Long pursuit of Amazon.com: Deal's certainty came only after company delivered news

Columnists

Until Amazon.com made it official it would open a fulfillment center in Jacksonville, economic developers figuratively held their breath.

Even with City Council approval of the incentives April 26, site clearing by July 13 and the land sale to the project developer July 21, there still was an underlying concern.

“There were a number of things that happened between council approval and a couple of days ago when it was announced that you kind of go, ‘oh no, is this the thing that’s going to kill it?’ But everybody was able to work through those issues,” city Office of Economic Development Executive Director Kirk Wendland said last week.

JAXUSA Partnership President Jerry Mallot said he wasn’t completely confident until a week before the announcement when the JAX Chamber was reviewing a final draft of the company news release, which finally was posted by Amazon.com the morning of July 27.

“We wanted them to do a huge celebration. They did not want to do that,” Mallot said, although there might be one later.

Wendland, Mallot and Tim Vanderhoof, vice president of business development for Enterprise Florida, presented “Winning Project Rex: What it Means for Northeast Florida” at the JAXUSA Partnership Regional Economic Development Forum last Friday, just two days after the announcement.

Seattle-based global e-commerce retailer Amazon.com will open a $200 million center in North Jacksonville that will pick, pack and ship small consumer goods. The center will comprise 2.4 million square feet of space in a multilevel building with an 855,000-square-foot floorplate.

It will hire 1,500 people, of which the bulk will earn at least $25,000, but 500 jobs will pay an average of $50,000.

Mallot said it is the single largest jobs announcement in the city’s history.

The project was expected in earnest for months and in concept for years. It was code-named Project Rex as it sailed through City Council in April. City and state taxpayer incentives total almost $18.4 million.

The economic developers involved were held to confidentiality agreements until the company went public with it.

“You guys are much better than I am. I still can’t say the name,” Wendland joked with the forum. “I told my wife today I’ve got something coming in from Rex Prime.”

Amazon Prime is a service that includes free two-day shipping and access and streaming to music, videos, movies and TV shows for $99 a year.

Mallot told the almost 70 economic-development executives at the forum the recruitment started about seven years ago, an account he shared with reporters the day of the announcement.

He said he met an Amazon.com representative at a national meeting and “struck up a conversation that developed into a relationship that developed into a very targeted process to try to help make this thing occur.”

There wasn’t a project to pursue. “We just knew it was a great company that was growing,” Mallot said.

Over the years, the man, who Mallot did not identify, and others would ask JAXUSA, part of the JAX Chamber, to send information about the region and sites. Mallot sent information about locations from throughout Northeast Florida.

After the state resolved a sales-tax collection issue regarding online retail sales, Amazon.com announced in 2013 it would open fulfillment centers in Lakeland and Ruskin.

While Mallot had hoped Jacksonville would be among those announcements, the population density and ability for the company to reach a market of 12 million to 14 million people was pivotal to the Central Florida decision.

“We knew we were going to have a shot at the next one over the next couple of years,” Mallot said.

Aware the decision would be North Florida or Georgia, the fear was the population density of Atlanta might sway the company that direction. “But we kept our efforts up,” he said.

By then, Mallot, Senior Vice President of Business Development Aaron Bowman and the team had been meeting with Amazon.com officials at least twice a year and were being assured Northeast Florida remained under consideration.

Then came February, when Mallot got a call to meet with an unidentified developer about an unnamed distribution center.

It was Amazon.com developer Seefried Industrial Properties Inc., which was well underway in independently finalizing the North Jacksonville site.

Vanderhoof at Enterprise Florida, the public-private state economic-development agency, was familiar with the company through previous site decisions.

“When we did get that call in late February not knowing who it was, we had our assumptions,” he said.

Once it was clear it was Amazon.com, it was “really go mode.”

“Amazon works on a very fast cycle. Everything is based on … will we be operational by peak season,” Vanderhoof said.

In Jacksonville, the company wants its center ready by October 2017 for the holiday shopping and shipping season.

Enterprise Florida knew Jacksonville City Council could approve incentives quickly and Vanderhoof was confident the state’s assistance also could go through fast enough.

“There were multiple meetings, easily a dozen, that we probably had over the coming months to really start to bring this to fruition,” he said.

Mallot said Amazon.com was considering three sites in Florida for the fulfillment center. The company’s Jacksonville site, at 12900 Pecan Park Road, hadn’t been on JAXUSA’s radar.

Wendland said his team introduced Seefried to the city’s planning and development department and other reviewers “and they were outstanding.”

“The answers were ‘yes, we can absolutely do that,’ or ‘we’ll figure out how to get that done,’” Wendland said.

In March, the economic development leaders learned it was Amazon.com and the other two Florida sites took a back seat.

The company had told the Jacksonville team it was developing several sites around the country, “so they take their algorithms, their analysis of delivery times, their population density and identified as many places that could work, but only a few were going to be selected,” Mallot said.

The city and state needed to be able to meet the development timetable and put together a deal. An important factor was council approval so the company’s site evaluation committee was assured of the support.

One potential glitch was the state no longer offered a governor’s Quick Action Closing Fund because the Legislature cut it from the budget. That challenged Wendland to make sure Jacksonville could close the deal.

That led to meetings with Mayor Lenny Curry and administration officials about crafting the incentives package. Wendland also worked with then council President Greg Anderson and other key council members.

To help make the case, JAXUSA commissioned a Project Rex economic simulation report from the Northeast Florida Regional Council.

Its findings issued April 21 calculated a $1.95 billion impact over the first 10 years to Duval County, meaning that’s the value of goods and services expected to be added to the economy.

Incentives legislation was introduced to council April 12 and the resolution was adopted two weeks later.

The city will cover $13.4 million, comprising a tax refund for job creation; training and hiring assistance; a road improvement grant; and, the largest piece, up to $10 million, in a grant based on the increased property taxes generated at the site.

The state’s portion is $4.95 million for its share of the tax refund for the jobs, training and road improvements.

By July, the deal was well on its way to being done.

Mallot said while there still was concern, a Daily Record story July 13 that site clearing had begun alleviated some of it. “Then we’ve got to be all right,” he thought at the time.

Another big sign came July 21, when USAA Real Estate Company bought the site for Seefried to develop.

With no fanfare, Amazon.com posted a news release July 27.

“We ended up on top, and I tell you, it did take a lot of effort and it’s going to take more effort going forward,” Mallot said.

Wendland and Mallot said they are ready to help as Amazon.com builds the center and hires employees.

The city is reviewing site plans for the infrastructure work and a building-permit application is expected to be approved soon for the $87 million construction project.

Mallot said as many as 2,000 employees will be involved in the construction project, including site work, roads and utilities as well as construction of the building, creating a significant regional impact.

JAX Chamber, the city, the regional CareerSource of Northeast Florida and others are preparing a job-hiring program for Northwest Jacksonville job-seekers.

Questions remain, including the area the fulfillment center will serve.

“Part of their decision was they wanted to be in a location where they could provide minimum two-day delivery to most of the people in the region they’re going to serve,” Mallot said.

But Amazon.com hasn’t publicly defined that region. He said Northeast Florida obviously would be included, especially with the push for one-day delivery.

Mallot said the region will benefit not only from the jobs, construction needs and services, but also from the basic product.

“I think we probably all use Amazon,” he said.

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