency is using to justify giving nearly $124 million in subsidies to Amazon.
Those incentives for over a 15-year period include $94 million in property tax abatements, $26 million in sales tax breaks, and $3.55 million in a mortgage recording tax exemption. Amazon would make PILOT payments totaling $49 million over 15 years before paying $9.5 million a year after that.
The three-million square foot distribution center proposed at 8995 Lockport Road will cost $550 million, of which $450 million is construction costs and $100 million is furniture, fixtures, and equipment costs. It is projected to take around two years to complete.
It is proposed to bring 1,000 new jobs to the Town of Niagara, of which 950 are warehouse and logistics jobs that pay an average of $31,200 a year and 50 management jobs that pay around $60,000 a year.
Good Jobs First’s subsidy tracking database lists Amazon as having received more than $4.7 billion in subsidies worldwide, $4.1 billion of which comes from across the United States.
Greg LeRoy, the executive director for Good Jobs First, stated the IDA’s study fails to state its underlying assumptions, which are critical to the credibility of any cost-benefit analysis, nor does it name any software products used to derive these estimates.
“There is no indication that the cost-benefit calculator accounts for job destruction in the bricks-and-mortar retail sector caused by the rise of e-commerce/Amazon,” LeRoy said. “That job destruction will offset warehouse job gains to an unknown degree. Just because people have another way to shop does not mean they have more money with which to shop.”
LeRoy also mentioned that residential property values along the routes serving the warehouse are at risk, given that hundreds of trucks traversing those streets every day may harm home resale values given the increase in noise and decline in air quality.
Other details he pointed out included using the words “local” and “state” to distinguish benefits without distinctions between Niagara and Erie counties, that it is reasonable to assume most of local job takers would be from Erie County given its higher population and not suffering tax revenue loses, the 1,000 permanent employees may not be a valid assumption given Amazon’s moves towards automation, and that it would generate far fewer “ripple effect” jobs than the 527 permanent jobs projected.
The most troublesome aspect of this analysis is the finding that local benefits will outweigh local costs due to the juxtaposition of payroll earnings with incentives, which LeRoy says is not valid.
“The PILOT incentive equals public dollars out, whereas earning (ie payroll) does not equal public dollars in,” LeRoy stated. “Someone earning $32,640 here pays state income tax of 5.2% So only 5.2% of the projected earnings can be correctly counted as a revenue benefit against the PILOT incentive cost.”
The calculator has a projected payroll of $1.34 billion equaling 91.3% of its total projected benefits. It also double-counts $69.6 million in project benefits, which are attributed to temporary and permanent jobs. There is no notation that that sum has been subtracted from the payroll estimates.
“So for all these reasons, in our opinion, this is not a fiscal break-even analysis, or a taxpayers’ cost-benefit analysis,” LeRoy ended his statement with. “It is a misleading public relations document.”
The statement has been given to the IDA as part of its public comment period for the proposal. The agency held a public hearing Wednesday afternoon at the Niagara Town Hall, where the majority of those offering comments spoke against the development.
The IDA will vote on whether to grant Amazon its requested tax benefits at its next meeting at 9 am, Aug. 10 at 6311 Inducon Corporate Drive in Sanborn. It already has the approval of the Niagara County and Town of Niagara planning boards, the Niagara Town Board, and the Niagara Zoning Board.