When Mayor Frank Scott Jr. touted the Amazon distribution center at the Little Rock Port as one of the recent pieces of good news for the city, it prompted a question:
But isn’t the Amazon site OUTSIDE the city limits of Little Rock? Indeed it is.
And that prompted another question: Might the city seek to annex this property?
I put the question to the mayor’s private PR contractor, Stephanie Jackson, and I got this response:
Yes, we have plans to annex the site into the city soon.
I’ve asked followup questions: 1) if the city has an agreement with Amazon to be annexed; 2) what might the tax benefit be to the city.
Annexation would produce a financial windfall that the money-strapped city could use. The land alone cost $3.2 million. The four-story building will be 3.2-million-square feet of space under roof and personal property at the facility will include expensive robots.
The exact cost of the project isn’t known, but the financial group that will own the property and lease it back to Amazon put a $1.68 billion mortgage on the property. It’s unclear if that mortgage might include other Amazon properties. The building permit for a 1-million-square-foot Amazon center in North Little Rock was for $105 million.
Similar projects in other cities have been put in the range of $200 million dollars. The city has a 5-mill property tax, part of just over 70 mills assessed by the county, schools and other taxing entities. The effective tax rate is 1.4 percent of market value, with the city keeping about 14 percent of that. So at a $200 million valuation, the city could realize $400,000 or so. But this is just a very rough calculation.
UPDATE: Bryan Day, the port director, confirms Amazon agreed to be annexed in striking the land purchase agreement. He said plans are underway to annex that property and some other port parcels. This is not a payment-in-lieu-of-taxes deal, as sometimes applies to industry developments. The land will be taxed normally.