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Thread: IDA incentives trigger debate

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    Member steven's Avatar
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    IDA incentives trigger debate

    Two packages relating to incentives for a $2.7 million expansion of FedEx Ground Package System Inc.'s operations in Cheektowaga, prompted the debate.

    FedEx Ground Package System, an affiliate of the shipping giant, is acquiring a five-acre parcel along Walden Avenue that will see the development of 25,000 square feet of distribution space. The deal is being put together through Monmouth Capital Corp.

    The 15-year payment-in-lieu-of-taxes package will save the company about $560,000 in taxes and fees while the firm will be creating 16 part-time jobs and another full-time independent contractor's position.

    Without the incentives, the distribution center could have potentially gone to Rochester, IDA officials said.

    The pilot offering was questioned by Amherst Supervisor Satish Mohan, who felt Federal Express shouldn't be seeking public sector incentives.

    "It's a growing company. Do we really need to help them?" Mohan asked.

    Yes, according to IDA officials including some of its board of directors.

    Following a 20-minute debate, the IDA's board of directors approved the incentive package by an 11-2 vote, with only Mohan and Erie County Executive Joel Giambra voting against the deal.

    "As long as we continue to give, people will be there to take," Giambra said. "We have to be careful about what we are doing."

    The project will serve as an upstate distribution hub for FedEx.

    "They need to be in this region," said Andrew Rudnick, Buffalo Niagara Partnership president and CEO. "This is an opportunity cluster and that's the reason why we need to support this project."

    Charles Webb, ECIDA president, said projects like FedEx or Geico are essential to the region because they encourage other companies to invest in the Buffalo Niagara area.

    "Incentives encourage economic development here," Webb said.

    http://www.bizjournals.com/buffalo/s...ml?jst=b_ln_hl

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    $560,000 in taxes and fees for 16 jobs? ????????????????
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    Mohan is out of order here. If the FedEx Plant was in Amherst, would he have been questioning it?
    I doubt it.

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    Tony Fracasso - Admin
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    Good job satish.

    I wouldn't give away my town either.

    I really don't like IDA's because it seems unfair to help some business people complete with other local people already established.

    Why should I subsidize a company in my own town while my own business pays full rate?

    Ida's should be used when helping a company that will DRAW money into the area. That fedex money will trickle to the 16 people they may hire but the rest will go to the head quarters in another state I suppose. WHat is the point of that?

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    Originally posted by WNYresident
    Good job satish.
    Don't you see that he's being a hypocrite?

    I may be presuming this, as no Amherst projects have come up for a vote this month, but let's see if he takes the same moral ground when the next deal is in Amherst.

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    Another question might be: "Why is Mohan on the Erie County IDA when Amherst has their own IDA?" Isn't that a conflict of interest?

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    Tony Fracasso - Admin
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    Originally posted by therising
    Don't you see that he's being a hypocrite?

    I may be presuming this, as no Amherst projects have come up for a vote this month, but let's see if he takes the same moral ground when the next deal is in Amherst.
    and he might so don't condemn him just yet. Why give away your precious green space? If they are going to take it let them pay for it.

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    Originally posted by WNYresident
    and he might so don't condemn him just yet. Why give away your precious green space? If they are going to take it let them pay for it.
    Who's giving away green space? Does the Town own the land, and, are they giving it to FedEx?

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    Tony Fracasso - Admin
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    THey are giving them a spot to operate from. Your trying to tell me there's no spot in Buffalo this fedex building can go?

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    Member steven's Avatar
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    why do they need an incentive anyway?
    “if you’ve got health insurance, you can keep your doctor, you can keep your plan. Nobody is talking about taking that away from you.”
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    They don't need an incentive...they have every reason to locate somewhere in the region. They are just going for the break because it is so easy to get.

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    Member absolivious's Avatar
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    Originally posted by WestCoastPerspective
    Another question might be: "Why is Mohan on the Erie County IDA when Amherst has their own IDA?" Isn't that a conflict of interest?
    It's in the ECIDA charter. Also on the board of directors are the supervisors of Tonawanda, Cheektowaga, and the Mayor of Buffalo.
    Look here.

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    Originally posted by WNYresident
    THey are giving them a spot to operate from. Your trying to tell me there's no spot in Buffalo this fedex building can go?
    I don't understand?

    WHO, exactly, is GIVING them a spot to operate from? Is Town land being donated?

    Or, are you saying the Government should interfere with the sale of a private transaction?

  13. #13
    moonshine
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    As a fedex employee I oppose all forms of corporate welfare, but I won't fault the fedex execs for making the attempt. These IDA's need to be abolished so no company can buy favoritism.

    Mercantilism is alive and well in this country and being encouraged by government policy. Screw the mercantiles'. Bring on unadultered capitalism.

  14. #14
    Member crlachepinochet's Avatar
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    Here's the Snooze's article:
    http://www.buffalonews.com/editorial...18/1031149.asp

    Amherst Supervisor Satish Mohan caused a stir Tuesday at his first meeting as a director of the Erie County Industrial Development Agency by challenging a proposal to grant $623,000 in tax breaks for a package delivery business in Cheektowaga.
    Mohan questioned the need to grant tax breaks for a $2.7 million expansion of the FedEx Ground Packaging System facility on Walden Avenue in Cheektowaga that is expected to create 16 part-time jobs.

    "Some businesses like this that are well-established and are not bringing in many new jobs - just 16 part-time - is that worth the incentives?" Mohan asked. "Do they really need help from us? What is the need?"

