Amazon wants to revise Johnston tax deal

Posted 3/14/24

Amazon’s looking to re-negotiate their tax deal with Johnston.

The estimated opening date of Johnston’s Amazon has been bumped back several times. While the company says …

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Amazon wants to revise Johnston tax deal


Amazon’s looking to renegotiate its tax deal with Johnston.

The estimated opening date of Johnston’s Amazon Facility has been bumped back several times. While the company says they’re sticking to their latest timeline, which estimates an opening by the end of 2024, the town’s tax agreement with Amazon may be about to change.

Johnston Town Council will hold a public hearing at 6 p.m., Thursday, March 28, “concerning a proposed ordinance authorizing a Revised Tax Stabilization Agreement” (TSA) between the town and Services, owner of the as-yet unopened robotic sorting facility on Hartford Avenue.

“Working closely with Amazon over the last several months, we are pleased to have reached a payment plan that serves the best interests of Johnston taxpayers and allows Amazon to continue investing in our local economy,” Johnston Mayor Joseph Polisena Jr. wrote Wednesday.

Last year Amazon delayed the facility opening by another year, announcing an expected Christmas 2024 launch.

“Amazon informed us late last year they are invoking a construction clause in the agreement, which would allow them to pay roughly $3 million less than the full balance of taxes owed in the first year,” Polisena explained via email Wednesday. “After months of negotiation, we have secured the full $5.7 million payment this year.”

Town Council will have to vote to approve the agreement at the March 28 meeting. Polisena says the town will see more benefit early on in the agreement, rather than fairly inconsequential payments previously slated to start more than a decade from now.

“Furthermore, we have secured an additional $500,000 in payment for next year, which will bring the revenue up from $5.8 million to $6.3 million,” the mayor explained. “We applied the principle of time value of money and in exchange, we are lessening the amounts owed by $200,000 in years 11-20 of the agreement.”

The new agreement may be packed with financial bells and whistles but should yield positive results for the town, according to Polisena.

“Because of the relatively flat yield curve between 10- and 20-year treasury rates, we used a 10-year treasury as our indicator,” the mayor explained. “Using that discount rate of 4.10 percent, this amounts to $618,000 in net present value. Additionally, rather than pay in smaller quarterly installments, Amazon also agreed to pay their annual bill in one lump sum payment at the beginning of the year, which helps our balance sheet’s cash flow metric.”

Polisena ended his message with praise for the retail giant, which has yet to deliver 1,500 promised jobs to Johnston.

“I’m very grateful to Amazon for coming to the table and being a model corporate citizen for Johnston and its residents,” Polisena wrote. “The wording of the agreement is still being finalized but should be complete within a week. We have already received the $5.7 million check from Amazon for this year’s payment.”

With $5.7 million of Amazon’s money in the bank, Johnston town officials have yet to see the finalized document and some were reluctant to comment on the changing TSA this week.

“I haven’t seen any document or amendment in writing,” Johnston Town Council President Robert V. Russo said early Wednesday morning.

Russo said he had few details to offer regarding changes to the TSA between Johnston and Amazon, but he expects Town Council will likely consider changes to Amazon’s payment schedule since the company’s Johnston facility is “getting off to such a late start.”

The expected amendment to the current community agreement may be as simple as “spreading out the payments over a longer period of time,” Russo explained.

“The builders are not done yet,” Russo said. “They’re getting delayed.”

Amazon responded to several requests for comment at 11:21 a.m. Wednesday morning. Amazon spokesman Steve Kelly replied: “Acknowledging receipt of your emails.”

While at least one source in town government has suggested the Amazon opening date will be pushed back yet another six months, to a likely Summer 2025 opening, Kelly insisted, “The timeline has not changed for us – still slated for later this year.”

Polisena backed up Amazon’s timeline.

“Amazon is there daily, working on their internal robotics and racking system,” Polisena said this week. “The timeline they told us is they expect to be open by this November.”

Polisena has promised that structured pre-approved tax payments from Amazon, which began earlier this year, would cover the school construction bond burden, canceling out any need for a tax increase.

Amazon provided no statement regarding the proposed changes to the TSA.

The original TSA was signed by members of Town Council in September 2021. Polisena Jr., then Vice-President of Town Council, signed the original document.

Multiple planned payments to the town were attached to the TSA (and were expected to kick in whether the Amazon facility opened or not): $582,500 per year to fund a Johnston High School Pathway Program (for 20 years, totaling $11,650,000); $400,000 toward starting up the Pathway Program; five payments to the state totaling $1,250,000; $5,380,000 over 10 years toward public safety operations; $2,750,000 toward the state's Small Business Assistance Program (SBAP).

“Pursuant to the Community Partnership Agreement (those) payments are mandated effective Jan. 21, 2024,” Polisena said last year. “This means that the expected revenue from these agreements will be completely available to support the School Building Project for our Town's children and their families.”

Russo said Wednesday morning that the proposed changes to the TSA will likely have no impact on the school bond.

“I don’t think it has any effect at all,” Russo explained, adding that the TSA changes likely “won’t have any effect on the schools” and will likely “take place toward the end of the contract.”

“We’ll know more details when we actually see the document,” Russo said.

Russo, the long-time president of Johnston Town Council, said he’s not concerned exactly when the facility will eventually open for business.

“They’ve spent a lot of money up there,” Russo said. “Obviously there’s a huge building. If they built something that big and for some reason didn’t want to go through with it that would send a shockwave throughout the world ... I’m not worried at all.”

The Thursday, March 28 meeting will start at 6 p.m. and be held at the Johnston Municipal Court Building, 1600 Atwood Ave.

amazon, tax, deal


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