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The city of Hollister will lose significant expected sales tax revenue from the nearly complete Amazon project after the company announced on Nov. 12 that it changed how it plans to use the million-square foot facility. Amazon told the city that what was proposed as a fulfillment center will instead be a warehouse.
“We made a business decision, based on our customer need, to change the facility type,” said Stephen Maduli-Williams, Amazon’s senior economic development manager.
He said the change impacts the city’s expected sales tax revenue from the project.
“There will be a loss of project sales tax revenue,” Maduli-Williams said. “We can’t tell you how much that would have been but it certainly is the case, because the new facility type does not generate sales tax revenue.”
Maduli-Williams said he could not estimate how much money the city will be missing out on.
“I don’t think there is anyone that can tell you accurately at this point how much sales tax revenue would be generated from a particular given site,” he said. “As a matter of practice, we don’t tell a jurisdiction how much sales tax revenue is going to be generated from a particular site.”
He added this site was going to be different from other Amazon projects in that it was going to handle primarily bulky items, thus the number of transactions would be smaller than some other fulfillment centers.
Councilmember Rolan Resendiz said he was disappointed in Amazon’s change of plans. He said he understood the project would generate approximately $2-$3 million annually.
City manager David Mirrione said that while it was difficult to give a precise estimate, the city’s consultant estimated $1-$1.5 million annually.
“Again, that all depends on actuals,” he said.
Mayor Mia Casey said the project was rushed through by the previous City Council and that Amazon had “every right” to change their business model based on how the project was negotiated in 2021-22.
“There was nothing we can do to stop that,” she said.” It’s just a decision they made so we’re stuck with it.”
While Maduli-Williams said Amazon made the decision to use the building as a warehouse in January 2024, the city learned that Amazon changed their business model in September.
“They omitted that the entire time they were working with the city staff to get their project built,” Mirrione said.
He said city staff primarily worked with the project owner, Prologis, Inc., which rents the facility to Amazon.
Amazon’s announcement came as the City Council considered annexing the project into Community Facility District 4, which collects taxes from property owners to pay for ongoing and future maintenance of public facilities. The City Council unanimously tabled that item until Dec. 3.
According to the staff report in the agenda, while rates may vary depending on cost of services, the maximum tax it can collect for the 2024-25 fiscal year is $1,890.60 per acre.
Planner Eva Kelly said the city would begin taxing the 73-acre property next year at about $138,013 annually.
Additionally, Kelly said staff are reviewing the traffic counts for the project as they relate to the traffic impact fees developers pay the city. She said the fee would take into account the square footage of the project and infrastructure improvements by the developer. While it wasn’t revealed how much the city expects in traffic impact fees for the second Amazon location, the city received $77,800 for the first, which is 1/10 the size of the second location.
Maduli-Williams said Amazon is still committed to hiring up to 800 employees.
Original plans
In January 2022, Hollister planners approved the project known as Project Almond in the Clearist Industrial Park. Projects are responsible to pay for infrastructure updates such as the roundabout on San Felipe Road near the Amazon building.
The building’s tennant had not been disclosed at the time but was described as a major internet retailer. It was touted as a fulfillment center that would handle large items such as furniture and appliances and involve 200 tractor-trailers daily (100 incoming and 100 outgoing).
It wasn’t until June 2023 that Amazon confirmed it would have a second location in Hollister. The first was a delivery facility that opened in 2021.
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