IDAs seek revised incentive policy
Plan would reward business projects with ‘exceptional impact’ on economy
Published: November 18, 2009, 12:30 am
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Business projects that make an exceptional impact on the region’s economy would receive a higher level of financial incentives from any one of Erie County’s six industrial development agencies, under policy changes proposed by those agencies.
The six IDAs for the past decade have followed a uniform policy determining which projects are eligible for tax abatements and how much they can receive. The policy is meant to discourage intra-county competition and promote regional growth.
By the start of 2010, the IDAs hope to have approved changes to the policy that include creating a three-tier system for incentives, based on criteria for new projects, and shortening the number of years over which the incentives are provided.
The agencies’ boards plan to vote on the policy changes at their respective meetings this month and in December, said John Cappellino, the Erie County IDA’s executive vice president and director of business development and marketing. The other five IDAs are in Amherst, Clarence, Concord, Hamburg and Lancaster.
The revised policy clarifies which projects are eligible for incentives, and calls for increased incentives for projects that will have the greatest impact on the region. GEICO Corporation’s Amherst service center, which has about 1,500 employees, was cited as one such example.
The IDAs’ three-tier incentive system would rate a project’s impact based on criteria such as job creation, “green” features in its facility, the return on its investment, and whether it fits into one of six strategic industry “clusters.” A project would earn “points” for meeting criteria spelled out on a scorecard.
The IDAs currently provide incentives under “payment in lieu of taxes” agreements over a span of 10 or 15 years. Plans call for trimming those two schedules to seven years and 10 years, and adding a top tier, called “enhanced jobs plus,” for projects that rate highest on the scoring system.
“We do agree that some [projects] have a bigger bang for the buck or have a better economic impact than others,” said James J. Allen, the Amherst IDA’s executive director.
While GEICO has grown into a major employer, Cappellino said the uppermost tier of incentives would not be strictly for companies that create jobs on the scale of 1,000 or so. Cappellino said even a manufacturer that created perhaps 60 to 80 jobs could be eligible for the top incentives, depending on other criteria it met.
Under the revisions, projects at the low end of the range on the scoring system would be eligible for a seven-year PILOT, while those scoring in the middle range would qualify for a 10- year PILOT. Projects whose scores reach the uppermost tier would be eligible for enhanced 10-year PILOTs.
Companies like the idea of shortening the two tax abatement schedules to seven and 10 years, to keep a closer connection between a project and the incentives they receive for it, Cappellino said.
The shorter timetables also mean the properties return to full value on the tax rolls sooner, a plus for the taxing jurisdictions, he said.
David C. Hartzell, chairman of both the Clarence IDA and the Erie County IDA Leadership Council, said the revisions help align the six IDAs’ goals.
“It’s nice that we have [eligibility] guidelines, but also that everyone’s working off the same page,” he said.
Under the proposed changes, a hypothetical $1 million project approved for IDA assistance in Erie County would receive savings of $148,896 under a seven-year PILOT, $213,869 under a 10-year PILOT and $254,477 under a 10- year “enhanced jobs” PILOT.
Allen said he was hopeful the county IDAs’ policy could become a model for other incentives- providing organizations in New York State, including the New York Power Authority and Empire State Development Corp., to reward projects with the greatest potential impact.
Projects deemed eligible for incentives could earn some “points” on the IDAs’ scoring system if they fit into one of six industry clusters the region has identified as growth targets: advanced manufacturing, back office, agriculture, life sciences, regional tourism, and distribution logistics.
IDA leaders hope the proposed policy changes will speed up the process for companies considering the Buffalo Niagara region for a project, Allen said. They can quickly determine if they are eligible for incentives and at what level, he said.
The IDA Leadership Council will hold a workshop to provide information about the policy changes, 10 a. m. to noon on Dec. 2 at the Center for Tomorrow on the University at Buffalo’s North Campus.
mglynn@buffnews.com
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