VEGAS INC Coverage
North Las Vegas will become home to the West Coast distribution center of 2010’s fastest growing e-commerce company next year.
Montreal-based Beyond the Rack won $149,221 in tax abatements, $23,860 in tax deferrals and $162,000 in training grants today from the Nevada Commission on Economic Development.
The commission granted the incentive package in a unanimous vote based on the company meeting two of three criteria for job creation and capital investment. The company will offer 102 jobs, 36 percent more than the statutory requirement for incentives, and will invest $1.2 million, 19 percent more than required.
The company fell short on the third criterion, paying more than the state average wage, but incentive regulations require a company seeking abatements and deferrals to meet just two of the three. Beyond the Rack listed an average wage of $18.50 for its workers, 5 percent below the statutory requirement.
Robert Gold, co-CEO and a founder of the company, said the Beyond the Rack plans to open a 52,000-square-foot distribution facility in January, which he expects to grow to 150,000 square feet within three to five years.
The company already has begun hiring the first 50 employees and by the time the center opens in January, it will have more than 100 employees. By the end of the fifth year, Gold expects to employ between 300 and 500 people.
The company hasn’t signed a lease, but Gold said the facility would be in North Las Vegas.
Beyond the Rack is a private online shopping club for men and women seeking designer brand apparel and accessories with prices of up to 80 percent off retail store prices.
Gold said the company considered locating its West Coast distribution center in Los Angeles — the source of most of its clothing line — but executives changed their minds to Southern Nevada because of lower rents, a larger work force and greater support from state government leaders.
Merchandise is offered to the company’s 5.5 million members in limited-time events, most of which last about 48 hours.
In addition to having about 70 packers and shippers, Gold said the North Las Vegas facility would have a photography studio and a staff of photographers and models to produce images of merchandise for sale. Gold said the company receives about 1,000 to 1,500 pieces of merchandise a day and produces 10,000 photographs a day for its online catalog.
The company’s distribution center also will serve as the company U.S. headquarters.
Beyond the Rack will benefit from $72,733 in sales tax abatements in its first year of operation and $19,112 a year in modified business tax abatements for four years. The company will defer $23,860 in sales tax payments for five years and also will receive $1,588 per employee in federal training grants passed through by the state.
Beyond the Rack’s presence in Nevada is expected to net $2.1 million in new tax revenue and have an estimated economic impact of $175.6 million over 10 years. At that rate, each abated tax dollar would result in a $1,177 economic impact over 10 years.
In other business, the commission voted to have newly appointed director Steve Hill and his staff to draft regulations for review by the state Attorney General’s Office on whether a $10 million catalyst fund approved in legislation overhauling the state’s economic development plan is constitutional.
At issue is a section of the Nevada Constitution that says, “The state shall not donate or loan money or its credit, subscribe to or be interested in the stock of any company, association or corporation, except corporations formed for educational or charitable purposes.”
The catalyst fund has been described as a resource for “closing the deal” to bring important business investment to the state.
The current commission can offer economic incentives to companies because it awards tax deferrals and abatements, not cash.
Commission members hope to have an opinion from the Attorney General’s Office by the end of the year. The commission is giving way to the new Board of Economic Development and is operating through June when the tax abatement and deferral program ends and the new policies of the board are implemented.