Amazon’s Massive Chicago-Area Expansion Was Fueled By $741 Million From Taxpayers
The online retail giant’s 36 new warehouses have brought thousands of jobs. Most of the taxpayer assistance comes from Black communities.By John Lippert, BGA, Natalie Moore, WBEZ
The people behind Project Condor came to University Park village trustees early this year with an intriguing proposal — and an ultimatum.
The Condor pitchman, developer Mark Goode, promised a new, $150 million warehouse that would bring 800 jobs to the cash-strapped, predominantly African American suburb 20 miles south of Chicago.
But there was a catch. Several catches.
First, trustees had to keep the identity of the company behind the project a secret, at least until the deal was sealed. Second, they had to promise more than $100 million in future tax revenues to help pay for it.
And third, they had to ram through a vote on the deal to meet the project’s construction timeline, which put the first shovel in the ground just weeks later on April 1. It was a demand that prompted trustees to bypass their practice that spreads such big decisions over three meetings to give the public a chance to have its say.
That is how the largest online retail company in the world — headed by Jeff Bezos, the richest man in the world — came to break ground on one of its newest Chicagoland distribution warehouses.
Exactly what prompted Amazon to name the project after one of the largest species of vultures in the world, company officials won’t say. But to some in University Park, the name is apt.
“You’d think Amazon coming would lift people’s spirits, but we’re still feeling a sense of depression,” said Theo Brooks, the lone University Park trustee to vote against the deal during that 20-minute special meeting on March 13.
“You come home to a majority Black town, and there’s no grocery store, no life in the town center and crumbling streets,” Brooks said in an interview. “Amazon isn’t putting more police officers on the street. Amazon isn’t helping me with my taxes.”
Amazon has been quietly cutting such deals in and around Chicago since 2015, winning tax breaks and public incentives to build 36 warehouses as part of its nationwide effort to expand its own distribution system, cut its dependence on rival shippers like the U.S. Postal Service and bolster its famous promises of next-day delivery.To help pay for its vast expansion, the company and its developers have won at least $741 million in taxpayer-funded incentives in northeast Illinois alone, according to a Better Government Association/WBEZ investigation.
An examination of public records from more than two dozen municipalities provides new details in Amazon’s six-year effort, revealing a patchwork of nondisclosure agreements, a lack of transparency during negotiations and suburbs pitted against each other to secure the most favorable deal.
The BGA/WBEZ analysis found the company received far more tax breaks from communities of color — like University Park.
Amazon collected less than $100 million in public incentives for the 15 warehouses it built in predominantly white communities but won more than $640 million in taxpayer incentives for the 21 projects built in communities with larger nonwhite populations, the examination found. Many of those communities are either mostly Black, mostly Latinx or have higher concentrations of low-income residents, and with municipal budgets already short on cash.
Records show the three largest incentive packages Amazon received — totaling $512 million — all came from predominantly Black suburbs. By contrast, the company built warehouses in at least seven mostly white communities that reported offering no public incentives at all.
Amazon officials declined repeated requests to be interviewed for this report. But in a series of emailed responses, the company said the expansion has already created 23,000 full- or part-time jobs in Illinois that pay at least $15 per hour.
A company spokeswoman described the government subsidies as “standard practice when a company plans a large investment.”
While many of the communities may get more jobs, experts interviewed say the lost revenue from taxpayer incentives will strain public resources to rebuild crumbling roads from the truck traffic, mitigate pollution from the exhaust fumes and noise and to pay for other services such as police protection and fire prevention.
“It’s impossible to negotiate on these really important land-use decisions when one side has all the knowledge, all the finances and all the top lawyers, and on the other side you’ve got what are basically small towns that can’t even afford a traffic engineer,” said Jose Holguin-Veras, an engineering professor at Rensselaer Polytechnic Institute.
Brandon Svec, an economist for CoStar Group, a Washington, D.C. market research firm that monitors Amazon’s expansion, agreed.
“There’s no doubt that when they play communities against each other, they’re being less than a good corporate citizen,” Svec said. “These warehouses can only go where the politicians will let them go.”
The incentives elected officials have approved for the Amazon warehouses run the gamut: property tax abatements, pledges of future tax revenue to help pay construction costs, infrastructure improvements and waivers on sales taxes for building materials, records show. In Cook County, Amazon and its developers have applied for abatements on six warehouses that could be worth tens of millions of dollars more, records show.
