Johnston has a new biggest taxpayer.
The Johnston Town Council voted unanimously Wednesday night to approve a Tax Stabilization Agreement with Amazon.
“This agreement if approved by you this evening will solidify the financial stability for the town of Johnston for the next 20 years,” said Johnston Mayor Joseph M. Polisena. “It will ensure and guarantee payments for the next 20 years to support the following programs … education, town infrastructure, public safety, our elderly population, our youth, our youth sports programs, financial stability in the form of higher bond ratings, stabilization of taxes and of course jobs for Johnston residents.”
The deal will multiply the tax yield of a mostly vacant section of land along Hartford Avenue, which currently generates $60,084 in annual tax revenue, by 92 times (an estimated 12,000 percent increase).
Amazon is expected to cover 8 percent “of total town tax levy” after the facility is built and operational.
“This will be probably the biggest project the state and the town has ever seen, no doubt about it,” Polisena said. “This will be the largest and highest taxpayer in our town.”
Johnston will now receive more than $170 million in tax dollars and additional benefits over two decades from the proposed Amazon facility.
The resolutions include a 20-year Tax Stabilization Agreement, and a list of other appropriations, to be spread throughout the town.
The Rhode Island Building and Construction Trades Council (RIBCTC) also announced its support for the construction of the six-story, 3,864,972 square-foot “new, state-of-the-art Amazon Robotics Sortable Fulfillment Center.”
The organization — a federation of 16 local trade unions — swarmed into Wednesday night’s meeting, wearing fluorescent T-shirts. Two trucks bedazzled by flashing electric signs were parked outside the Johnston High School.
The signs declared: “Local jobs for highly skilled union tradespeople” and “Economic development = Good local union jobs.”
Although Amazon is notoriously anti-union when it comes to its own in-house workforce, local unions hope the company will use union labor to construct the facility.
“Given the fact that the union sector is the only entity capable of constructing a project of this size and magnitude, the 16 unions of the RIBCTC will construct this project as if it were being constructed under a building trade community workforce agreement,” according to a RIBCTC press release.
“This will ensure that the Amazon project is built with local union tradespeople earning family-supporting wages,” said Johnston resident Michael F. Sabitoni, RIBCTC President. “It will also ensure that this project is built safely, on time, and within budget.”
Polisena also urged Town Council to vote in favor of the agreement, both for the benefits the project is expected to pay toward the town, and union trade workers.
“This will put obviously members of the trade unions to work,” Polisena said. “Real Rhode Islanders, by the way. Several hundred Johnston residents, as a matter of fact, belong to the trade unions that are here this evening.”
Despite what many have labeled a recent nationwide labor shortage following the pandemic, new jobs were a major factor in the deal.
“They’ll build this state-of-the-art facility; it will be 1,500 direct construction jobs, and another 1,500 permanent jobs to follow,” Polisena said. “The building will be nestled in trees, and will be aesthetic for all those who enter the property and see. This will provide benefits to our state as well as our town.”
Amazon estimates it will hire 1,350 full-time associates, starting at $18 hourly wages, plus healthcare, dental and 401K benefits.
The company also estimates it will hire 10 managerial, technical and operational oversight jobs with estimated $60,000 annual managerial salaries.
The new employees’ compensation should total around $57,000,000 in “new annual payroll created.”
“Rhode Island, as we know, has been hit with a pandemic, and many have lost their jobs, especially in the hospitality industry, as well as other small businesses,” Polisena said. “And these lost jobs will never come back.”
Now that the company has secured a tax agreement with the town, they will be expected to make a series of 20 annual tax payments averaging more than $7.2 million each year for the next two decades.
The company will receive a significant savings on tangible taxes, but pledges to make stable annual payments, starting with a potential $5.7 million the first year, with a fixed annual 2.5 percent increase, raising the annual payment to more than $9 million by the 20th year.
But how much will Johnston leave on the table following the tax agreement?
Amazon will save significantly by avoiding taxation of its tangible assets. The project is projected to cost around $290 million to build.
Town Council Vice-President Joseph Polisena Jr. discussed the issue with Johnston’s legal counsel.
“Just spoke with the solicitor,” Polisena Jr. wrote Wednesday, via text message. “He believes based on rough estimates they’ll be paying around 60% of their total obligation.”
Amazon will make the stabilized annual payments “in lieu of any and all other real and personal property taxes and assessments,” according to the tax agreement.
“This agreement represents an average tax revenue of $7,280227.42 over the 20-year term of this agreement, representing a $7,220,143.42 or 12,016% average increase in tax revenue over the current tax revenue for the property,” according to the tax agreement.
