The Clarence Industrial Development Agency approved tax breaks for a new Towne Mini auto dealership, a decision criticized by a state lawmaker who wants IDAs to be choosier with incentives.
The Clarence IDA board on Thursday voted in favor of incentives that add up to about $69,000 in sales and mortgage recording tax exemptions.
Towne Automotive Group plans to build a $1.9 million standalone Mini dealership on Main Street, across from a joint Towne BMW-Mini location just east of Transit Road. Assemblyman Sean Ryan, D-Buffalo, had urged the Clarence IDA not to award the incentives, claiming the project would be built anyway and was a poor use of tax breaks.
The incentives approved by the Clarence IDA were crafted more narrowly than for some projects. No property tax breaks were awarded, and the sales tax break applies only to the cost of construction materials for the 10,000-square-foot building, not to dealership-related equipment that will be installed.
Nathan Neill, the Clarence IDA's bond counsel, said the sales tax exemption will be worth about $50,000. The mortgage recording tax exemption was estimated at $19,000, but Paul Leone, a Clarence IDA consultant, said that amount could end up being lower, based on the project's mortgage.
IDA board members praised the economic benefits the new dealership will generate, as described in an economic impact analysis prepared for the IDA. The analysis identifies $1.7 million in benefits to the community, including some related to construction of the facility.
But Ryan, who did not attend the meeting, called tax breaks for a retail operation "a waste of taxpayer dollars" and said IDAs should be more selective about which projects they support with financial assistance. He pointed to plans like the "Buffalo billion" and the newest round of funding awards for the Western New York Regional Economic Development Council. "We have a comprehensive plan to grow our economy. Subsidizing retail is not in that plan."
Ryan noted Towne had purchased the Main Street property, has done some work on the site and received development plan approval from the town. He said those actions show the project was going forward regardless of incentives.
But Leone said Towne and the dealer group's attorney had "anticipated" incentives from the Clarence IDA would be part of its project and they "were just trying to get the application put together. That's the reason why you saw movement where they took down two houses [at the site] and did the utilities. But I always had the [Clarence IDA] chairman aware of what we were doing."
Frank Downing Jr., president of Towne Automotive, said his dealer group has to take the risk of building a $1.9 million dealership before receiving any tax breaks, and will end up generating more tax revenue and hiring more people. Towne expects to create 11 permanent jobs in connection with the new dealership, including two new jobs at its BMW dealership, with projected income before benefits of $463,000, Downing said.
"The IDA assistance is a good thing, for that gave us another reason to want to pursue the project," Downing said. "Without it, it would have been another reason to just keep Mini where it is and not build [the new dealership]. And if we didn't build, how does that help enhance the area and generate more tax revenue?"
Downing said Towne is not required to build a standalone Mini store – only if the planned store volume was more than 500 units. Towne Mini is far below that volume, but wants to increase its vehicle allocation and needs a standalone store to do so. "The decision to build, or not build, for Mini is ours alone, and the IDA incentive was one of the reasons we wanted to move forward with the project," he said.
David C. Hartzell Jr., the Clarence IDA's chairman, said he had been "on the fence" about whether to support incentives for Towne Mini, but he said he was persuaded in part by the fact that there is only one Mini dealer in Western New York. "If it was a Chevy dealership, I probably wouldn't have done it, or a Ford dealer. I wouldn't want to take away from the other dealers in the area."