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- 2013 - May - 17th -
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Scott rejects Amazon.com deal, but door remains open for development project

by Karen Brune Mathis, Managing Editor

Florida Gov. Rick Scott has rejected a proposal with Seattle-based Amazon.com to bring at least one, and possibly two, major fulfillment centers to the state, creating up to 2,500 jobs.

Amazon.com, the nation's largest online retailer, has been building 1 million-square-foot centers nationwide. The order-filling centers are part of its efforts to provide next-day and same-day delivery for customers.

It wasn't immediately clear why Scott rejected the proposal, according to news reports Thursday.

But when it comes to a big job-creating economic-development deal, especially like an Amazon.com-size project, it's not uncommon for a governor, a company, legislators and economic-developments executives to find a way to make it work.

In this case, consider:

Amazon.com needs fulfillment centers in Florida to reach its goal of providing same-day or next-day service to customers.

• Scott ran for governor on a platform of creating jobs, taking office Jan. 4, 2011, and is preparing for his 2014 re-election campaign.

• Legislators as well as city and county lawmakers like signing their names to job-creating economic deals.

• Economic-development executives can access many state and local incentives to make such deals attractive to companies.
The News Service of Florida and The Associated Press reported Thursday that after months of negotiations, Scott said no to a deal that would have led to the construction of Amazon.com warehouses in Florida.

That would have meant Floridians would have to pay sales tax on Internet purchases made through the company, the AP explained.

Amazon.com wanted to defer collecting the state's 6 percent sales tax until February or when its warehouses were open and occupied, according to news services.

Amazon.com has reached similar arrangements in several states across the country.

"As a major company with the ability to make a significant economic impact in our state, we wanted to understand how Amazon could partner with the state in a way to create more jobs and opportunities," Melissa Sellers, a spokeswoman for Scott, said late Wednesday, according to the AP.

"Amazon worked with our office, along with other cabinet agency offices, to draft agreements related to possible changes in sales tax collection and the company's presence in our state. We were ultimately not able to reach an agreement," she said.

Sellers did not respond to questions about why Scott rejected the proposed Amazon.com deal.
The News Service of Florida quoted Sellers saying, "Amazon officials discussed building a facility in the state by the end of 2015 if the Department of Revenue could reach agreement on their sales tax collections.

"We were not able to reach an agreement in those discussions," she said.

Amazon.com spokeswoman Mary Osako told the Daily Record late Thursday the company didn't have a response to the news about Scott rejecting the proposal.

"We don't have a comment on that," she said.

The AP said Scott's reluctance might have been tied to the idea that he would allow taxes on Internet purchases shortly before he runs for re-election. He has said in the past he could only support the taxation of Internet purchases if the money were offset by tax cuts elsewhere.

Meanwhile, as the AP reported, Scott's decision comes as Congress has been debating whether to allow states to collect sales taxes on Internet purchases their residents make with out-of-state companies.

The measure, called the Marketplace Fairness Act, passed the U.S. Senate but has been opposed by leading Republicans and is not expected to pass the House.

As the AP reported, Floridians are supposed to pay taxes for online purchases, but the state can't force companies like Amazon.com to collect the tax unless it has a physical presence, such as a warehouse or store.

Early last year, Amazon.com representatives made their first pitch to Scott and legislators to defer collection of sales taxes until 2014, the AP said.

Groups like the Florida Retail Federation opposed the proposal, saying Amazon.com and Internet companies have an unfair advantage over traditional retailers.

However, The AP said Amazon.com representatives started talking to state officials again several months ago. Randy Miller, an executive vice president at the Florida Retail Federation, told the governor's office earlier this year that it could accept the arrangement.

The AP reported the deal appeared poised to pass because it obtained documents showing the Department of Revenue briefed the staff of Chief Financial Officer Jeff Atwater about the potential deal.

The news service said the Scott administration and the department have refused to release any documents tied to its conversations about an agreement with Amazon.com.

The department contends that any information related to a "particular taxpayer" is confidential. A spokeswoman has said whether the "taxpayer" actually pays taxes is "not relevant" and the department can withhold all information that identifies a company.
The News Service of Florida reported that Amazon.com planned to build at least one warehouse in Florida.

It said Scott administration officials declined to offer many details of the scuttled proposal, including where the facility would have been and how many jobs it might have meant had a deal been worked out.

In January 2012, officials in the governor's office said in published reports that they were "aware" of a desire by Amazon to put warehouses in the state, creating as many as 3,000 jobs, in exchange for a two-year exemption from collecting state sales taxes, the News Service said.

