LOCKPORT – Yahoo will save more than $45 million under the terms of a state and local package of tax breaks and electricity discounts for the second phase of the company’s data center in Lockport.
That’s on top of more than $100 million the company saved in the benefit package it received when it agreed to locate the original data center in the town’s industrial park in 2009.
And the savings total could grow if Yahoo extends its hydropower contract with the New York Power Authority beyond its proposed seven-year length.
Yahoo is planning to create 115 more jobs in Lockport on top of 77 people it already employs. Most of the new jobs would be in the call center, a 24/7 customer service facility to be included in the center section of the new three-building complex planned for construction in the town industrial park.
The Buffalo News used figures from the Town of Lockport Industrial Development Agency, Empire State Development and the Power Authority to arrive at the savings total of almost $45.2 million.
That works out to $393,000 per job.
The power allocation alone in the 2009 deal, which was 15 megawatts, saved Yahoo an estimated $101.2 million, or nearly $810,000 per job. Counting the estimated value of tax breaks and other incentives, Yahoo saved about $250 million on the original deal, The News reported at the time.
On the other hand, Lockport IDA Executive Director David R. Kinyon said, the expansion will result in a total of $30.8 million in new revenue, based on estimated income tax payments by Yahoo’s new employees and corporate franchise tax payments by the company.
Property and sales tax savings for the company are estimated at nearly $30.6 million for the expansion. Kinyon said the benefit calculation “clearly” comes out on the plus side for the local governments.
Last week, Yahoo reported that it made a profit of $390 million in the first three months of this year, on revenue of $1.14 billion.
The Lockport IDA will be holding a public hearing and vote at 9 a.m. Thursday in Town Hall, 6560 Dysinger Road, on the property tax and sales tax portions of the deal.
Andrea L. Sammarco, attorney for Lockport construction and real estate executive Glen C. Miller, sent a letter to the Lockport IDA opposing the incentives.
“We believe that no further reward of tax incentives to this billion-dollar company is really required in order to sweeten the pot,” Sammarco wrote in the letter Miller released Monday.
The Power Authority must hold a public hearing on its latest contract with Yahoo. Authority spokeswoman Connie Cullen said Monday the hearing hasn’t been scheduled yet, but it will likely be held in the Power Vista at the Niagara Power Project.
The giant Lewiston hydroelectric plant is the source of the 7.2 megawatts of power Yahoo is being promised in a seven-year contract. Cullen said it would save Yahoo $1.8 million a year. The Power Authority will be charging Yahoo about 3 cents per kilowatt-hour, or roughly half of its standard rate.
That’s a saving of $12.6 million, based on current electricity prices.
Pete Gallivan, Western New York spokesman for Gov. Andrew M. Cuomo, said Yahoo has been approved for the new Excelsior Jobs Program, which sets up a maximum of $2 million in tax credits over the next 10 years.
“It is also dependent upon Yahoo meeting job-creation benchmarks,” Gallivan said. “Under the agreement, they are required to create a total of 115 new full-time jobs over the duration of the agreement: 30 by 2014, 85 by 2015 and 115 by 2017, maintaining that total through 2023.”
Kinyon said that based on current tax rates, Yahoo will save $19,875,758 on property taxes over the next 18 years.
If tax rates rise, which they generally do, Yahoo will save more.
Since there is no general town tax in Lockport, all the savings will be money given up by Niagara County and the Lockport City School District.
As was the case with the first deal, Yahoo again will pay no property taxes for 10 years on the value of the $168 million data center and call center project,
After that, the company will make payments in lieu of taxes for eight more years. It will pay 20 percent of full value in the 11th and 12th years; 40 percent in years 13 and 14; 60 in years 15 and 16; and 80 percent in years 17 and 18.
For the next 20 years, Yahoo will pay no sales tax on any building materials and equipment it purchases for the new facilities.
The exception to that is that materials for repairs and maintenance to the structures will be taxable.
However, Kinyon said, Yahoo won’t be taxed on new computer equipment it buys for the data center, which he said is replaced every few years.
Based on information from Yahoo, Kinyon estimated the value of the sales tax exemption at $10.72 million.