    While the IDA ultimately approved the tax breaks by an 11-2 vote, with Mohan and County Executive Joel A. Giambra opposing the incentives, the FedEx project prompted a debate among the agency's directors and staff about its policy toward granting aid to existing businesses.

    Giambra, who previously has criticized the county's IDAs for being too lenient in granting tax breaks, said the agency should give more weight in its consideration of a project to whether it would happen without any aid.

    "We have to be careful about what we're doing," Giambra said. "I think it's time we need to start raising these questions."

    Charles Webb, the IDA's executive director, said the goal of the agency's incentives is to encourage businesses to make investments in their operations here, which then become more competitive and often are able to increase employment.

    The biggest portion of the agency's tax breaks, which also include sales and mortgage tax savings, come through property tax reductions that are spread over 10 to 15 years, depending on the number of tenants in the facility. Even with those tax breaks, projects typically pay about 78 percent of the normal taxes during the period covered by the exemption, he said.

    "In every tax abatement case, there is new tax revenue for the taxing jurisdictions," Webb said.

    In the FedEx case, the construction of a 21,938-square-foot addition and a separate 3,100-square-foot vehicle maintenance building will generate about $321,000 in additional school, town and county tax revenues, IDA officials said. Monmouth Capital Corp., a real estate investment trust, will build the facility and lease it to FedEx.

    While Mohan and Giambra questioned the tax breaks because they believe FedEx would want to have a presence in the Buffalo Niagara region because of the nature of its delivery business, Al Culliton, the IDA's treasurer, noted that the company has a facility in Rochester.

    "We can't say definitively they would move to Rochester. They haven't threatened to move to Rochester," he said. "But there are other companies that service the Buffalo area out of Rochester."

    Andrew J. Rudnick, the president of the Buffalo Niagara Partnership, noted that the IDA's policy specifically targets the logistics firms as part of a high-priority industry officials hope to develop.

    Culliton also noted that the IDA previously approved tax breaks for FedEx's existing operations in Cheektowaga five years ago, and also has granted incentives to competitors, such as UPS Inc. and Airborne Express. "We have not varied from the policy," Culliton said.

    Mohan, however, proposed that the agency veer away from its standard policy and either deny the tax breaks for the project or grant the property tax exemption for just five years. His suggestion was not converted into a formal proposal and was never put up for a vote.

    The agency also approved $373,500 in sales and mortgage tax breaks for Steuben Foods, which is planning a $9.25 million expansion that will expand its processing and office space, as well as add new warehouse facilities and a raw milk processing operation.


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  15. #15
    Member crlachepinochet's Avatar
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    Not only am I a FedEx employee, but this is the actual building that I work at, so I don't think I could be more biased... but hopefully I can keep some distance here.

    I don't think the county's taxpayers got completely screwed, but I don't think they needed to give us the tax breaks. If the numbers in the News are correct, the additional taxes generated will repay the tax breaks in two years. Additionally, the tax projections don't rely on sales tax estimates, like a Bass Pro's would (and sorry to bring that up). Those estimates will be correct unless the gov't lowers taxes. There is almost no chance that the company will take the tax breaks and skip town in a year or two. And, in a small part thanks to my efforts, I think the facility is at least an average corporate citizen. Today, the CPD had drug-sniffing dogs training in the building (oh, the stories...), there are food drives, charity donations, and a Brush Up Buffalo team for next year that I will (unfortunately) probably be leading.

    But, like I said before, I don't think the county needed to give FedEx the tax breaks. The people on the IDA board couldn't possibly have known as much as I do, so I don't blame them for thinking the company might move w/o the breaks. Here's a couple reasons why the board probably should've said 'NO'...

    1. Go ahead, map it. 1289 Walden 14211. Just like the Galleria, the building is located in a very, very central portion of WNY. It's close to where the 33, 290, 400, 219, and 190 all hit the 90... easy access to anywhere in the area. It's even a short drive to the west side and downtown on the side streets. I couldn't think of a better location for a delivery service. I just noticed the other day that DHL is setting up shop on the other side of the 90 from us.

    2. We NEED the space. We came awful close this year to doing as much as possible with the space that we have now. We are handled about 15% more volume this Xmas than last Xmas, and the two new Bed Bath & Beyonds that opened/are opening represent another 1-2% increase that we can already count on for next year. In December, we had our busiest day ever, then we had our busiest day ever, and then we had our busiest day ever, and THEN we had our busiest day ever! Go figure, it was also our busiest week ever.

    3. If we were to move to a new building, there's a time crunch now. Like I said above, we expect to need a bigger building by next Xmas. Actually, we are crazy busy from back to school time in August right up until Christmas Eve. If were were to move, the new facility would have to be ready no later than, I'd say, October. Finding a location, acquisition, and construction might be tough to do in that time limit.

    4.
    "They need to be in this region," said Andrew Rudnick, Buffalo Niagara Partnership president and CEO. "This is an opportunity cluster and that's the reason why we need to support this project."

    Charles Webb, ECIDA president, said projects like FedEx or Geico are essential to the region because they encourage other companies to invest in the Buffalo Niagara area.
    I just don't get this. A FedEx facility will not have "spin-off" development. There's none right now, why would a bigger building make it any different. The trucks drive out to your business and pick up/deliver the packages, not the other way around. Companies don't need to be located close to a delivery company's building.

    Whew! A post that combines my two loves: politics and boxes!
    Remain calm!! But run for your lives if necessary!

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