Amazon Fulfillment

[BDP]

I'm not gonna penalize Costco because they're really good at what they do and are coveted by the consumer.

They are, no doubt.

So, of course, then they'd need no government incentives, right?

But they say they just wouldn't ever, never come here without the assistance.

Which is why they asked for the incentives.

Which is also, oddly, why they got them.

A corporation got incentives from the government because they didn't need them.

I can't think of a better break down of American economics in 2019 than that.

Good show.

[Jersey Boss]

The fallacy here is that Billy Bobs Tackle couldn't have brought the same value as BPS. You don't know that (especially since BBT is fictional). Of course, maybe they couldn't have without the incentive, but BPS's contention was that they couldn't either, right?

But it was only offered to BPS (with a big middle finger from the city to Billy Bob.)

You could substitute ACADEMY for BBT, and have a real case.

[mugofbeer]

They are, no doubt.

So, of course, then they'd need no government incentives, right?

But they say they just wouldn't ever, never come here without the assistance.

Which is why they asked for the incentives.

Which is also, oddly, why they got them.

A corporation got incentives from the government because they didn't need them.

I can't think of a better break down of American economics in 2019 than that.

Good show.

You really don't understand the concept of "investment." In return for building the store within the OKC limits, (per The Oklahoman May 17, 2019) a portion of sales taxes will be reimbursed back to COSTCO until the total reaches $3 million.

OKC anticipates this store will generate between $600 million to $1.1 million in NEW sales tax revenue (as opposed to a redistribution of existing taxes). 2.25% of total sales tax %, which is 41% of total sales tax revenue per the agreement, will be rebated up to the $3 million. Per the agreement, OKC and taxpayers are not out a penny. It's a rebate of tax revenue that wouldn't have been generated without the store. The incentive to pay the rebate was the possibility the store could have been built in Edmond instead of OKC.

So, in summary, the deal is a virtually risk-free investment by OKC in return for additional NEW sales tax revenue, property tax revenue and approximately 150 jobs.

[gopokes88]

I think all anyone is pointing out is that if a company is negotiating with government entities for any kind of exception for their entity, it is not a free market or "free enterprise" system. Sure, it is still economics. For that matter, socialism is still economics. And people have argued the merits of various economic systems for millennia, and one aspect of those arguments has always been what role government should play in economics and to what degree. So, really, it just kind of boils down to: if you are in favor of the city giving incentives to select entities on a one-on-one basis, that's one thing, but what it is not is a free market system. And that's not a qualitative statement.

Basically, capitalist theory contends, in part, that governments are corruptable, and therefore, should not play a part in market transactions, so it does not support these types of arrangements. Capitalism is not concerned with the return a government entity will receive by offering concession to a single market entity. It is concerned with keeping government entities out of the markets. Capitalism would prescribe that if Amazon is not sustainable in the market without government concessions, then it should not exist.

The big irony in all of this is that Amazon is sustainable in this market, and just about all others, on its own but it still demands and receives concessions from governments to do business in the jurisdiction of those governments. They have parlayed a broader market leverage into leverage over local governments (and federal as well, in some ways). They are basically following the Wal-Mart model. And so, they aren't so much creating new jobs out of thin air as they are shifting those jobs from traditional retail to online fulfillment, while netting a regulatory mandated competitive advantage over other retailers, mostly of the small and local variety.

So, when a government gives incentives to amazon, they aren't so much creating new jobs as much as simply facilitating and endorsing that shift. The government is basically saying we would rather have warehouse workers than retail workers and need to get involved to make that happen. To do this they offer incentives to the employer of warehouse fulfillment workers, but not to local retail employers. The net effect, and intended one, is to give a competitive advantage to the fulfillment employer over the local retail employer, effectively disincentivizing local retail, or at least shifting them into special markets not yet affected by government incentives to their competitors.

Again, this may be what you're advocating for, but it's not a free market system (we don't have one) and, yes, it is still just economics.

1000%. Exactly.

Tax incentives are the govt picking and choosing who gets a head start in the race and then backing that guy at a sports book. That’s A race the govt should be a referee in, not a participant.

Okc should give tax incentives away because they are damned if they do damned if they don’t.

But there should absolutely be a federal ban on it, re levels the playing field.

