‘A game-changer for city finances’: Zoning changes to encourage fulfillment centers move forward

Changes to city zoning rules that will make it easier for developers hoping to build massive fulfillment centers were moved forward by the City Council Thursday evening. The move could help roughly double the city’s annual sales tax revenues.

“This would be a game-changer for the city’s finances,” City Manager Justin Clifton told councilmembers. “It’s unlikely there has ever been a single development that could offer that kind of tax collection on its own.”

At issue was an ordinance approving zoning changes that would allow for the construction of buildings up to 95 feet high on land north of Interstate-10. Current city rules allow for buildings up to 40 feet tall, but developers have been asking for variances during pre-application meetings with the city. The additional height will allow for interior storage racks standard at warehouses used by companies such as Amazon.

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The Palm Springs Planning Commission considered the changes recommended by city staff in November. Ultimately, the Commission elected only to form a subcommittee to study fulfillment center and distribution warehouse issues.

Fulfillment centers can generate tens of millions in sales tax revenue for cities that allow them because goods go directly to consumers instead of being shipped to stores. Clifton said Palm Springs might gain as much as $40 million in additional yearly tax revenues if a fulfillment center is built within the city limits. The city collected $22.3 million in sales and use taxes in the past fiscal year.

Following a public hearing that saw residents speak out in support of fulfillment centers, the Council voted 5-0 to skip further study and allow for the changes. A second reading and final approval of the ordinance allowing for the changes is expected to be on the Council’s consent agenda on Jan. 27.

The move was not without acknowledgment that companies that build fulfillment centers are often called out for poor working conditions and low wages and that allowing such buildings — some as large a 1 million square feet — could pose risks to the environment.

“I’m not a fan of these generally, but these are – whether we like them or not – popping up everywhere,” said Mayor Pro Tem Grace Garner. “I find it difficult not to have some of this potential revenue and jobs in our city when we know they will just spring up right across the way.”

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