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Developers Seek Federal Grant, Tax Increment Financing to Support Amazon Warehouse in Sioux Falls

By Cory Allen Heidelberger on 2020-09-01

Amazon has confirmed the big economic development rumor of August: the online retailer is bringing a warehouse to Sioux Falls, promising 1,000 jobs and an infusion of $200 million in private investment.

And of course, Amazon can’t do it alone. The project is part of a pitch for a federal subsidy:

According to documents obtained Monday by [that Sioux Falls paper], Seattle-based Amazon joined a combined effort with the city, several state agencies and the Sioux Falls Development Foundation in requesting $1.9 million in grant funding from the U.S. Economic Development Administration,

The money would be used to build out and add infrastructure and utilities for Foundation Park, with Amazon signing on to the grant application as a beneficiary. Amazon told federal officials the facility would serve as a hub of economic growth [“Report: Amazon Commits to Build New Facility in Sioux Falls,” AP, 2020.08.31].

The Sioux Falls Development Foundation is also looking for local tax dollars to support the expansion. It wants to be able to deprive Minnehaha County of the full tax benefits of the Amazon development by diverting any new tax revenues toward paying their own building costs first:

The foundation will ask the City Planning Commission and Sioux Falls City Council to approve tax increment financing for the northwest Sioux Falls development park, which would allow for infrastructure to be installed on the north end of the property.

…A TIF district works by allowing the applicant – in this case the Development Foundation – to use the difference between property taxes paid on the base value of a property and the property taxes paid on the value of the same property once improvements such as buildings are made. That difference – the increment – could be used for improvements such as utility work, roads, lighting or landscaping.

…Approving a TIF is a multistep process, and the first step is establishing the boundaries of the district, which is what the Planning Commission will be asked to consider at its Sept. 2 meeting [Jodi Schwan, “Development Foundation Seeks Tax Increment Financing to Further Develop Foundation Park,” Sioux Falls Business, 2020.08.28].

You’d think that Amazon, with a 40% increase in sales and doubled net income in Q2 2020, could roll in and build a warehouse without any government subsidy. But evidently even the most successful capitalists depend on socialism to expand their empires.

 

Published in South Dakota

12 Comments

  1. mike from iowa 2020-09-01 07:34

    Bezos probably earns at least 1.9 million bucks every minute of the day. He can pay his own way and then some and then some more and then even more.

  2. Donald Pay 2020-09-01 08:10

    Socialism for the elite.

  3. Moses6 2020-09-01 09:21

    How much will the starting wages here be 20 bucks an hour I hope to start.Pay a liveable wage, so teachers can come and work here.

  4. bearcreekbat 2020-09-01 10:13

    I question the conclusion that

    evidently even the most successful capitalists depend on socialism to expand their empires.

    This type of government funding for Amazon seems more a “subsidy” than “socialism.”

    By definition, socialism refers to a form of economic production, whereby workers co-own and co-produce goods and services, sharing in the profits—as opposed to capitalism, wherein a business owner owns all of the tools and other means of production and keeps all of the profits while paying workers a wage.

    More recently, socialism has been, correctly or incorrectly, conflated with statist forms of government. Under this definition of socialism, the government—rather than individuals or businesses—owns and controls major industries, and the economy is planned centrally.

    https://www.investopedia.com/articles/retirement/122916/are-social-security-benefits-form-socialism.asp

    The statist definition seems more consistent with what most economic writers have described as “socialism.” In short, as far as I can tell “socialism” has little or nothing to do with transfer payments of government revenue to private individuals or to businesses absent the government obtaining an ownership interest in the individual or business in exchange for the transfer.

    Thus, so called economic incentives such as TIFs don’t seem to fit within either of the above definitions of “socialism.” The conservative misuse of the the term as a meaningless “bogyman” continues to confuse our mainstream language.

    Rep. Alexandria Ocasio-Cortez recently announced she would raise her congressional staff’s wages. The average entry-level congressional staffer earns $31,500 a year; Ocasio-Cortez set the starting salary of her staff at $52,000.