Amazon has received $112 million in corporate tax credits through a state program known as EDGE to help build three warehouses in Joliet, Monee and Aurora, state records show. In Markham, the company project got incentives worth $300 million, including a county abatement and promises of future tax receipts over the next 12 years. In Channahon, the village agreed to $12.8 million in road upgrades near an Amazon warehouse. And in Waukegan, the city pledged $40 million for redevelopment costs.
Amazon’s push is part of a worldwide effort to take control of its own distribution as the company reports record profits.
In the U.S. alone, the online behemoth has 225 new warehouses in the works, with plans to reach nearly 1,000 facilities in a few years, said Marc Wulfraat, president of the Montreal-based market research firm MWPVL International, which tracks Amazon’s distribution strategies.
He also said the warehouses are going up closer and closer to Chicago’s center, in neighborhoods such as Goose Island and Bridgeport, to help with next-day deliveries. In total, Amazon has 25.5 million square feet of warehouse space in the city and surrounding suburbs, according to reports from Wulfraat’s research firm.
Amazon spent $10 billion on this nationwide effort last year alone, nearly as much as competitors United Parcel Service, FedEx Corp. and the Postal Service combined, according to a research report Bank of America published for its equity investors.
The report concluded Amazon’s warehouse expansion nationwide could quadruple its U.S. deliveries to 9.7 billion packages by 2025. Company-wide profits could nearly double in just two years, the bank researchers predicted.
Good Jobs First, a Washington, D.C. policy think tank that monitors corporate subsidies, has reported it was able to find close to $3 billion in economic incentives governments gave to Amazon nationwide since 2012, averaging about 20 deals per year.
But the group acknowledges it has been difficult to track Amazon deals across the country because the company tries to keep a low profile during negotiations.
“We have noticed that Amazon has gotten more secretive about its redevelopment incentives, and Illinois is a good example of that where they are using LLCs as the ownership structure and properties owned by others,” said Greg LeRoy, executive director of Good Jobs First.
He said tracking Amazon in Illinois is even more difficult since the state has more local taxing bodies to check than any other state.
Experts said Amazon’s intense and sudden growth is helping contribute to an already dire environmental burden, often in lower-income communities already bearing the brunt of congestion and air pollution. The environmental impact of its warehouses has drawn criticism and protest around the world.
In Will County — where Amazon has or is building 12 warehouses — officials were bracing for a 60% increase in regional and cross-country freight traffic by 2040, even before the pandemic turbocharged e-commerce.
In Cook County — where Amazon has or is building 15 warehouses — the health impacts of the area’s already high soot levels is borne mostly by Black and Latinx residents who live near freeways, according to a Chicago Tribune report in May. Because Chicago is a freight hub, it already has double the level of heavy-duty truck traffic as other major cities, the newspaper reported.
Mayor Lori Lightfoot published Chicago’s first-ever neighborhood air quality report in July. In it, she promised that instead of reviewing new industrial proposals separately from each other, she’d make sure “cumulative burdens” don’t disproportionately affect certain neighborhoods.
Her proposals dovetail with other experts who argue online retailers such as Amazon should be encouraged to build delivery stations in densely populated urban areas instead of far-reaching suburbs that increase travel times. In return, governments need to require more electric vehicles, buffer zones and air filters for nearby homes and increased compensation for schools and hospitals, said Holguin-Veras.
Amazon has touted plans to reduce its carbon footprint by purchasing 100,000 battery-powered delivery vans by 2030.
In a statement to shareholders earlier this year, the company said its initiatives “demonstrate that we are already responsibly managing the environmental impact of our operations on the communities in which we operate, including communities of color.”
While Amazon promises the world’s largest fleet of electric delivery vans, it is also hiring tens of thousands of “Flex” or gig drivers who use their own cars and trucks. Unlike California, Illinois has no requirement that Amazon or anybody else use electric trucks, and the state is not providing subsidies for people who can’t afford them.
Some experts are calling for increased transparency so that those most affected by the impact of these warehouses have more input into the government actions surrounding them.“Imagine a system in which residents could opt in to receive email alerts any time there are new development proposals in their wards, instead of hearing about them by chance,” said Kate Lowe, an urban planning professor at the University of Illinois at Chicago. “It’s not a hard thing to set up.”
