Pet care company Chewy may hire up to 1,600 at new Kansas City area fulfillment center
Chewy, an online pet care retailer, plans to spend more than $143 million on a new fulfillment center in the Kansas City area that could employ as many as 1,600 people.
The Florida-based company will lease a nearly 800,000-square-foot facility in Belton’s Southview Commerce Center, the former site of the Southview Golf Course.
The Belton City Council approved a development agreement and incentive package at a special meeting Tuesday night.
The Missouri Development Finance Board on Tuesday approved $2.8 million in bonds to help finance the project. The Missouri Department of Economic Development has also given Chewy nearly $4 million in incentives from the Missouri Works program, according to state records.
In council documents, Chewy predicted its new jobs would pay an annual average wage of at least $32,641. For the last quarter of 2019, the Bureau of Labor Statistics calculated the average wage in Cass County was $752 per week — or $39,104 per year.
The company expects to hire 1,200 employees by next year and as many as 1,600 by 2023. The distribution center is slated to open by June 2021 in the industrial park created by locally-based NorthPoint Development.
Chewy sells everything from flea medicine to cat treats to horse grooming supplies. The company promises that most orders arrive within one to three days.
With 15 million active customers, Chewy recorded nearly $5 billion in sales in its last fiscal year.
“We are thrilled to extend Chewy’s fulfillment operations to the Kansas City area community, our first in the state and eleventh in the country,” Gregg Walsh, the company’s vice president of fulfillment and supply chain human resources, said in a statement. “With this enhancement to our delivery network, we’ll be able to continue serving our customers with fast shipping throughout the Midwest region and beyond.”
As part of the city’s agreement, the council approved issuing up to $70 million in industrial revenue bonds to help build the distribution center. Those bonds would be paid back solely by revenue from the project, city officials said, and would not create new liabilities for the city or state.
The council granted a 10-year property tax abatement on the new facility. Chewy will receive a 100% abatement over the first three years, a 95% abatement for three more years and then a 90% abatement for the last four years. That gives the company an estimated tax benefit of $8.5 million, officials said.
Chewy has agreed to make payments in lieu of taxes, also known as PILOTs, to the city and other taxing jurisdictions. City leaders received several letters of support from community groups and none of the affected taxing jurisdictions objected to the project.
The city also approved a sales and use tax exemption on Chewy’s purchase of equipment worth an estimated $6.5 million. The agreement requires the company to generate $80 million in annual retail sales beginning in 2022 that are subject to local city sales tax.
A July 14 report to the Missouri Development Finance Board shows the Show-Me-State competed with Tennessee for the new facility. It expects the project to have a net economic benefit to the state of $11 million over 15 years.
A third-party analysis found that Chewy had a “moderate-high risk” of going out of business, becoming dormant or filing for bankruptcy in the next year. That’s an unusual finding for new economic development projects, said Bill Miserez, executive director of the Missouri Development Finance Board.
But he said the deal posed little risk to the state. The board has yet to offer final approval of the bonds, which resemble the utility of a forgivable loan. The board issues bonds to the company. As the firm repays the bonds, they receive state tax credits.
And the company must meet its obligations to the state to receive those credits, Miserez said.
“There is no liability to the board or the state,” he said. “To the extent that they don’t continue to provide the (agreed upon) jobs and investment, they would no longer receive tax credits. As long as they continue to perform as agreed and approved, they’re fine.”
This story was originally published July 21, 2020 at 5:10 PM.