In a statement issued Thursday, Sellers implied that if the Internet company were to locate in Florida and begin collecting taxes, that would amount to a tax increase on Florida residents who use the popular shopping portal.

And –– here's where the door remains open –– she said the company could still decide to build here, anyway.

"Gov. Scott does not want to raise taxes in Florida, and we are confident Amazon will invest in our state because of our low-tax, pro-business jobs climate," Sellers said, according to the News Service.

Those familiar with Seattle-based Amazon's consideration of two centers in Florida speculate that Jacksonville and Tampa made sense as sites because of the logistics of reaching the market with the quickest delivery.

JAX Chamber interim CEO Jerry Mallot said Thursday he could not comment.

Mayor Alvin Brown had no comment, either. "At this time, we are deferring comment as this is a state issue," said David DeCamp, Brown's communications director.

Enterprise Florida Inc., the state's official economic development organization, issued a lengthier no comment.

"Unfortunately, I don't have any info for you," said Sean Helton, Enterprise Florida public relations manager, in an email to the Daily Record.

"Enterprise Florida Inc. can neither confirm nor deny that an economic development project with Amazon exists in the State, pursuant to statute 119.07(1) and s. 24(a), Article I of the State Constitution," he said.

He continued:

"Economic development information is protected for 12 months after the date EFI receives a request for confidentiality from a company or until the information is otherwise announced, whichever occurs first," he said.

"If a project is submitted for economic development incentives, confidentiality lasts for 180 days after the company's agreement with the state (Department of Economic Opportunity) is executed," he concluded.

The Daily Record emailed Amazon.com several questions, which were not answered.

We asked how many centers Amazon.com operates –– total and in the U.S.; how many more are planned, including in Florida; whether Amazon.com continues to pursue plans to build in Florida; and whether other incentives are being discussed.

Among sites in Jacksonville that could accommodate a 1 million-square-foot center is Cecil Commerce Center, which is owned by the City and managed by Hillwood Investment Properties.

While reporters are cautioned it is only a coincidence, and to not infer any connection with any particular deal, City planners and the St. Johns River Water Management District have been reviewing construction plans for the "JCCC Parcel A-Phase 1" project for Hillwood's AllianceFlorida.

Hillwood has submitted applications for a two-phase, 1 million-square-foot distribution-warehouse center on 100 acres at Cecil Commerce Center in West Jacksonville.

The City received plans March 21 and records show the St. Johns River Water Management District received an application April 2.

Some documents in the 119-page Water Management District application refer to it as "Project Z."

However, Brown's administration reports the filing was only a site obligation by Hillwood and has cautioned reporters that the project should not be considered a pending economic development deal.

Hillwood has a long-term contract with the City to develop up to 30 million square feet of industrial and retail space in Cecil Commerce Center, Aleizha Batson, Brown's deputy director of communications, said in an email in April.

"Plans were recently submitted on April 2 to the St. Johns River Water Management District to meet contractual obligations for the site, due by September 15, 2013," she said, not elaborating further.

The proposed project is designed in two phases of 400,000 square feet and 600,000 square feet.

There's some speculation Amazon.com would start its Jacksonville center with a 400,000-square-foot center.

However, there's also discussion that Amazon.com has interest in other sites, including along the Interstate 295 West Beltway that would provide convenient road access to I-95 and I-10.

Amazon.com Inc. is a large company, with about 88,400 full- and part-time employees as of Dec. 31, according to its annual report filed with the Securities and Exchange Commission.

It reported revenue of $61.1 billion and income from operations of $676 million.

Amazon was founded in 1994 and has grown to be a Fortune 100 company.

The Amazon.com sites says the company's mission is "to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices."

Amazon.com and other sellers offer millions of new, refurbished and used items in categories such as books; movies; music and games; digital downloads; electronics and computers; home and garden; toys; kids and baby; grocery; apparel; shoes and jewelry; health and beauty; sports and outdoor; and tools, auto and industrial.

The company said technological innovation drives the growth of Amazon.com to offer customers more types of products, more conveniently and at lower prices.

Since 1995, it has significantly expanded its product selection, international retail websites, and worldwide network of fulfillment and customer service centers.

Its website shows that in the United States, Amazon has fulfillment centers in 14 states and customer service centers in three states. Its corporate headquarters are in Seattle with "other locations" are in Phoenix, Las Vegas, New York and Herndon, Va.

The site also lists 19 locations for subsidiary centers in the United States, as well as corporate offices and fulfillment centers in France, Germany, Ireland, Italy, Romania, Slovakia, Spain, the United Kingdom, China, India, Japan, Singapore, South Africa, Egypt, Morocco, Costa Rica, Brazil and Australia.

