PHH Mortgage Corp. plans to move its soon-to-be-acquired mortgage servicing business in Depew to a new facility it intends to build on Wehrle Drive in a move that is expected to preserve 400 local jobs and potentially create 400 more.
The Amherst Industrial Development Agency on Friday approved a series of tax breaks worth $4.55 million for the $34 million project, which would build a 97,000-square-foot back-office facility at 1760 Wehrle. The project also is expected to receive $3 million in tax credits through the state’s Excelsior Jobs Program.
Depending on how the project plays out, the $7.55 million incentive package could work out to an average of almost $19,000 for every job retained, if PHH simply keeps much of the existing operations here and does not expand. But the value of the incentives per job would decrease markedly if the company followed through on the potential expansion and increased its local workforce to 800. Then, the incentives would be worth a little less than $9,500 for every job created or retained.
PHH is acquiring HSBC Mortgage Corp.’s mortgage processing and services business, now located in a 172,630-square-foot building at Walden Avenue and Dick Road, in a deal that is expected to be completed next year.
IDA officials said PHH was seeking a site that could accommodate both the existing operation as well as a potential expansion. PHH also is considering moving the mortgage servicing work to its Mount Laurel, N.J., campus and has excess capacity at its loan origination and servicing center in Jacksonville, Fla., IDA officials said.
That puts all of the 400 existing Depew jobs at risk if PHH were to choose to locate the project in either Florida or New Jersey, IDA officials said.
IDA officials said PHH quickly decided it was not an option for PHH to remain at the Depew building, which will continue to house other HSBC operations and will have a large amount of vacant space once the mortgage business moves out. HSBC is expected to announce plans to move out of the One HSBC Center tower in Buffalo once its lease expires in October 2013, and the Depew site has been listed as a potential landing site for some of those downtown operations.
Richard Sibley, PHH’s vice president of administration, said the company would “look at” signing a long-term lease for the project if the IDA incentives were approved. “We need those incentives to stay competitive and advance the business.”
Sibley said PHH has done an “exhaustive study” of real estate here and elsewhere. “Our commitment is to this site,” he said. “We would not bring to the table an offer such as this on a short-term basis.”
James J. Allen, the IDA’s executive director, said he thinks there is a “very good” chance that PHH will end up putting all 800 jobs in the new Amherst office, which is expected to be ready by the end of next year. “I’m very confident,” he said. “This is a great win for the region.”
Sibley said the region has enough workers with the skills and education to support the hiring of an additional 400 workers as part of an expansion that would be completed by the end of 2015. “The outstanding workforce in Erie County is a key reason we decided to remain in this area,” said David Tucker, PHH’s president, in a statement.
“They have more than enough people with the education and qualifications for those 400 slots,” Allen said.
The HSBC mortgage operations employed 680 people at the time the deal with PHH was announced in May, but PHH said only 400 of those workers were expected to transfer to PHH, with another 80 remaining with HSBC. That potentially could leave about 200 of the Depew workers out of a job, although PHH said at the time it had about 100 unfilled positions tied to the HSBC work that those employees could apply for.
Construction on the new building could begin as early as March. PHH is expected to move the mortgage servicing and processing operation to temporary space until the new building is completed, probably by the end of next year. The tax breaks were broken into two separate deals. An entity controlled by PHH will receive sales tax breaks worth an estimated $1.3 million, while the building’s developer, Zaepfel Development, is receiving an incentive package that includes $2.5 million in property tax breaks over a 10-year period, along with an estimated $569,000 in sales tax savings and a $140,000 reduction in mortgage taxes.