Amazon spending more in Mississippi

[CoastRat.sixpack]

Some of that is correct, but it doesn't necessarily have to do with education. The counties rarely give up the school's portion of taxes. In Madison County, for example, something like 35-40% of ad valorem taxes go towards education. I haven't looked into this deal specifically and I imagine they have found ways to give Amazon an abatement or created some bonding or something to give them an economic inducement, but I doubt they're giving away the school system's portion entirely or easily.

You are correct, you can't abate the portion that is statutorily allocated to schools. But they can abate all the rest, which means they won't have anything extra to give towards schools. Also, what gets lost in all of this, is the local governments need the taxes because when you move more and more people to your area for the new jobs, you have to service all of those new residents with water service, fire and police protection, and all other county/city services. For example, do you really think the fire departments in these areas have the proper equipment to fire protect a structure that size? Just like when gaming hit the coast, and they started building these high rise hotels; they quickly realized they didn't have fire equipment capable of fighting a fire on the 20th floor of a hotel. So what will happen is they will all abate taxes, and then cry to the state legislature every year for grants to buy the equipment they need, and to upgrade the water/sewer systems, and build new roads, etc. The state continues to try its best to bankrupt all local governments because they want to divvy out all the money from Jackson, instead of leaving it in the local communities where it belongs.

 

[johnson86-1]

You are correct, you can't abate the portion that is statutorily allocated to schools. But they can abate all the rest, which means they won't have anything extra to give towards schools.

You mean other than the millions of dollars in revenue they will get from the fee in lieu agreement? You're right, they won't have anything extra to give to schools, you know, outside of those millions of dollars. I suspect a lot of school districts would be ok with that deal though.

Also, what gets lost in all of this, is the local governments need the taxes because when you move more and more people to your area for the new jobs, you have to service all of those new residents with water service, fire and police protection, and all other county/city services.

That's basically true. Some areas will not abate the portion of ad valorem set aside for roads and bridges and community college for partly that reason, with the justification that new projects put a lot of wear and tear on roads and also generally want to benefit from skills training provided by community colleges.

Most areas have gotten much better about not giving away the farm. We basically gave away the farm to get Nissan. We gave up much less to get Toyota. Most areas and Mississippi in general have also gotten better about not getting fleeced. You're less likely to see millions in infrastructure investment for a project where the state or local entity is at risk of holding the bag if the project gets mothballed or cancelled. Much more likely to see tax abatements tied to production, not breaking ground. I have not looked into any of the data center deals, but I would expect them to be pretty decent just because we have reasonably good access to natural gas and water, relatively cheap land, and electricity capacity and the ability to permit new plants when it comes down to it. Possible we are getting hosed on everyone and that's why we are seeing an influx, but I think it's more likely that we check some boxes so we are not having to give up the farm to get these deals.

For example, do you really think the fire departments in these areas have the proper equipment to fire protect a structure that size? Just like when gaming hit the coast, and they started building these high rise hotels; they quickly realized they didn't have fire equipment capable of fighting a fire on the 20th floor of a hotel. So what will happen is they will all abate taxes, and then cry to the state legislature every year for grants to buy the equipment they need, and to upgrade the water/sewer systems, and build new roads, etc. The state continues to try its best to bankrupt all local governments because they want to divvy out all the money from Jackson, instead of leaving it in the local communities where it belongs.

 

[Darryl Steight]

You are correct, you can't abate the portion that is statutorily allocated to schools. But they can abate all the rest, which means they won't have anything extra to give towards schools. Also, what gets lost in all of this, is the local governments need the taxes because when you move more and more people to your area for the new jobs, you have to service all of those new residents with water service, fire and police protection, and all other county/city services. For example, do you really think the fire departments in these areas have the proper equipment to fire protect a structure that size? Just like when gaming hit the coast, and they started building these high rise hotels; they quickly realized they didn't have fire equipment capable of fighting a fire on the 20th floor of a hotel. So what will happen is they will all abate taxes, and then cry to the state legislature every year for grants to buy the equipment they need, and to upgrade the water/sewer systems, and build new roads, etc. The state continues to try its best to bankrupt all local governments because they want to divvy out all the money from Jackson, instead of leaving it in the local communities where it belongs.

Whether they do it through tax abatement, tax freezes, bonds, or other - the incentives eventually burn off. This is a forward-thinking bet that municipalities make. Meaning, "we'll give you a break on taxes now for 10 years so you can get going, but at the end of that 10 years you have to start paying".

It's an absolutely proven way to get business going in your area, and the city/county/state knows it will be glad they did it in 10 years. Especially when the decision is to either (a) offer an incentive; or (b) let a 200 acre clump of trees sit there for another 30 years with nothing on it and the owner paying next to nothing in taxes, while our roads, bridges, schools, etc. keep limping along and detiorating over the next 10 years. It's an easy call.

 

[aspendawg]

If they keep getting located here there will be NGCC plants put in to power them somewhere nearby to avoid disruptions. We are close enough to gas hubs that pipeline capacity shouldn't be an issue either. Not super informed on that, but that's my guess. Just not capacity available otherwise and dI would think they'd rather deal with gas pipeline costs instead of transmission lines because they can lock in the cost of that gas pipeline capacity a lot more easily than they can the transmission costs, and they're less susceptible to disruption from weather events.

I think y'all underestimate just how much natural gas these things can consume (obivously depends on size). Pipeline capacity will become an issue. Then you'll need a massive 12 stage compressor to feed that gas turbine and there's only three companies who can do it.

 

[CoastRat.sixpack]

Whether they do it through tax abatement, tax freezes, bonds, or other - the incentives eventually burn off. This is a forward-thinking bet that municipalities make. Meaning, "we'll give you a break on taxes now for 10 years so you can get going, but at the end of that 10 years you have to start paying".

It's an absolutely proven way to get business going in your area, and the city/county/state knows it will be glad they did it in 10 years. Especially when the decision is to either (a) offer an incentive; or (b) let a 200 acre clump of trees sit there for another 30 years with nothing on it and the owner paying next to nothing in taxes, while our roads, bridges, schools, etc. keep limping along and detiorating over the next 10 years. It's an easy call.

I don't disagree, so long as the business is one that is not likely to be obsolete in 10 years, or if it's a business that will require upgrades to services, they should only abate a portion of the taxes rather than all, to give the city some revenue to offset the costs (if any). Obviously, not all businesses will require updates to city services.

 

[Darryl Steight]

I don't disagree, so long as the business is one that is not likely to be obsolete in 10 years, or if it's a business that will require upgrades to services, they should only abate a portion of the taxes rather than all, to give the city some revenue to offset the costs (if any). Obviously, not all businesses will require updates to city services.

The obsolescence thing is a real consideration. Traditionally it's been a great bet for states and cities with tires, tools, automotive, etc. We knew those would be around for at least a couple decades or more. The AI/data center stuff moves so fast, it's a real concern. The best the municipalities and utilities can do right now is vet each potential developer completely for experience, knowledge, and staying power (read: deep pockets). That's why AWS was such an easy call - even as cloud services and technology changes, you pretty much know they will adapt and keep going. If a data center is built by a group with none or less of the above, it's obviously a lot bigger risk.

But I do know the state, counties, Entergy, MS Power et al are doing just that. The vetting process is very long and expensive at this point, as it probably should be.