    . . . Fox News host Pete Hegseth responded to the move by decrying it as “socialism and communism.”

    . . .

    Hegseth’s hyperbole was inane, unpersuasive, and, it would seem, laughably bad political strategy. But have some sympathy for Fox News. At this point, they just can’t help themselves. They’ve been calling every minor redistributive economic reform “socialist” for more than two decades. It’s a hard habit to break.

    Most of what the Right calls socialism is hardly worthy of the name. . . .

    Fox is wedded to this rhetoric because it riles up their base and drives up ratings. . . .

    . . . the Right’s exaggerations rendered the term functionally meaningless for most Americans. . . .

    https://jacobinmag.com/2019/03/fox-news-socialism-alexandria-ocasio-cortez

    The linked article argues that the misuse of of the term “socialism” is backfiring on conservatives.

    The generations that came before us were subjected to a rigorous anti-socialist ideological campaign, analogous to the one millennials experienced around the idea of “terrorism.” But millennials were not ourselves witness to the height of that anti-socialist campaign, because in our youth, there was no active socialist presence to campaign against.

    . . .

    The Right’s habit of calling everything socialism is far from new, but it has never been less troubling. What used to be a savvy scare tactic for reactionaries is now a recruitment strategy for the other team. Unfortunately for them, and blessedly for us, that socialist threat isn’t fictitious anymore.

    Whatever the reality, it would seem that misuse of of such economic terms undermines the attempted clarity of language.

  5. Donald Pay 2020-09-01 11:49

    Well, we do have to dumb down everything for Republicans. They don’t know socialism from kleptocracy, so we use “socialism” as a way to communicate with the dumb crowd.

  6. Debbo 2020-09-01 17:33

    I read somewhere that Bezos is forecast to be the first trillionaire. I think that’s a bit exaggerated. It’s a long way from billion to trillion.

    Nonetheless, he is despicably greedy and lacks the decency to be ashamed. He’s acquired his wealth on the suffering of those he under pays, under benefits, under protects and over works.

    That is shamefully despicable.

  7. Richard Schriever 2020-09-01 19:33

    Just to clarify a couple of things; 1. Amazon is building their facility TIF or not. In fact, I am told I may be moving equipment to the site on Friday to start working on it Tuesday. 2. The TIF as currently structured will benefit the SFDF by allowing them to expand the park BEYOND what it currently is for future development, NOT where Amazon is currently building. THAT infrastructure is already a done deal.

  8. Richard Schriever 2020-09-01 19:43

    One more thing – TIFs are tax dollars collected from the property that are directed to paying for the infrastructure necessary to support the properties development. Once that infrastructure cost is paid for by the collected tax dollars – the TIF expires and the same tax dollars go into the general fund. In any case, TIFs have date certain expiration dates. If the infrastructure costs are NOT covered by the INCREASED tax dollars coming from the development, the developer is on the hook for the balance, and the tax dollars from that property go back into the general fund.

  9. Moses6 2020-09-01 19:46

    would it be like a farmer getting crop insurance and crop subsidy but that would not be socialism, but everything else is.

  10. Cory Allen Heidelberger Post author | 2020-09-01 20:18

    Governor Kristi Noem says her office was “heavily involved” in months of discussions to get Amazon to come to Sioux Falls.

    Meanwhile, KFGO reports today that Amazon is going to build a similar warehouse in Fargo, north of the Hector International Airport and the I-29/I-94 intersection. “Amazon has reportedly not asked for any local tax breaks.”

  11. grudznick 2020-09-01 20:23

    Good for the Fargoans. Those fellows have no taxes or hills.

  12. Richard Schriever 2020-09-02 05:25

    They are also building an identical facility in Lakeville, MN. We bid on all 3. Got one. BTW, the fact that the company I work of is even involved at all is indicative that the ground the building is going up on has some stability problems that are beyond normal. That in itself is one of the reasons TIFs were originally designed to address. I.E., the extra costs associated with development of difficult sites.

    ps, grudz, I am in Fargo working on a project right now. They have a LOT of unstable soils up here.

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