DLNews Biz:

Original Plan

Amazon planned to build one of the largest warehouses in the country in Desert Hot Springs, a city that desperately needed more revenue and jobs. The warehouse, which the city's planning commission approved in March 2022, would have a size of about 3.4 million square feet and a height of 105 feet. It was the first project to benefit from the city's decision to increase the maximum building height in its industrial zone from 50 to 120 feet earlier that year. Amazon bought the project site shortly after.

Revised Plan

However, after the company's Q1 earnings call, in which they admitted to overestimating e-commerce growth and overextending their warehouse network, it became apparent that the Desert Hot Springs location would need to be downsized. During the earnings call, Amazon CEO Andy Jassy reportedly stated that some 10-30 million square feet may be subleased for storage space use. A leaked internal document from Amazon, called "Community Engagement Plan 2024 – Southern California," revealed that the company intends to open a "middle mile project" in Desert Hot Springs instead of the original "fulfillment center" project. A middle mile project is a part of the supply chain where items are moved between facilities, while a fulfillment center is where items are stored, packed, and shipped, as explained by a city staff report in the July 25 planning commission agenda.

Mayor Scott Matas has been serving in his position since March 2007.

Impact on City

The document also stated that the fulfillment center "would have generated significant income into their general fund." Mayor Scott Matas expressed his disappointment that the city would not receive tax revenue from fulfillment sales, which would have significantly improved its budget.

Some of the main differences between the original and revised project plans are:

·      The project size decreased by 80%, from 3.4 million to 650,000 square feet

·      The project height was reduced by 57%, from 105 to 45 feet

·      The number of full-time employees decreased by 22%, from 1,874 to 1,464

·      The type of facility changed from a fulfillment center to a middle-mile project

Future Outlook

Despite the changes, Matas said that the warehouse would still create jobs for the residents. The project is expected to employ 1,464 full-time workers, down from the previous estimate of 1,874, according to the July 25 staff report to the planning commission. Deputy City Manager- Doria Wilms said the project will start construction next year and open in 2025.

Fulfillment Center vs Middle-Mile project tax benefits explained:

"Maximizing Tax Benefits: Amazon's Logistics Impact on Our Community"