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Amazon's new Michigan fulfillment center 'like landing an automotive assembly plant' By Paula Gardner

The company estimates the move is valued at $140 million, a pricetag that officials in Wayne County say could finally generate more development in the I-94/I-275 corridor with the "transformational" deal.

The public contribution includes $5 million in performance based grants from the Michigan Strategic Fund. That money was awarded on Tuesday, and it will be paid over three years as Amazon meets its 1,600 new-employee hiring goal at the nearly 1 million-square-foot facility that will be built north of Detroit Metropolitan Airport.

 (Google maps)

Another $13.5 million will come in the form of infrastructure improvements that will be paid through bonds issued by the city of Romulus - with half reimbursed through a planned 15-year tax capture of a portion of the state property tax bill for the improved property.

The investment in improving the infrastructure around the 84-acre parcel at Wick and Vining is worth the public money due to Amazon's ability to attract additional transportation and logistics companies to the swaths of vacant property near the airport, said the director of the Detroit Regional Aerotropolis Development Corporation.

"We think it's going to be a watershed development for the entire region," said Rob Luce, who was hired in March as the first full-time CEO of the seven-community collaboration that includes eastern Washtenaw County and western Wayne County.

He added: "This is the last underdeveloped region in Southeast Michigan."

Luce is seeking development of 6,000 acres within the Aerotropolis, an effort that started in 2007 as the seven communities united to create the entity. While it started with high hopes to leverage the Detroit and Willow Run airports, it never took off.

That's changed now that the economy is rebounding and Amazon recognizes the potential of the region, Luce said.

Nearby are I-275, I-94 and I-75, along with five rail lines operated by four carriers and the two airports. It's also near 4.6 million Michiganders who live in Southeast Michigan, a number that's nearly half of the state's population.

Amazon - which posted sales of $136 billion in 2016 - also had a reason to choose the location. Located within 15 miles:

  • Amazon's new 1 million-square-foot distribution center in Livonia, which was approved in late 2016 - along with a $7.5 million performance grant for hiring 1,000 people.
  • Amazon's sorting facility in Brownstown Township, where about 200 people work.

Those locations - along with Amazon's building spree to set up distribution centers across the U.S. - raise questions about whether the company's claims are valid that it also looked in other Midwest states and Canada for the center, said a researcher on economic development subsidies. Looking outside of Michigan was among criteria for the state performance grant.

Amazon now hiring for massive new fulfillment center in Michigan

Amazon now hiring for massive new fulfillment center in Michigan

About 1,000 people expected to work there by 2020.

 

"(Amazon is now saying) we're going to locate close to customers and we're going to get there in an hour," said Thoman Cafcas of Good Jobs First in Washington, D.C., noting recent delivery changes for Amazon Prime Now customers.

"When that changed, they had to locate facilities all over the country."

He continued: "These are extremely location-dependent site selection processes."

The property that will become home to Amazon's Romulus regional distribution center is part of a 1,000-acre assemblage known as Metro World Commerce Center. Luce added that it's not the property formerly planned for an outlet mall.

Metro World Commerce Center's parcels on Wick Road have been registered to PRII Metroworld Michigan LLC since 2005. According to assessment records, they are an entity of Prudential Real Estate Investors.

Detailed information on the portion of the property that will be used by Amazon was not available. Tax bills for the Wick Road parcels are sent to the Detroit-area headquarters of Ashley Capital, which is developing the Amazon distribution center in Livonia that will open later this year.

One way to capitalize on Amazon's site selection in Romulus is to create a Local Development Financing Authority within the Aerotropolis region, Luce said. That potential taxing authority will face a public hearing at 3 p.m. July 13 and it will initially include only the Amazon facility.

If passed, it will allow the LDFA to "capture" increases in taxable value on the property after the new building is up and running. Officials are looking at using 50 percent of the state portion of the property tax.

In the short term, Luce said, "it's going to be paying for half of what the city of Romulus is bonding out."

Longer-term, it will aid "the Aerotropolis in adding value to this region." The Aerotropolis board expects to add all seven member communities to the LDFA, giving it the ability to fund through tax increases more infrastructure upgrades as companies build new facilities.

The LDFA public hearing will be at Romulus City Hall. Neither Romulus Mayor LeRoy Burcroff nor Tim Keyes, economic development director, were available to comment for this story.

But Luce noted that this development speaks to the strength of the Aerotropolis region due to its significant vacant land.

Warehouse space is in short supply, and industrial tenants near Detroit Metro Airport face finding available land to build in order to locate there.

"(D)emand for bulk warehouse remains very strong, while the available supply is severely limited. The only option for companies with significant space requirements is a build-to-suit," according to a 2017 commercial real estate outlook for Metro Detroit by Newmark Knight Frank.

The development is bringing jobs to the region, Luce noted. That's also one reason Wayne County Executive Warren Evans has said he's supporting it.

"From a job count perspective, it's like landing an automotive assembly plant," Luce said.

Amazon estimates 1,600 jobs may be created, though it won't disclose details on them. Based on other locations, they appear to be mostly warehouse associates. The positions in other states are advertised with a starting wage of $12 per hour.

The greater Detroit area had an unemployment rate of 3.6 percent in May, compared to a rate of 4.2 percent for the full state. The rate was 8.2 percent in the city of Detroit in April, a 16-year low.


Amazon seeks $5M tax break for new $140M distribution center in Michigan

 

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