Delaware OKs $4.5M Amazon grant for Boxwood
NEWPORT – Despite a barrage of criticism, a Delaware state investment board unanimously approved a $4.5 million grant Monday morning for Amazon to operate a “next-generation,” multistory fulfillment center at the former General Motors Boxwood plant.
Specifically, the e-commerce retail giant will receive a $3 million grant tied to hiring 1,000 new full-time positions over the next three years and $1.5 million toward the fit-out of the nearly 3.7 million-square-foot facility being built by Nevada-based developer Dermody Properties on the old automotive manufacturing plant site.
Those funds come from the taxpayer-funded Strategic Fund, which is utilized to attract employers to locate or expand in Delaware. The fund is managed by the Delaware Economic Development Authority’s nine-member Council on Development Finance, which is appointed by the governor and lawmakers.
Of the nine members of the council, the bare-minimum quorum of five were present Monday: Kevin Kelly, Rep. Ed Osienski, Jack Riddle, Nancy Cook and Tarik Haskins. Absent were Joshua Martin, Sen. Nicole Poore, Richard Rowland, and Fred Sears.
Also supporting the application Monday was the Delaware Prosperity Partnership, a public-private entity that acts as the state’s economic development agency. Notably, support by the DPP has historically meant the approval of applications before the CDF.
Jeff Zygler, senior vice president of national development for Dermody, told the CDF’s members that his company plans to spend between $200 million and $300 million on the construction of the facility, which it hopes to open by the third quarter of 2021, but no later than the third quarter of 2022. Zygler said that construction was expected to begin within a few months.
Brian Kenner and Holly Sullivan, representatives for Amazon, said that the new 1,000 jobs to be created will be in excess of the roughly 2,500 people already employed at distribution centers in New Castle and Middletown, as well as a truck yard in the state. The company also plans on investing about $50 million in the equipment, interior fit-out and personal property of the facility.
According to Amazon’s CDF application, provided by the state to media after the vote, the company plans to create about 50 managerial positions earning a minimum of $60,000 annually and 950 associate jobs, earning between $31,200 and $33,000 annually.
Responding to CDF members’ questions, Delaware Division of Small Business Director Damian DeStefano said that the project is expected to create a return of about $445 million in economic impact. He also noted that the state would be requiring the eligible jobs created under the agreement remain in-state for at least four years after the eligibility period.
All of the grants have benchmarks that are required to be met before the monies are awarded, and the funds for job growth will be doled out over the eligibility period beginning as the fulfillment center opens, DeStefano said.
As first detailed by Delaware Business Times, the so-called LogistiCenter at I-95 will feature 69 loading docks, nearly 2,000 parking space and nearly 1,000 spaces for tractor-trailers.
The plan would make the LogistiCenter project perhaps the American distribution center with the most floors, as existing or announced projects have typically topped out at four floors. At 3.7 million square feet, it would also be among the largest multistory projects built.
It’s a departure from the plan first announced by Harvey Hanna & Associates, which purchased the 142-acre property in 2017 before selling about 88 acres to Dermody for about $21.6 million in November. Harvey Hanna had proposed building two single-story buildings roughly 1.1 million square feet and 1.3 million square feet each, along with secondary 350,000- and 310,000-square-foot buildings.
The single, multistory building concept is where Amazon is heading for its distribution centers now, with nearly identical facilities being built near Milwaukee and Memphis in the past year. That construction allows Amazon to move into denser urban markets where vacant land is scarce. Notably, the Boxwood project is off Del. 141 and within miles of Interstate 95, the New Castle Airport and the Port of Wilmington.
In an unusual November public meeting for a project like the LogistiCenter at I-95, a project team showed a video of a 3D rendering of the facility, describing how five freight elevators and a dozen staircases will move product and personnel up and down the five floors.
At Monday’s meeting at the Buena Vista conference center in New Castle, the proposal to grant $4.5 million of taxpayer dollars to one of the world’s most profitable companies did not come without its criticisms.
Leading the charge was Rep. John Kowalko (D-Newark), who has sponsored a resolution in the Delaware legislature to phase out “corporate giveaways” as part of a nationwide campaign in states. In a prepared speech, Kowalko assailed Amazon, saying, “Enough is enough.”
“Doling out money from the Strategic Fund, which is entirely comprised of taxpayer money, to the wealthiest corporations in the world is a practice not in the public’s best interest and displays a certain amount of arrogance and disregard for the electorate when shrouded in secrecy,” he said.
Kowalko was joined by a number of tradesmen and construction workers who pressed whether Amazon or Dermody would be making concerted efforts to hire Delawareans in the impending construction work. Sullivan, of Amazon, said that all locals would be considered during their bid process, while Zygler said their general contractor, St. Louis-based Clayco, had been seeking local subcontractors.
Political activist and podcaster Rob Vanella said that he grew up in the shadow of the GM plant and remembered how it supported many families through its unionized work there. He chastised Amazon for its non-union labor and its exceedingly high profits off their employees.
“I appreciate your utter shamelessness for coming here today and asking for this money,” he said.
Meanwhile, resident Dustin Thompson said that what concerned him the most was that Amazon didn’t articulate a need for the funds. Noting that the money wasn’t being used to install a community solar project, or to fund concerted hiring efforts for the under-served, he said awarding a trillion-dollar company like Amazon $4.5 million from the Strategic Fund’s $12.5 million pot deprives other businesses.
“I see why they want it, they want to please their shareholders, that’s their job as a company, but that’s not good enough to take away $4.5 million from businesses that actually need that money to grow in Delaware,” he said. “Without having known the details put out, all we’re doing is a back-door deal in a country club, just like we used to do – still do, apparently.”
The grants weren’t without their supporters, although most qualified their support by requesting conditions upon the monies.
State Sen. Anthony Delcollo (R-Elsmere), who sits on the DPP’s board of directors, said that he believed there needed to be clearer information conveyed to the public regarding the purpose of the Strategic Fund, but he also noted that the project would benefit the Red Clay School District with millions in property taxes.
Todd Ruckle, a former Newark city councilman and the director of relocation and business development for Keller Williams Realty, noted the positive impact that the Amazon project could have on nearby homeowners.
Before Amazon’s arrival in Middletown, Ruckle said that home values in the nearby Middletown Village community averaged about $100,000 to $110,000. Now, those homes are valued at close to $200,000.
“That’s not all Amazon – we’ve had the Appoquinimink School District being the No. 1 rated school system and people are flooding there – but [Amazon] continues to grow and expand, giving personal wealth to each homeowner,” he said. “For a $4.5 million investment, we’re getting a projected $450 million … This is a pin-prick of an investment to bring it in.”
In a statement released after the CDF vote, Amazon said that “receiving incentives and support from local and state governments is a standard practice when a company plans a large investment. Every state and big city has economic development offices or similar entities working to attract private investment to their region, and incentives linked to job creation are one of the mechanisms they use to do so. By securing support for our facilities in a comprehensive manner, it allows our company the ability to reinvest in more locations due to the material cost savings achieved through programs like the Delaware State Strategic Fund.”
By Jacob Owens