[mugofbeer]

1000%. Exactly.

Tax incentives are the govt picking and choosing who gets a head start in the race and then backing that guy at a sports book. That’s A race the govt should be a referee in, not a participant.

Okc should give tax incentives away because they are damned if they do damned if they don’t.

But there should absolutely be a federal ban on it, re levels the playing field.

Tax incentives are absolutely not the government picking and choosing. They are an attempt to attract new business to a city. It is their job. Other cities have their own versions of gofundme funds or business incubators for the little guys. OKC doesn't seem to.

I would be OK with a total ban on incentives but then you run the risk of some projects going to other countries, instead. I would be in support, though, if it came up but l doubt it would be written without some sort of loophole or back-end incentive.

[Laramie]

.

Growth and expansion in corporate, wholesale & retail establishments will continue to add to our sales tax base. Anytime a company is lured thru financial incentives, it will eventually reach a point of 'increasing returns' the longer it continues to operate.

Oklahoma Quality Jobs Program along with incentives Oklahoma City offers will boost job growth, attract & retain young & seasoned professionals to our city.

[RedDollar]

The fallacy here is that Billy Bobs Tackle couldn't have brought the same value as BPS. You don't know that (especially since BBT is fictional). Of course, maybe they couldn't have without the incentive, but BPS's contention was that they couldn't either, right?

But it was only offered to BPS (with a big middle finger from the city to Billy Bob.)

No, what BPS brought that Billy Bob could not, was getting people off I-40 and into Bricktown. BPS was as much a tourist attraction as it was a retail store.

Bricktown was failing. South of Reno, we had a canal going through a dirt field. As soon as BPS committed, Harkins and a hotel deal fell like dominos. The foot traffic that BPS would bring, made those deals work.

Billy Bob could not do that. For the City to let their concern for Billy Bob get in the way of an economic development like Bricktown, would be absurd. The greater good was served.

And as I said, once the novelty of BPS wore off, fishermen would've gone back to Billy Bob. I know , cause I talked with them every day. But in the end, it was internet sales that hurt Billy Bob's business. I could buy cheaper with no sales tax from places like Tackle Warehouse in California.

And Johnny Morris began BPS as a catalog sales company, who easily morphed into internet sales and strived.

Some people are just better at business than others. And they can command an incentive from a City.

[RedDollar]

I think all anyone is pointing out is that if a company is negotiating with government entities for any kind of exception for their entity, it is not a free market or "free enterprise" system. Sure, it is still economics. For that matter, socialism is still economics. And people have argued the merits of various economic systems for millennia, and one aspect of those arguments has always been what role government should play in economics and to what degree. So, really, it just kind of boils down to: if you are in favor of the city giving incentives to select entities on a one-on-one basis, that's one thing, but what it is not is a free market system. And that's not a qualitative statement.

Basically, capitalist theory contends, in part, that governments are corruptable, and therefore, should not play a part in market transactions, so it does not support these types of arrangements. Capitalism is not concerned with the return a government entity will receive by offering concession to a single market entity. It is concerned with keeping government entities out of the markets. Capitalism would prescribe that if Amazon is not sustainable in the market without government concessions, then it should not exist.

The big irony in all of this is that Amazon is sustainable in this market, and just about all others, on its own but it still demands and receives concessions from governments to do business in the jurisdiction of those governments. They have parlayed a broader market leverage into leverage over local governments (and federal as well, in some ways). They are basically following the Wal-Mart model. And so, they aren't so much creating new jobs out of thin air as they are shifting those jobs from traditional retail to online fulfillment, while netting a regulatory mandated competitive advantage over other retailers, mostly of the small and local variety.

So, when a government gives incentives to amazon, they aren't so much creating new jobs as much as simply facilitating and endorsing that shift. The government is basically saying we would rather have warehouse workers than retail workers and need to get involved to make that happen. To do this they offer incentives to the employer of warehouse fulfillment workers, but not to local retail employers. The net effect, and intended one, is to give a competitive advantage to the fulfillment employer over the local retail employer, effectively disincentivizing local retail, or at least shifting them into special markets not yet affected by government incentives to their competitors.

Again, this may be what you're advocating for, but it's not a free market system (we don't have one) and, yes, it is still just economics.