In the case of the new Amazon warehouse in Bridgeport, developers quietly started negotiations with the neighborhood’s alderman and other city officials a year before the official announcement, said Lowe, who attributed this information to an attorney for the retailer.
“This is how business traditionally operates,” Lowe said. “The deals get made with one big man before there is ever a public-facing event.”
“The Condor people”
In his annual “State of the City” report in September, long after Amazon had already broken ground on the warehouse he worked quietly to approve six months earlier, University Park Mayor Joseph Roudez made the Amazon project a centerpiece.
“The $150 million Amazon facility under construction has already generated $1 million in village revenue in impact fees, and an additional $952,000 through permit fees,” Roudez told the roughly 200 attendees gathered at the Village Hall parking lot.
Village records show the impact fees will be returned to Amazon’s developer — with interest. They show the developer also will be reimbursed for land and construction costs up to $107 million from University Park’s future tax collections. The village also will make annual interest payments equal to 7% until Amazon’s developer receives the entire amount over 20 years.
Village Manager Ernestine Beck-Fulgham said the secrecy demand from Amazon was typical and the subsidies were awarded because “there was no other way’’ for the village to redevelop industrial property.
“It’s customary now, when mega-Fortune 500 companies come, that they prefer that you not divulge what they’re doing,” she said. “It happens all the time.”
In a recent interview in his office, Roudez said some of his constituents commute 50 miles to O’Hare Airport for $15-per-hour jobs, but now they’ll have a chance to earn the same money 15 minutes from home.
“When Amazon comes to a community, they drive economic development,” Roudez said. “Now we’re getting so many other phone calls asking what’s available.”
Roudez said the project was originally dubbed “bluebird,” but the name changed after Amazon decided to double the size of the warehouse to 1.2 million square feet.
“Condor is a humongous bird,” he said. “This is the largest single commercial development in University Park’s history.”
Roudez and Beck-Fulgham said the future taxes University Park will hand over to Amazon would never have existed if the retailer wasn’t building the warehouse. Critics ask who will pay for the crumbling roads from the increased traffic.
University Park’s roughly 7,000 residents, meanwhile, are grappling with — among other things — municipal water with so much lead that most families are forced to use bottled water.
Brooks, the sole dissenter on the village board, decries how the deal was done so swiftly and without more pressure on Amazon for concessions. He refused to sign a formal nondisclosure agreement, and he has since sued his own board of trustees for failing to provide him the financial records behind this and other aspects of the city’s finances.
During the March 13 meeting, at which Roudez referred to Amazon only as “the Condor people,” he told attendees “it was a decision that had to be made right away to start construction on April 1.”
According to records, trustees didn’t receive a copy of the 23-page agreement they would be asked to approve with Amazon’s developer until less than seven hours before the final vote on the ordinance.
Even though the specifics of the village’s contribution weren’t discussed, they did promise to reimburse Project Condor with future tax revenues from the site for the next 20 years. Goode, the developer of the project, told the trustees his client’s contribution would be significant.
“The actual investment will be well above [$75 million] in terms of the equipment that this user, who we’re calling Condor but everyone now knows who it is, in essence, is making inside the building,” said Goode, a founding principal at Venture One Real Estate. Goode did not respond to requests for an interview.
Government watchdog experts say the concealment of Amazon’s identity at a public meeting violates the spirit of the state’s Open Meetings Act. “If they’re making an incentive agreement based on who that company is, on their stature or their promise or their business model or whatever, then that’s relevant information that the public needs to know,” said Ben Silver, an attorney for the Citizen Advocacy Center based in Elmhurst.
The BGA/WBEZ review found University Park was among the three predominantly Black suburbs where Amazon or its representatives extracted the largest incentive packages.
Brooks said Amazon didn’t consider his town until after Bolingbrook turned it down.
Bolingbrook’s former Mayor Roger Claar said Amazon’s demands were too onerous.
“We were told they didn’t want windows in the building because they don’t want their employees staring out the window,” said Claar, who left office in July. “And $15 an hour is barely minimum wage.”
Claar also decried potential traffic “gridlock.”
In Markham — where four of every five residents is Black — Amazon insisted it would walk away without an incentive package worth $322 million, almost three times the one it got from University Park.
