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Amazon May Bring a Distribution Center and 1,500 Jobs to the Central Valley

Jan. 17, 2012

Dale Kasler


When state officials ended their tax war with Amazon.com last fall, the giant Internet retailer promised to bring 10,000 jobs to California.

Now Amazon is apparently ready to make good on that pledge, starting in western Stanislaus County.

Amazon is expected to announce soon it will build a 1,500-employee distribution center off I-5 in Patterson, west of Modesto. The facility would be the first of several Amazon sites in California.

No deal has been finalized yet in Patterson, and city and county officials will refer to the new employer only as Project X. But according to the Modesto Bee, the company is widely believed to be Amazon.

City Manager Rod Butler said he expects an announcement in a week or two.

"They're talking 1,500 full-time jobs throughout the year, going up to 2,500 or more seasonally," he said.

Executives with Amazon and the company developing the site didn't return calls for comment. A spokesman for Gov. Jerry Brown, who signed the bill that ended the state's fight with Amazon, said the governor had no information on Amazon's job plans.

But other elected officials said they were pleased that Amazon is about to fulfill its promise.

"They want to be in California," said Tom White, spokesman for Assembly Majority Leader Charles Calderon, D-Whittier. Calderon wrote the compromise legislation that ended the tax dispute.

Amazon already operates a big distribution center in Fernley, Nev., east of Reno, but has long wanted to add warehouses in California.

Until now, it's held off because of a long-simmering feud with state officials over sales-tax collection.

Amazon resists collecting sales tax from customers wherever possible, a stance that gives the e-commerce giant a price advantage over brick-and-mortar competitors.

Lawmakers in California and many other states have always wanted to tax e-commerce sales, but Amazon and its allies used a U.S. Supreme Court ruling from 1992 as a defense. The court said a retailer couldn't be forced to collect sales tax unless it had a physical presence -- such as a warehouse -- in the state.

That defense has crumbled in recent years. Eight states passed laws taxing e-commerce, arguing that the e-commerce companies' in-state affiliates amounted to a physical presence. Affiliates are online businesses and nonprofits that earn sales commissions by referring customers to Amazon through their websites. Usually, Amazon and other e-commerce companies have responded by dropping affiliates.

The issue has heated up considerably in the past year. Amazon has dangled warehouse jobs -- thousands of them -- as incentives to states willing to surrender on the sales tax. In South Carolina, for instance, lawmakers abandoned an e-commerce sales tax after Amazon threatened to cancel a big warehouse project.

In California, the issue threatened to go nuclear. Amid fierce lobbying by brick-and-mortar retailers, Brown signed a law last summer requiring Amazon and others to start collecting sales tax.

Amazon responded immediately. It fired its in-state affiliates, refused to collect the tax -- and launched a referendum campaign to overturn the new law.

Then, on the last night of the legislative session in September, lawmakers and Amazon struck a compromise. California agreed to delay the sales tax law until September 2012.

Amazon suspended its ballot fight and promised to lobby Congress for a national sales tax law governing the Internet. The company has long said that state-by-state sales tax collection would be a logistical nightmare but it would go along with a national approach.

The compromise legislation doesn't commit Amazon to create jobs in the state, but as Brown signed the compromise into law, top Amazon officials said jobs would follow.

"We intend to bring jobs to California, create jobs here in the state, and we anticipate within the next few years those jobs will number on the order of 10,000 full-time jobs with comprehensive health care," company Vice President Paul Misener said last fall.

Source: (c) 2012 The Sacramento Bee (Sacramento, Calif.)

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