When cities compete against each other, that is a market.

The socialist Euros have adapted what you want. You don't want competition.

Hey, my Dad sold insurance in a small town. The only way he could grow his business, was if the town grew. He could not just trade money with other people in town.

And the only way the town was going to attract new money, was offer incentives for a company to move there.
I learned this over the dinner table back in the 1960's.

You're making this sound like WalMart can't compete with Amazon because OKC offered a pittance of an incentive to locate here. That's nuts. These incentives are penny ante stuff.

My only problem with Amazon getting an incentive, is they probably needed OKC more than OKC needed them and being near the airport, was most likely a big draw. But I don't think paying Amazon whatever we paid them, is going to tilt the balance of their competition with WalMart.

Some companies are just smarter than others.

Like Sears, talk about missing the boat. If there was ever a company that could've morphed into internet sales and been a competitor to Amazon, Sears was it. Sears already had the catalog sales knowledge.

[RedDollar]

And the City's " subsidy " to Amazon, needs to be put into perspective.

City gave them $1.7 million. $700,000 of that was spent on road and access improvements. The other million was some kind of quality jobs incentive.

But WalMart got the same road improvements, if not more, on the other side of I-44. City built a new service road and an intersection, to improve access.

Whether the City should've paid them the quality jobs credit, I've no idea. But a million bucks to the bottom line of Amazon is a drop in the bucket.

And btw, as far as doing something for me, Average Joe Citizen, I live in far south. And many people here are anticipating that Amazon will help our property values. And it will dam sure help our property values far more than any MAPS project, past , present, or future. This type of economic development is real and will be felt, rather than the faux economic development claims of things like streetcar or whitwater.

Most of MAPS, just benefits downtown real estate developers.

[RedDollar]

Tax incentives are absolutely not the government picking and choosing. They are an attempt to attract new business to a city. It is their job. Other cities have their own versions of gofundme funds or business incubators for the little guys. OKC doesn't seem to.

I would be OK with a total ban on incentives but then you run the risk of some projects going to other countries, instead. I would be in support, though, if it came up but l doubt it would be written without some sort of loophole or back-end incentive.

Or the company will locate in a state that has no income tax or lower corporate taxes. Incentives offer a way to equalize those differences.

We need to reform our State tax code, to align with Texas. North Texas is one of the hottest areas in the country for business. But that does not extend to the north side of the Red River. Tax code has a lot to do with that.

But reforming our tax code would take an act of god.

[aDark]

And the City's " subsidy " to Amazon, needs to be put into perspective.

And btw, as far as doing something for me, Average Joe Citizen, I live in far south. And many people here are anticipating that Amazon will help our property values. And it will dam sure help our property values far more than any MAPS project, past , present, or future. This type of economic development is real and will be felt, rather than the faux economic development claims of things like streetcar or whitwater.

Most of MAPS, just benefits downtown real estate developers.

I think that Amazon is going to hurt property values. It will create more traffic, and you'll get more "strip mall" type of developments to serve those who work there. But only a small handful of the jobs that come with that facility will pay enough for people buy homes very near the facility. The average Amazon employee at that facility won't be able to afford a home in Lakeridge, for example. If anything, it will spur development in cheaper rural areas to the south and west. Watch Newcastle boom even more while the "airport area" becomes an industrial style area with $15 an hour employees.

As to your second point about MAPS not helping the south side of OKC, I think that's a discussion for a different thread. Agree to disagree.

[Jeepnokc]

I think that Amazon is going to hurt property values. It will create more traffic, and you'll get more "strip mall" type of developments to serve those who work there. But only a small handful of the jobs that come with that facility will pay enough for people buy homes very near the facility. The average Amazon employee at that facility won't be able to afford a home in Lakeridge, for example. If anything, it will spur development in cheaper rural areas to the south and west. Watch Newcastle boom even more while the "airport area" becomes an industrial style area with $15 an hour employees.

As to your second point about MAPS not helping the south side of OKC, I think that's a discussion for a different thread. Agree to disagree.

That was my thoughts also. I think it will make the value of the homes that are west of 104th and I44 go down in value due to the sheer increase in industrial traffic.