Once Amazon starts making tax payments, the company is expected to cover around 8 percent of Johnston’s total tax levy, eclipsing the town’s five current annual high taxpayers: National Grid Electric ($4,553,143), Rhode Island Resource Recovery ($4,361,210), Rhode Island State Energy L.P. ($3,247,296), National Grid Gas ($1,274,573) and FM Global ($1,160,183).
Both Rhode Island Resource Recovery (the landfill) and Rhode Island State Energy L.P. have previously signed TSA’s with Johnston.
“In approximately 15-17 years the landfill will be closing … and our town will loose approximately $6.5 to 7 million per year and whoever’s in charge of our town then will have no choice but to go to the taxpayers,” Polisena warned.
Town officials hope Amazon will help fill the hole caused by eventual closure of the landfill.
“Over the next 20 years, between the one-time payments, added up it comes to $164,634,548,” Polisena told the crowd; he estimated annual payments should total $8,231,727.
The agreement also lists about a dozen promised allocations to Johnston for community improvements.
A proposed Construction Funding Agreement, ratified Wednesday night, promises funding for “certain off-site roadway improvements to the surrounding roadways, such improvements being identified by the Rhode Island Department of Transportation as being necessary prior to the proposal for the Project.”
Many residents have expressed concern regarding a major influx of tractor-trailer and commuter traffic in the already congested sector of Johnston.
Polisena argues the project, and subsequent road improvements, “will make Hartford Avenue, Route 6, much safer.”
Hartford Avenue is also Route 6, a state highway plagued by safety concerns, and infamous for difficult left turns, fatal crashes and treacherous hills during snowstorms.
“There will be a $9 million investment in Hartford Avenue,” Polisena told the crowd gathered in the Johnston High School auditorium. “Nine million dollars, that’s a lot of money for such a short distance.”
A new Amazon facility means the addition of 1,500 commuters and hundreds of facility-bound tractor-trailers.
In an effort to offset commuter congestion, “Amazon shall encourage its employees and visitors of the Facility to carpool, and use public transportation and car sharing services,” according to the Community Partnership Agreement approved by Town Council Wednesday.
Amazon has pledged to spend up to $90,000 annually to purchase RIPTA bus passes for employees of the facility (based on actual employee demand) during the first 10 years of operation, for commuters from the Ocean State’s urban centers: Central Falls, Pawtucket, Providence and Woonsocket.
One to three years following the opening of the facility, Amazon will contribute “up to $100,000 for a traffic mitigation study to measure volumes and levels of service at peak periods (taking into account peak seasonal patterns) to determine any traffic and transit improvements that may be warranted to mitigate the Facility’s impacts on area roadways, and to enhance access to the Facility and the quality of traffic circulation for residents and other businesses.”
Within one year after completion of the traffic study, Amazon has agreed to contribute up to $1,000,000 for “post construction traffic mitigation equipment and improvements.”
The CPA also stipulates Johnston will be the first community to host a job fair, one of at least three hiring events to promote job openings.
Over the 20-year life of the tax agreement, Amazon will contribute $582,500 annually toward funding a “Johnston High School Pathway Program, including, but not limited to a P-Tech career pathway program for Johnston High School students.”
P-Tech refers to Pathways in Technology Early College High School.
Amazon will make a $400,000 one-time payment to cover the program’s initiation costs.
The program is expected to focus on preparing Johnston students for careers in the business and health care fields.
The company will also promise to make five annual payments of $250,000 (totaling $1,250,000) toward Rhode Island Municipal Education and Training Initiatives.
Public safety budgets will receive 10 annual $538,000 payments to the town’s “public safety operations.”
Some of that money will go toward bolstering a nearby Hartford Avenue fire station, funding the addition of at least one more firefighter to each shift covering the west-end fire station.
Johnston youth sports will receive a $50,000 payment; the Johnston Senior Center will receive $100,000; the Johnston Municipal Land Trust, $250,000; and Johnston Memorial Park, $100,000.
Amazon has also pledged $2,750,000 (payable in $550,000 annual installments) toward Rhode Island’s Small Business Assistance Program (SBAP), the state’s primary small business assistance program.
An existing solar field on the site will remain in operation, and more solar panels are planned for the facility’s roof.
The company estimates it will pay more than $1 million in building department fees, and will pay $250,000 toward a new Providence Water pump station “to support new building and other buildings in the area,” and a $2 million estimated sewer connection fee.