After Eugene Weekly unmasked Amazon as the conglomerate behind the planned package-distribution center near the Eugene Airport, some people have suggested Amazon’s property tax payments on the place may prove a rich windfall for money-starved local governments.
But that’s not likely.
How much will the facility pay each year in property taxes to the cash-strapped city of Eugene? Maybe about $290,000, Bricks $ Mortar calculates. That won’t go far in a city government with a $930 million annual budget and 1,500 employees.
Eugene School District 4J, now implementing major layoffs, would get less, about $250,000, Bricks $ Mortar calculates. That’s enough to pay the salary and benefits of a few teachers, in a district with about 2,000 employees and a roughly $300 million annual budget.
The Amazon facility may be many things. But a property tax goldmine it is not.
The facility’s advocates give it a fancy name: an “e-commerce center.” But it will really be just a vast steel warehouse filled with expensive conveyor belts, and will be taxed accordingly.
Amazon’s total property tax payments, to all local jurisdictions, will be roughly $720,000 a year, Bricks $ Mortar estimates. It could be somewhat more or somewhat less, depending on the value of the conveyor system. Amazon won’t disclose what it will spend on the facility, spokesperson Farah Jud says.
Let’s put this money in perspective:
Lane County records show the county’s single biggest property taxpayer is International Paper’s linerboard factory in Springfield, which pays $4.4 million a year. Other big property taxpayers are McKenzie-Willamette hospital ($1.8 million a year), Weyerhaeuser Co.’s mills in Eugene and Cottage Grove ($2.1 million total a year) and Valley River Center in Eugene ($1 million a year).
The Amazon facility likely would fall far short of making the top 10 list of Lane County property tax payers.
If you’re looking for a genuine recent tax godsend, consider the five big student apartment complexes out-of-state developers have built in Eugene in the last eight years. As a group, these five pay over $3.4 million a year in property taxes, county records show. The biggest, the Standard at Eugene, the new 703-bedroom student complex on Broadway near the Ferry Street Bridge, pays nearly $1 million a year in property taxes, county records show. Two more student housing high-rises are under construction. Each will likely pay about $750,000 a year in property taxes.
No one will know for sure how much Amazon will pay until the place has been built and officially assessed.
Here’s how Bricks $ Mortar estimated the taxes:
1. How much will Amazon spend on its project? Amazon spent $2 million to buy the farmland site, and in a filing with the city, Amazon’s consultant put the construction cost at $24 million.
On top of this, the wild card is the value of the conveyor system Amazon will install. News reports show that for some package-sorting centers of this size in other states, Amazon installs $20 million to $30 million worth of equipment. Let’s use the higher number. That gives us a facility with a total value of $56 million.
Compare that to the market value of the IP linerboard plant: $253 million.
2. Once the place is built, the Oregon Department of Revenue will use a valuation formula to determine the assessed value of the facility. The assessed value is the amount that’s taxed.
On large industrial properties such as the Amazon facility, assessment work is done by the Department of Revenue in cooperation with the Lane County Assessor’s Office. For almost all properties in Lane County, the assessed value is much lower than the cost of new construction, for reasons that are beside the point here.
The formula the state would use would peg the assessed value of the Amazon development at about $36 million, Bricks $ Mortar estimates.
How much property taxes would Amazon pay on that? For all property tax jurisdictions at that Highway 99 location — city of Eugene, Eugene School District, Lane County government, etc. — the total tax rate would be about $20 per $1,000 of assessed value. That’s $720,000 a year to be paid by Amazon.
Eugene residents may be praying for a savior who will bail out city government and the Eugene School District. But it won’t be Jeff Bezos.
Bricks $ Mortar is a column anchored by Christian Wihtol, who worked as an editor and writer at The Register-Guard in Eugene 1990-2018, much of the time focused on real estate, economic development and business. Reach him at Christian@EugeneWeekly.com.