UPS says $10M tax break needed to retain nearly 1,700 jobs near Atlanta

As UPS closes dozens of buildings and cuts tens of thousands of jobs across its vast network, officials in one metro Atlanta county said they needed to take action to prevent a local facility from suffering a similar fate.

The Decide DeKalb development authority Thursday approved a $10.1 million property tax break that UPS said would spare a more than 40-year-old facility near Doraville from the chopping block. The shipping center at 3930 Pleasantdale Road currently employs more than 2,000 full- and part-time workers, and UPS said the tax break will help retain most of those positions.

As part of the deal with the county, UPS said it will update the facility with a $151 million investment. The company said it will retain 753 full-time positions and 926 part-time employees. Unlike typical incentive deals in Georgia, this one is not tied to the creation of new jobs and focuses solely on trying to stave off job cuts.

“This is purely a retention project and setting this facility up for success in the future,” said Sunny Anderson, director of economic development at Decide DeKalb.

Sandy Springs-based UPS is undergoing what it calls the largest network reconfiguration in its history, as well as a significant investment in automation. DeKalb officials applauded the upgrades to the Pleasantdale site as a sign it would remain relevant to the world’s largest parcel delivery company in the decades to come.

The automation investments, however, will come at the cost of around 29% of the location’s part-time workforce — about 374 positions — the company expects will not be brought back to the facility after the renovation.

“I look forward to this facility staying operational for another 40 years,” Decide DeKalb board member Andrew Greenberg said. “ … I regret there’s no new jobs, but I’m very happy to retain around 1,700 jobs.”

The jobs primarily affected are manual labor roles involved in sorting packages that will be replaced by the company’s automated conveyors and imaging technology. About 40% of the facility’s employees live in DeKalb, Anderson said.

Just this year, UPS has closed 93 buildings and cut 34,000 operational jobs because of its significant strategy shifts, which also include a downsizing of its relationship with Amazon — formerly its largest customer. As a unionized employer, many of those cuts happen through attrition of its part-time workforce.

UPS expects 66% of its volumes in the fourth quarter to flow through automated systems, up from 63% last year.

“UPS, like every other shipping giant, is having to modernize to keep up with competition,” Allison Dyer, an attorney representing UPS, told the Decide DeKalb board. “And that’s what you’re seeing here today in this project.”

Development authorities offer tax savings to incentivize corporate investment through a complicated real estate agreement often called a “bond-for-title” deal.

The structure, unique to Georgia, is designed to circumvent the state constitution’s gratuities clause, which prevents government entities from providing a good, service or property without an equitable return.

In exchange for “bonds” that aren’t issued publicly but represent the potential future value of the project, the company grants its project site’s title to the development authority. As a government entity, development authorities don’t pay property taxes and are able to pass along tax savings to the company by charging rent at a certain percentage of what the property is worth.

In the case of UPS, it will accumulate $10.1 million in tax savings over a decade. Despite the abatement, the county and its school district are projected to receive a net $6.4 million in new property tax revenues during the 10-year period, according to Decide DeKalb.

Although Decide DeKalb’s effort aims to retain jobs for the long term, there is little consequence if UPS doesn’t meet its job retention commitments. When asked if repercussions could be codified into the deal to give the county more certainty, Dyer pushed back.