Amazon.com will invest $270 million to open four fulfillment centers in Virginia and Tennessee this fall, the company announced Dec. 22.
The Seattle-based Internet retailer will spend $135 million in Virginia for two distribution centers, one in Chesterfield County, south of Richmond, and the other in Dinwiddie County, near Petersburg.
The Chesterfield DC will be the larger of the two with 1 million square-feet of space and more than 1,000 jobs compared to 350 jobs at the Dinwiddie site.
It will invest an equal amount for facilities in Murfreesboro and Lebanon, Tenn.. The company already operates two facilities in the state.
The ability to quickly build the order-processing centers and start operations, as well as the available skilled workforce were key factors in Seattle-based Amazon.com’s decision to locate in the state, Virginia Secretary of Commerce and Trade Jim Cheng said in a statement. Local and state officials also said good infrastructure in the area, including a new interchange to the technology park in Chesterfield where the Amazon.com facility will be located, factored into the decision.
Gov. Bob McDonnell authorized $3.5 million in grants from the state’s Opportunity Fund to help Chesterfield and Dinwiddie counties with the project. Another Virginia commission approved $850,000 in funds to help attract Amazon to Dinwiddie.
Amazon has 52 distribution centers and continues to expand as its demand for its online shopping mall grows. Last year it announced plans to build 17 more fulfillment centers. factored into the decision.
The Virginian-Pilot newspaper in Norfolk in an editorial criticized the McDonnell administration for giving Amazon.com $4.3 million in incentives without agreeing to abolish an exemption in state law that permits the online retailer to sell goods to Virginia residents without collecting sales tax, as brick-and-mortar retailers are required to do.
Under current law, any retailer with a physical presence in Virginia must collect the 5 percent state sales tax. Amazon, which has a warehouse and a data center in Virginia, has operated under an exemption that was extended to distribution centers writ large by the tax commissioner in 2007 because they don’t actually handle retail sales.
“Technically, the distribution center doesn’t handle sales. But the reality is that Amazon runs the distribution center and it runs the website where the transactions are taking place. Its customers, consequently, are able to get better deals there than they would at traditional stores across Virginia,” the paper’s editorial board said.
“That’s not a bad thing for Virginia consumers, and it’s certainly not bad for Amazon. But it is for the small business owners, and the corporate big-box store owners, who’ve set up shop in communities across the state, employed thousands of people and dutifully paid their taxes. And, ultimately, it’s bad for the state and taxpayers because millions of dollars in tax revenue slip away each year rather than help fund critical services.”
State officials said Amazon won’t have to pay the sales tax after it builds the new warehouses because the facilities are being built and operated by a separate distribution company, Amazon.com kydc LLC, not the retail business, according to a Virginian-Pilot news report.
The newspaper said studies indicate Virginia will lose about $200 to $420 million in revenue this year from uncollected sales taxes.
Virginia retailers, Democrats in the legislature and the Virginian-Pilot editorial board said McDonnell should have followed the lead of Tennessee Gov. Bill Haslam, who reached agreement with Amazon.com that the retailer would start collecting state sales tax beginning in 2014.
The editorial called for the General Assembly to close the tax loophole and for McDonnell to sign the bill. — Eric Kulisch
Amazon.com DCs in Va., Tenn. raise eyebrows
