The Oklahoma City Airport Trust is in negotiations with Amazon to open a fulfillment center near the Will Rogers World Airport. The city is considering incentives to bring Amazon to Oklahoma City, but some city leaders are questioning whether incentives are necessary.
Journal Record senior reporter Sarah Terry-Cobo spoke with KGOU’s Jacob McCleland about the dilemma.
Jacob McCleland: It’s the Business Intelligence Report, a weekly conversation about business news in Oklahoma. I'm Jacob McCleland, and our guest today is Sarah Terry-Cobo. She’s the senior reporter at the Journal Record newspaper. Hey, Sarah. Thank you for joining us.
Sarah Terry-Cobo: Hi Jacob, it’s great to be here.
McCleland: I want to talk today about the Oklahoma City Airport Trust’s efforts to get Amazon to open a fulfillment center here. But before we get into what we know about these efforts, give us a little background here. What is an Amazon fulfillment center?
Terry-Cobo: So Jacob, just think of a giant warehouse with a bunch of loading docks off the back of one side of it. Basically cargo planes bring in packages to the a fulfillment center, where there is a lot of automation that helps sort packages and organize them before they’re shipped out. And even though there is a lot of technology inside one of these places, there are still of plenty workers doing some classic warehouse jobs.
McCleland: So what do we know about the incentives that the Airport Trust is offering Amazon?
Terry-Cobo: So the Trust is considering a forty year lease for the property with an annual rent of about $242,000. That can be adjusted or increased every five years with options to extend the contract. And Airport Trust officials will be discussing the details on Thursday. And keep in mind right now there is nothing built there on the land. It’s just a big open field near Will Rogers Airport.
McCleland: So Journal Record reporter Brian Brus’ story about the Amazon fulfillment center compares it to recent incentives to bring a Costco to Oklahoma City. What are the similarities between the two?
Terry-Cobo: My colleague Brian says that councilman Ed Shadid points out the similarities here. Basically Shadid argues that both of these companies, Costco and Amazon, would come to Oklahoma City anyway, so there is no need really to offer money to either of the companies.
McCleland: Does Oklahoma City really need to do this? Do we need to offer these economic incentives to bring Amazon and Costco to the city?
Terry-Cobo: Right, and so there are some differences there when it comes to Amazon and Costco. It seems to be that Amazon has its eye on property near major airports pretty much anywhere in the U.S., so there aren’t many options. Whereas in the case of Costco, municipalities are in competition for multiple alternative sites, which could affect where that tax revenue goes.
McCleland: What are some of the criticisms to using incentives to lure big companies, like Amazon and Costco, to a city?
Terry-Cobo: It is what economists call game theory. Each party is trying to get the other to concede something. So there is the hope that one party won’t hold on the other, and both can get something from a deal. So if you offer money, or tax deferrals or low rental rates, whatever, to a company that’s coming here regardless, then that’s money the city is losing. And plus, economists say those incentives end up pitting cities against one another in a so-called race to the bottom.
McCleland: Anyway, let’s get back to this fulfillment center. If this does come to fruition, how many jobs could it potentially create? And what kind of economic impact would it have on the city?
Terry-Cobo: About 2,000 jobs, roughly. And Amazon is already advertising for those jobs. But as far as economic impact is concerned, the Airport Trust is keeping negotiation details close to the vest.
McCleland: Sarah Terry-Cobo is the Journal Record’s senior reporter. Sarah, thank you for your time.
Terry-Cobo: Absolutely, thank you for having me, Jacob.
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