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Online retail behemoth Amazon.com is set to open new distribution centers and other facilities in Illinois by 2017, according to the Chicago Tribune. The first one could be open as early as 2015 and could bring 1,000 jobs over the next three years.
The announcement is good news for Gov. Pat Quinn but may be a precursor to bad news for Amazon customers in Illinois, who will have to pay sales tax on Amazon orders when it has a facility in Illinois.
The Tribune reports that Amazon has been expanding rapidly:
Amazon has been adding distribution facilities at a clip as it seeks to expand its same-day delivery service, test its own delivery network outside of FedEx and UPS, and experiment with drone delivery and “anticipatory shipping,” in which the company gets packages ready even before a customer clicks…
According to a 2013 Bloomberg Businessweek report, Amazon invested about $13.9 billion from 2010 to 2012 to build 50 new warehouses, more than it had spent on them since its 1994 founding.
And as its building boom accelerated, Amazon has reduced the time required to open a new warehouse from two years to 10 months, according to the magazine article.
According to Crain’s Chicago Business, the company might be opening more than distribution centers.
There are already similar distribution centers in Wisconsin and Indiana. The operation in Illinois could follow a model established in Maryland, the Tribune reported, building in a highly-populated area that could increase the company’s tax-incentive package from the state.
From the Tribune:
Officials in Maryland offered an estimated $43 million in tax credits to the retailer in exchange for a $175 million investment in a distribution center in October 2013.
The Seattle-based company will receive the bulk of that money, $35.3 million, because it located to the site of a former General Motors plant in Baltimore.
Without knowing where Amazon intends to build in Illinois, it is impossible to tally the millions the company would receive in state tax credits for the estimated $75 million investment here.
But Director of the Illinois Department of Commerce and Economic Opportunity Adam Pollet told the Tribune that the state likely wouldn’t offer any “extraordinary measures” to provide incentive for Amazon to build here because the size of the Chicago market would be incentive enough.
The idea of incentives isn’t totally off the table, reports Crain’s Chicago Business:
“The state is willing to negotiate subsidy agreements once Amazon’s specific plans are known.” the DCEO spokesman wrote. “Any agreement will require Amazon to meet performance targets and will ensure that the state receives an economic benefit greater than its investment.”
According to the Chicago Sun-Times, Amazon already receives thousands of orders daily from Illinoisans.
The Tribune also noted that opening a center near Chicago, though convenient for same-day delivery purposes, is contrary to Amazon’s regular practice of avoiding large cities in order to avoid sales tax. That won’t be the case at an Illinois facility.
From the Tribune:
“If Amazon or any online retailer has a physical presence here, they would absolutely have to collect and remit sales taxes here,” said Tanya Triche, vice president and general counsel at the Illinois Retail Merchants Association.
And from the Sun-Times:
After a failed attempt to tax online retailers was shot down by the Illinois Supreme Court, a new law taking effect in January will require every purchase on Amazon to be subject to the state sales tax of 6.25 percent.
Paul Misener, vice president of global public policy for Amazon, told the Sun-Times that the company was considering using drones to help with deliveries in Illinois.
Though the new plan was announced in conjunction with Gov. Pat Quinn and Sen Dick Durbin, who are both up for reelection Nov. 4 and have focused on jobs during their campaigns, Pollet told the Tribune the announcement was not planned to coincide with the election and called the timing just “fortuitous.”
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Caitlin Wilson is a staff writer for Reboot Illinois. She graduated from Loyola University Chicago, where she studied journalism and political science. Caitlin has become both endeared to and frustrated with her adopted home state and wants to bring Illinoisans the information they need to actively participate in the politics that directly affect them. You can find Reboot on Facebook here and on Twitter at @rebootillinois.