[Rover]

I think that Amazon is going to hurt property values. It will create more traffic, and you'll get more "strip mall" type of developments to serve those who work there. But only a small handful of the jobs that come with that facility will pay enough for people buy homes very near the facility. The average Amazon employee at that facility won't be able to afford a home in Lakeridge, for example. If anything, it will spur development in cheaper rural areas to the south and west. Watch Newcastle boom even more while the "airport area" becomes an industrial style area with $15 an hour employees.

As to your second point about MAPS not helping the south side of OKC, I think that's a discussion for a different thread. Agree to disagree.

Let’s not just blame Amazon. How about the demonization of unions in the red state era. How about all the available workers scrambling after the low skill jobs because they aren’t properly educated in our public schools and don’t qualify for more skilled positions. How about our poor support of training and supporting a needy portion of our society, leaving them to be forced to work at these conditions and wages (aid dependent on working often makes many people desperate for sub-subsistence level work, providing many such workers for companies like Amazon to prey on).
We need a wholistic approach to this problem.

[aDark]

Let’s not just blame Amazon. How about the demonization of unions in the red state era. How about all the available workers scrambling after the low skill jobs because they aren’t properly educated in our public schools and don’t qualify for more skilled positions. How about our poor support of training and supporting a needy portion of our society, leaving them to be forced to work at these conditions and wages (aid dependent on working often makes many people desperate for sub-subsistence level work, providing many such workers for companies like Amazon to prey on).
We need a wholistic approach to this problem.

Agreed. However, this thread is a discussion about the Amazon Fulfillment center. Delving off into political discussions of how we got here and what should be done are detrimental the website. Tons of threads for political discussion.

[Rover]

Agreed. However, this thread is a discussion about the Amazon Fulfillment center. Delving off into political discussions of how we got here and what should be done are detrimental the website. Tons of threads for political discussion.

It is exactly pertinent re the claims of its affect on neighborhoods and our economy. The discussion veered from the building itself to its affects on OKC. When discussing that, context is totally relevant. Claims made in a vacuum don’t reflect reality. Blaming Amazon and OKC for its part is only a part of the real cause. If this is only a forum to discuss physical properties then so be it. But most all the threads would end if that is the bar.

[Pete]

It's very hard to discuss Amazon without mentioning the bigger issues that they are driving: 1) the effect on their competition in all its forms; 2) their leveraging of public incentives; 3) what the pay and how they treat their employees and 4) the effect on the surrounding community when they open large facilities.

The simple truth is that they are so huge that they are impacting many things all the time.

Lots and lots of issues here and it seems all this will keep escalating for a while.

[aDark]

It is exactly pertinent re the claims of its affect on neighborhoods and our economy. The discussion veered from the building itself to its affects on OKC. When discussing that, context is totally relevant. Claims made in a vacuum don’t reflect reality. Blaming Amazon and OKC for its part is only a part of the real cause. If this is only a forum to discuss physical properties then so be it. But most all the threads would end if that is the bar.

Apologies. I would never want to stifle conversation. I do believe there's a bright line between discussing what an Amazon facility will do to surrounding property value as compared to discussing the long and historied degradation union power in America.

[onthestrip]

When cities compete against each other, that is a market.

The socialist Euros have adapted what you want. You don't want competition.

Hey, my Dad sold insurance in a small town. The only way he could grow his business, was if the town grew. He could not just trade money with other people in town.

And the only way the town was going to attract new money, was offer incentives for a company to move there.
I learned this over the dinner table back in the 1960's.

You're making this sound like WalMart can't compete with Amazon because OKC offered a pittance of an incentive to locate here. That's nuts. These incentives are penny ante stuff.

My only problem with Amazon getting an incentive, is they probably needed OKC more than OKC needed them and being near the airport, was most likely a big draw. But I don't think paying Amazon whatever we paid them, is going to tilt the balance of their competition with WalMart.

Some companies are just smarter than others.

Like Sears, talk about missing the boat. If there was ever a company that could've morphed into internet sales and been a competitor to Amazon, Sears was it. Sears already had the catalog sales knowledge.

Its rent seeking, pure and simple. The government is helping pick winner and losers and this is definitely not a free market thing. Govt should set the rules and let everyone play by them, not some uneven playing field. How to go about solving this issue is another thing.