The company demanded changes that would cut its property tax bill by more than 80%, according to Charles Durham, a Chicago attorney who advises the city. For a suburb struggling economically, political leadership felt it had to acquiesce, he said. A quarter of Markham’s residents are below the poverty line.
To secure the deal, Markham supported a Cook County abatement application worth $220 million over 12 years, and promised to refund another $102 million from future tax receipts. Amazon argued the incentives brought Markham closer to tax rates available in nearby Will County.
Amazon expects to open next year a $300 million, five-story, 3.86 million-square-foot behemoth in Markham billed as a robotics showplace.
“It doesn’t matter how much money they have in the bank,” Durham said. “They make rational decisions based on the economics of their business model. Any business would do the same.”
Roger Agpawa, Markham’s mayor, is equally pragmatic.
“You’ve got to start somewhere,” Agpawa said. “The Black or the brown community, or the place where they’re not speaking the language, you change that by what you put there.”
Amazon’s project will be on 140 acres of once-vacant, unincorporated land that until recently was home to chickens and other farm animals roaming freely among abandoned tires and empty lots.
Even with the tax breaks, the warehouse will boost Markham’s annual tax collections by $6 million, Agpawa said. Village residents will have a shot at the 1,000 jobs. And the warehouse had already attracted other developers who wanted to add a gas station, a restaurant and a hotel.
In nearby Matteson, records show Amazon will get a Cook County property tax abatement worth $82 million over 12 years.
As towns like University Park and Markham embrace the new Amazon jobs, critics argue the jobs don’t compare to what unskilled workers could earn in steel mills that dotted the suburbs south of Chicago a generation ago.
Even in the midst of a pandemic, Amazon needs to pay signing bonuses of $500 to quickly hire new workers because of the heavy turnover at the warehouses, said Roberto Clack, an organizer for Warehouse Workers for Justice, a union advocacy group.“It’s like a casino, and Amazon is the house,” Clack said.
In April, workers at the company’s Western Avenue warehouse in Chicago left their jobs and rallied in the parking lot to protest health risks from COVID-19. After that, Amazon switched more workers to full-time, granted more paid time off to part-time employees and installed additional drinking fountains.
According to the Bureau of Labor Statistics, 341,000 people work full-time in warehouse jobs in the Chicago region.
For them, as for warehouse workers across the U.S., inflation-adjusted wages are lower now than in 2001, according to Beth Gutelius, an urban researcher at the University of Illinois at Chicago. That is partly because new employers like Amazon have stymied unionization so far.
Many more part-time and temporary workers work in warehouses, she said. They are invisible — impossible to count — because they are scattered among the dozens of occupational codes tracked by the government, Gutelius said.
In Chicago’s Pullman neighborhood, Ald. Anthony Beale, 9th Ward, said he is eager to welcome the company to the south end of Chicago. The warehouse is expected to employ up to 200 employees and includes a parking lot to accommodate 800 cars and trucks, the alderman said.
Beale said he agreed to keep Amazon’s identity quiet during negotiations for fear publicity could have caused the company’s real-estate costs to skyrocket. Beale also said the lack of stricter air pollution mandates was acceptable because of the company’s promise to buy electric trucks. The state built an access road to keep truck traffic away from neighborhood streets, he said.
Beale said he is also putting his faith in Amazon because Black and brown and lower-income neighborhoods like Pullman have so few options.
The 21-year alderman rattles off a string of hard-won investments, like a Walmart that meant residents didn’t have to drive for miles to buy food, plus an S.C. Johnson & Son soap factory and an indoor produce farm called Gotham Greens.
He is proudest, perhaps, of a new Culver’s family restaurant. It brings 50 jobs and makes Pullman feel like a more normal place.
“We haven’t had a restaurant where you can actually sit down and have a meal in, I can’t tell you how long,” Beale said. “I’m just ecstatic.”
When asked whether he contacted nearby towns like Markham or University Park to make sure they didn’t undercut each other in talks with Amazon, Beale laughed out loud and then responded in mock protest.
“I’m just a small, local alderman,” he said, “trying to do the best I can for my little, bitty ward.”
Natalie Moore is a reporter for WBEZ’s Race, Class & Communities Desk. Follow her @natalieymoore. John Lippert is a freelance reporter for the Better Government Association. Follow him @johnmlippert. Mary Hall produced this story for web. Follow her @hall_marye.