Amazon.com Moves to Reno; Earns Tax Breaks for New Site
A state panel in Carson City has voted to give tax breaks to Amazon.com for its new distribution center in Reno. Goodbye California, you just cannot compete.
The decision is a welcome win for the company’s tax attorneys who had been lobbying hard for this. Their efforts bore fruit when the Governor’s Office of Economic Development board took the decision to grant the online retailing company the tax break for developing its new site in the desert city. The total budget for the new site that Amazon plans to build is supposedly around $28 million in capital equipment and building improvements.
Low taxes = jobs
Amazon is currently in the process of closing its distribution center in Fernley, a city 30 miles east of Reno. The new site is Reno will be 100,000 square foot which is much bigger than the current site at Fernley, and with the company growing at the breakneck pace that it is, the new site with its improved storage will be a much-needed addition to its operational strength.
All but mandatory taxes waived
When Amazon officials told the board about the plans they had for constructing the site, the $28 million dollar budget must have played a huge part in swaying their decision. Amazon’s tax attorneys have managed to get a waiver for all state taxes except or the constitutionally imposed and mandatory 2% sales tax which cannot be waived away under any pressure.
Abatements of half of the modified business tax for a period of four years, and half of the personal property tax for a period of ten years has also been approved. The Nevada Appeal reports that the abatements will cost $1.3 million in taxes, but it’s nothing compared to the amount of money the company is pouring into the city and the revenue that it will generate for Reno.
Besides Harry Reid, Nevada has something to smile about.
Reno site completely different than predecessor
Mike Grella, Amazon’s executive director for development, says that the new site in Reno is planned in such a way that it will turn out to be a completely different operation than the facility at Fernley. The Reno site is built in order to focus on handling large-size purchases and shipments such as big flat-screen television sets. In contrast, the center at Fernley had mainly dealt with a variety of smaller items that could be loaded and moved on a tray or a conveyor belt.
Grella says that the Reno plant will have a completely different inventory. Employees moving to the Reno plant form Fernley will be given similar positions to the ones they held down in the previous plant, and they will also be provided training to handle their new jobs since they will be working with different shipment sizes this time around. The new plant should be operational by 2015, according to Grella and the old operation in Fernley will also have been closed down by then.
The company is also stressing on the fact that they want everyone from the old plant to keep their jobs. Amazon’s tax attorneys say that a move to a new city is in no way a cost-cutting or employee reduction move.
