Amazon to receive $4.5 million in Delaware taxpayer money for new distribution center

Delaware Public Media | by Sophia Schmidt

Amazon could receive millions in taxpayer dollars from the state after a vote by economic development officials Monday.

The State Council on Development Finance voted unanimously Monday to approve a $4.5 million Strategic Fund Grant to Amazon for a new Delaware location.

Amazon has proposed leasing the portion of the former General Moters Boxwood Road plant near Newport that Nevada-based developer Dermody Properties bought last year.

Amazon plans to invest $50 million in equipment to outfit a 3.7 million square foot “next generation” fulfillment center planned there and create 1,000 new full-time jobs.

Delaware Economic Development Authority chair and Division of Small Business Director Damian DeStefano says the grant will be distributed over time as Amazon hits employment and capital expenditure benchmarks. He adds “clawback” provisions will ensure the state could get the money back if Amazon were to pull out of the location within a certain timeframe.

Ted Pankowski of Pike Creek, a longtime construction worker, was among the proposal’s critics at Monday’s council meeting. He worries Amazon will not hire local union workers.

“If you want to give money to them, and I understand— they’re going to bring a lot of money to the state,” he told the Council. “But hold their feet to the fire, and make them do it right.”

State Rep. John Kowalko of Newark also opposed the grant — citing Amazon’s profits, and a lack of transparency around the reasoning for the incentive. He called it one of several cases of “corporate extortion” in Delaware in recent years.

“Amazon, one of the wealthiest companies in the world, is asking Delaware for a $4.5 million state taxpayer grant,” he said in prepared comments to the Council. “This request displays the unmitigated gall and greed of Jeff Bezos and his company.”

DeStefano argued the grant is necessary to attract the company.

“When you have competition from other states, you have to make sure you’re able to win the opportunities,” he said. “So we’re willing to put forward a grant that recognizes the benefits that we’re going to receive from the thousand jobs they’re going to create and the money they’re spending to fit out the facility.”

But W. Kurt Foreman, president and CEO of the Delaware Prosperity Partnership, which helped Amazon apply for the grant, could not name a specific competing offer from another state.

Foreman says Amazon is not yet guaranteed to locate at the Boxwood Road site. “They could actually choose not to at some point,” he said. “It’s still in the process.”

Representatives from Amazon who presented to the Council declined to answer any questions from media.

DeStefano says with the application approved by the Council, the terms of the grant distribution will now be negotiated with Amazon.

He says the 1,000 new full-time jobs will need to be created over the course of three years, and maintained for at least four additional years.

DeStefano adds contracts are not typically changed as a result of public comment. But he said he is confident Amazon will hire locally.

“They said it’s easier if you can hire from the local market,” he said. “We expect that much of the jobs will go to Delawareans.”

According to Amazon’s grant application, the company plans to create positions ranging from fulfillment associate to area manager. Positions paid hourly would earn between roughly $31,000 and $33,000 annually. Salaried positions would earn around $60,000.

Amazon hopes to launch the site between late 2021 and 2022.

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