LOCKPORT – Yahoo will save $200 million over the next 20 years by not having to pay sales tax on equipment for the second set of buildings in its Lockport data center campus.
The Town of Lockport Industrial Development Agency approved the terms Thursday.
It was already known that Yahoo would have a 20-year sales tax exemption for building materials and equipment for the second complex it will soon begin building in the town industrial park off Junction Road. The IDA approved that, along with an 18-year property tax exemption, in April.
But not until Thursday was it specified that Yahoo will save over and over. “They freshen their equipment every three years,” IDA Administrative Director David R. Kinyon said.
According to IDA attorney Daniel E. Seaman, the estimated total value of the “freshened” computer equipment during the next two decades will be $2.5 billion.
The sales tax in Niagara County is 8 percent, which works out to $200 million Yahoo won’t have to pay.
The IDA board also voted to give Yahoo a break on the fee it must pay the agency for the tax-abatement package.
Kinyon said the IDA’s normal fee for assisting a project is 1 percent of the construction cost. In the case of the second Yahoo center, the cost is about $68 million.
That would be a $680,000 fee under normal circumstances, but the board voted to give Yahoo a discount, limiting the fee to eight-tenths of 1 percent. That means the IDA collects $544,000, Kinyon said.
Seaman said the IDA also gave Yahoo a discount on the fee for its first data center, approved in 2009. Kinyon said the agency ended up collecting $753,000 for that deal.
Yahoo told town planners in September that its second facility will have a capacity of 300 employees, although the company promised in its IDA application to deliver only 115 jobs in the new call center. The existing data center employs about 90 people.
In other matters Thursday, attorney Morgan L. Jones Jr. reported to the board about the oral argument he conducted Dec. 4 in front of a panel of judges of the Appellate Division of State Supreme Court in Rochester regarding the IDA’s attempt to seize 91 acres owned by General Motors through its eminent-domain power.
The land lies adjacent to the town industrial park, which the IDA wants to expand. The agency and the automaker were unable to agree on terms for a sale of the land, which is part of the parcel that includes the GM Components plant.
Jones said a decision on GM’s attempt to block the seizure should come from the court in a month or two.
Also, Kinyon said the IDA has received an application for a 15-year payment-in-lieu-of-taxes, or PILOT, arrangement from Bison Bag Co., which plans a 30,000-square-foot addition to its current 75,000-square-foot plant in the industrial park.
The company intends to add 15 jobs to its current workforce of 53, Kinyon said. Company officials will discuss the project at the IDA board’s Jan. 9 meeting.
Bison Bag already has a 15-year PILOT that lasts until 2017 on its current plant.