Amid all of the controversy surrounding the Genesee County Economic Development Center three months ago, Senior VP of Operation Mark Masse suggested an informational meeting where everything about how the GCEDC works and what it is working on could be explained to the public.
He booked a room that could seat 150 people and was worried it might not be enough space.
On Monday night GCEDC hosted its first public information meeting in a conference room at the Upstate MedTech Center.
Twelve people showed up.
None of the attendees were people who have publicly criticized GCEDC. No one asked pointed questions or raised any substantial concerns about how GCEDC operates.
Masse made a straightforward presentation about why GCEDC exists, what it is up against in New York, how tax abatements work and what projects are in the pipeline.
GCEDC exists because other jurisdictions are also competing for business development, and the competition isn't necessarily in states that have an image problem.
"Companies think New York is closed for business," said Masse. "When they think of New York, they think of taxes, regulations and unions."
The challenge for GCEDC is to break through that image and present Genesee County and Western New York's benefits, which includes median home prices of $85,000, about two million qualified workers, major universities nearby such as RIT, U of R and UB and attractive lifestyle amenities.
While GCEDC doesn't always win the location competition, once the case is made, the decision by the company to take a pass, if it does, usually comes down to factors out of GCEDC's control, Masse said, such as the business climate changing for the business (and expansion being put on hold) or change in leadership in the relocation team that changes the company's agenda.
Masse said part of his presentation was also designed to address the myth that GCEDC is giving away taxpayer money to companies. In truth, the tax breaks companies get is on taxes that would never be paid if the company didn't expand or relocate, Masse said.
In the example Masse gave, if a company does locate to a facility in Genesee County, local tax revenue actually increases at the same time the company saves a substantial amount of money.
The example: Acme Corp. will build a $15.5 million facility with a promise to create 50 new jobs in the first two years. It will purchase 10 acres of land and build a 30,000 square-foot factory.
GCEDC will likely offer a sales tax exemption on manufacturing materials for construction of the factory, a mortgage tax exemption and a PILOT (Payment in Lieu of Taxes) contract over the first 10 years of the increased assessment on the property.
The PILOT only covers the value of increased assessment. Property taxes remain the same on the original assessment (also, any fire district taxes cannot be abated, even on the increased assessment).
So, if the new assessed value is $3.5 million, the company would still pay the $6,130 in taxes on the original assessed value, but in the first two years, pay no taxes on the increase in assessed value.
In the third and fourth year, the company pays 20 percent of the new taxes, or $21,826 in each of the years.
The amount of taxes graduates from there every two years.
By the 10th and final year of the PILOT, the company is paying 80 percent of the increased assessment, or $87,304.
If the company had been paying full assessed value each of those 10 years, it would have been paying $109,130 in taxes annually.
Over the course of the 10 years, at full value, it would have paid $1,091,300 in property taxes. Under the PILOT, the property taxes paid over 10 years are $436,520 on the increased assessed value, while paying $61,300 on the original value.
If the company hadn't built the project, the property would have generated only $61,300 in taxes instead of more than $500,000 in taxes.
At the same time, the company has saved more than $500,000 in taxes over the full assessed value rate.
Masse also shared GCEDC's financial results from 2010 (previously reported here).
He then explained the purpose and progress of each of GCEDC's major projects, which are Gateway I, Gateway II, Apple Tree Acres, Buffalo East Tech Park, WNY STAMP, Genesee Valley Agri-Business Park, Upstate MedTech Park and Oatka Hills I and II.