We’re forgoing $800,000 in real revenue. That could make a difference in our spending. It’s not an insignificant amount.
Two councillors criticize move to waive $800,000 in builder’s interest payments
COUN. JEFF LEIPER, on the city’s agreement with Amazon.
Amazon’s planned distribution centre in Carlsbad Springs would see the building ’s landlord get a break from paying interest on stalled development charges, prompting some councillors to slam the city for turning down revenue.
The shopping and technology behemoth made its plans for an east-Ottawa “fulfilment centre” official on Tuesday, with the massive warehouse to be built at 5371 Boundary Rd. next to Highway 417. The planning application filed at city hall calls for a warehouse with just over one million square feet of space and 99 truck loading bays.
Montreal-based Broccolini will build and own the custom-built warehouse. Amazon will be the tenant.
The warehouse will create more than 600 permanent jobs. Amazon workers will pack and ship items ordered through the retailer’s website. Construction of the distribution centre, which could take up to 18 months, is expected to create more than 1,500 jobs.
The city has agreed to let Broccolini defer $8,034,164 in municipal development charge payments until the warehouse is built. In a rare move, council on Wednesday will be asked to waive $803,416 in interest on the development charge deferral.
Ontario cities don’t have many financial tools to woo large employers because of provincial laws that prevent sweetheart deals with the private sector. Mayor Jim Watson said the interest waiver would be allowed under the Ontario Municipal Act, which bans municipalities from providing corporate bonuses, like fee breaks.
In this case, the city would be getting a service in return — water mains, natural gas lines, hydro infrastructure and road work — from Broccolini in exchange for the waived interest fees.
City staff suggested the interest waiver is the linchpin in the arrangement between Broccolini and Amazon. However, Coun. Jeff Leiper said the deal wrongly sends a message to residents that the city will turn its back on revenue to attract a rich business.
“We’re forgoing $800,000 in real revenue. That could make a difference in our spending. It’s not an insignificant amount,” Leiper said.
The city could be setting a precedent for dishing out sweet deals to developers, said Coun. Tobi Nussbaum, who pointed out Amazon made $51 billion in net sales in the first quarter of 2018.
“Why we should make exceptions for that type client over a different type of development is unclear,” Nussbaum said. “I’m worried by making the exception that a future developer can make the same arguments.”
Watson said the math is simple: The city would be getting much more than what it would be giving.
“What we do offer is approximately $800,000 in interest fees that will be waived, yet we’re getting $8 million to $9 million in infrastructure that will not only serve Amazon, but will serve our purposes to attract more companies to the east end,” Watson said.
“If I were to give you $8 million and you gave me $800,000 back, I’d say that’s a pretty good deal for you, and that’s exactly what we’ve pitched to ensure that this is a viable deal for the land developer, Broccolini, and it lands the Amazon business.”
Some of the road changes, including those to the highway off-ramp and Boundary Road, will be coordinated with the neighbouring Taggart Miller recycling centre and landfill also under development.
The city for years has been trying to draw commercial interests to the Orléans area.
Cumberland Coun. Stephen Blais said the warehouse is “transformative for the rural eastern communities of our city.”
Blais said an analysis had determined that the Carlsbad Springs trickle feed from the municipal water supply can support the development without impacting the community ’s water requirements. Homeowners along the future extended water line could also connect to the service, he said.
Watson said the city doesn’t know if Amazon will run a shuttle service for staff. But there will be plenty of parking: 1,008 spaces.