Its European headquarters are in Luxembourg.

"Amazon has teams across the world working on behalf of its customers at Fulfillment Centers, which provide fast, reliable shipping directly from Amazon's retail websites, and Customer Service Centers, which provide 24/7 support," says the site.

In a March 24 report, GoUpstate.com, for Spartanburg, S.C., reported that Amazon.com opened a 1 million-square-foot fulfillment center that employs 400 people.

The news site reported that Amazon.com had more than 40 fulfillment centers in the United States and 80 worldwide.

Amazon began operating the center in September and held the grand opening in March. There also is a fulfillment center in Columbia, S.C.

The wkrn.com news site reported April 5 about the grand opening of Amazon's fulfillment center in Mufreesboro, Tenn., which had been operating since the fall and employed more than 1,100 people.

It is one of four Tennessee distribution centers for Amazon.com.

The AP reported in October 2011 that Tennessee Gov. Bill Haslam announced he reached a deal with Amazon.com for the online retailer to begin collecting Tennessee sales tax in 2014 and add 2,000 full-time jobs at two new distribution centers.

Amazon said it would invest $350 million in Tennessee over the subsequent three years.

Phoenix Realty changes name

Phoenix Realty Group announced Thursday that it has joined Newmark Grubb Knight Frank, a global commercial real estate advisory firms, and is doing business as Newmark Grubb Phoenix Realty Group.

Newmark Grubb Phoenix Realty Group, a locally owned commercial real estate company, was formed in February 1993 by Jim Sebesta and Ladson Montgomery, with John Richardson joining a few months after. Within its first year, the firm had a transaction value of $10 million.

Phoenix Realty Group joined the Grubb & Ellis commercial brokerage network as a national affiliate in 2000.

Richardson is president and principal and Sebesta is CEO and principal.

It has grown to 17 brokers and says it is the second largest commercial real estate brokerage firm in Northeast Florida, with more than $136 million in transactions during 2012. It provides brokerage, development, asset management and property management services.

In 2001, it launched PRG Developments with Montgomery, its president, and Forrest Gibson, vice president. PRG Developments has developed more than 2.2 million square feet of industrial and office space.

The Newmark brand was introduced in 2012 following BGC Partners Inc.'s acquisition of Newmark Knight Frank and the assets of Grubb & Ellis Co.

California-based Grubb & Ellis filed for Chapter 11 bankruptcy reorganization and sold most of its assets to BCG.

New York City Real Estate News and law360.com reported in early March that the Grubb & Ellis bankruptcy liquidation plan was approved, almost a year after it was acquired by BGC Partners.

Law360.com said Grubb & Ellis entered Chapter 11 with a plan to sell its assets to BGC, but hit a bump in the road when it received several objections to the sale. The site said Grubb & Ellis eventually came to terms with its unsecured creditors and other opposing parties and closed the deal on April 13.

The liquidation plan was filed in November.

Law360.com said BGC bought Grubb & Ellis for the purpose of integrating it with Newmark Knight Frank, its existing multinational firm, to form a commercial real estate powerhouse.

St. Johns Town Center adds tenants

Simon Property Group Inc. announced Thursday it has added more retailers and also has designated 10 parking spaces for expectant mothers at St. Johns Town Center.

To park in the spaces, shoppers must register at St. Johns Town Center's management office, which is behind Pottery Barn Kids, and be issued hangtags for registered vehicles.

Upon registration, expectant mothers will receive information from the Family Birth Place at St. Vincent's HealthCare as well as coupons and offers from St. Johns Town Center retailers.

Among new tenants, locally owned MShack, by Matthew and David Medure, will open in October in the former Ritz Camera location. MShack offers burgers, fries and shakes.

Sperry Top-Sider will open its first Northeast Florida store in September in the former Bakers location. It will sell men's and women's apparel, shoes, swimwear and accessories

The Daily Record previously reported three other new tenants announced Thursday.

LUSH Fresh Handmade Cosmetics will open in June in the former BCBGeneration space; Cosmo Nail Bar will open in July in the former Lotus Massage location across from YOBE; and Victoria's Secret PINK, carrying lounge wear and athletic wear, will open in August in the former Original Piece location.

Also, as reported, Bath & Body Works will open in July in the former Design Elements space, and Victoria's Secret will open its renovated and expanded space in the fall.

Original Piece, whose Jacksonville flagship store is at St. Johns Town Center, relocated in April to the former Juicy Couture spot,

Still no final word on the Microsoft retail store lease in negotiation.

kmathis@baileypub.com

@MathisKb

(904) 356-2466

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