Also, you cant compare private companies to government entities.

[David]

Something that I have been thinking as I've been watched this thread go on, it's worth considering that the following are two related but separate issues:

1) This is the government picking winner and losers
2) This is always a bad thing

Item 1) can be true without 2) also being true. Some of the examples that have been presented (Bass Pro in particular) are a pretty good argument for this. Bass Pro may well have worked out quite well for Bricktown and the city, but that doesn't change that it was government intervention.

[Rover]

Apologies. I would never want to stifle conversation. I do believe there's a bright line between discussing what an Amazon facility will do to surrounding property value as compared to discussing the long and historied degradation union power in America.

Working conditions, turnover, low pay, etc. are all reasons why it will have a long term negative effect. Being non-unionized is one of the main things that contribute to h problem and why getting a center is ultimately bad. I noticed you didn’t note education or other reasons so I assume you are anti union, as is most of OK. That is why these low pay jobs thrive here. Most fail to see any connection. We need them to pay reasonable living wages and have reasonable conditions so we can attract and grow the communities around them with people who can afford to live there and spend money. The okc incentives are the least of our worries about this long term.

[Rover]

Something that I have been thinking as I've been watched this thread go on, it's worth considering that the following are two related but separate issues:

1) This is the government picking winner and losers
2) This is always a bad thing

Item 1) can be true without 2) also being true. Some of the examples that have been presented (Bass Pro in particular) are a pretty good argument for this. Bass Pro may well have worked out quite well for Bricktown and the city, but that doesn't change that it was government intervention.

There is always a role for government to play in economic development. Some do it wisely and some badly. OKC doesn’t have many bullets in its gun... mostly “it’s cheap to be here”. Would love to have them attract companies because we have the most skilled work force or the most livable city.

[chuck5815]

There is always a role for government to play in economic development. Some do it wisely and some badly. OKC doesn’t have many bullets in its gun... mostly “it’s cheap to be here”. Would love to have them attract companies because we have the most skilled work force or the most livable city.

I mean, sure, but you can't easily change the geography of Oklahoma. It's probably always going to be hot most of the time and windy all of the time, with a side of Earthquakes and a dash of tornadoes. A far cry from eating Cheese Burgers (or even Nothing Burgers) in Paradise.

[Dob Hooligan]

I mean, sure, but you can't easily change the geography of Oklahoma. It's probably always going to be hot most of the time and windy all of the time, with a side of Earthquakes and a dash of tornadoes. A far cry from eating Cheese Burgers (or even Nothing Burgers) in Paradise.

I will never understand our inferiority complex regarding our weather. The D/FW metroplex (that we all think is the most wonderful, business friendly and fast growing area in this part of the country) is virtually the same, except 3 degrees hotter in the summer and 1 degree less cold in the winter. Houston is unbearably hot and humid in the summer, and suffers from hurricanes (which are worse than tornadoes IMO). Phoenix and Las Vegas are hellish hot in the summer. Virtually every city in America has weather issues IMO. Except for San Diego.

[GoGators]

I mean, sure, but you can't easily change the geography of Oklahoma. It's probably always going to be hot most of the time and windy all of the time, with a side of Earthquakes and a dash of tornadoes. A far cry from eating Cheese Burgers (or even Nothing Burgers) in Paradise.

This is the exact reason why I always harp on development. OKC can’t control what the weather does or how far the beach is. What it can control is the built environment and how livable the city is. Historic preservation, beatification projects, transit, and urban design standards are all tools that can be used to mitigate the geography argument.

Parking lots, strip malls and interstate expansion won’t make OKC a more attractive place for relocations. But there are things we can control that would.

[Pete]

Dallas also has the same typography and is even further from mountains and nowhere near a large body of water.

I've said it a million times: Oklahoma should be a prosperous state. We have just as much oil & gas per capita as Texas, which has been fantastic in terms of economic development, education and investing it tons of quality of life areas.

Yet, we are down with Mississippi and West Virginia -- 2 states with deeply embedded economic and social problems -- rather than anywhere close to the one state we are nearest to and most similar in terms of geography and almost everything else.

And here we sit, generally doubling-down on the same failed policies that have put us in this position in the first place. It's maddening.