Firms will get more than $11 million in tax relief to build giant yogurt factory in Batavia
PepsiCo and the Theo Muller Group -- partnering on Project Wave in Batavia -- will receive more than $11 million in tax relief for the planned yogurt plant in the Genesee Valley Agri-Business Park.
The incentive package was approved by the Genesee County Economic Development Center Board on Monday.
The PILOT on the project -- relief from taxes on the increased value of the assessment -- is 100 percent for the first six years and 50 percent in years seven through 10.
The total PILOT abatement is estimated at $5.6 million over 10 years.
The companies will also receive $5.4 million in sales tax abatement on materials and supplies for construction of the facility.
The project will add 186 new jobs to the local economy, and early planning for the plant projected as many as 600 jobs by 2033.
Wave Holding, LLC (the company formed by Pepsi and Muller for the project) will spend $206 million on construction of a 363,000-square-foot facility.
Construction on the project began in November.
The agreement calls for the first 186 jobs to be filled within three years of Wave Holding receiving a certificate of occupancy.
GCEDC competed with shovel-ready sites in Avon and Pennsylvania.
According to a GCEDC press release, for every $1 invested by Waving Holding the local economy will benefit by $14.47.
$69,000 per job out of our tax dollars. Since it's factory work, I'm guessing that the majority of these jobs will be in the $22,000 to $35,000 range.
Don't talk to me about 2033, or even 2020. Call it corporate welfare, bribery, "stimulus" or whatever, the business climate in NY is so bad, I guess this is acceptable to most.
In most categories, NY has the highest tax rates in the nation. Until that changes, don't expect to see much growth at all.
I hear you Bob when it comes to New York State's tax rate, and agree that as long as it is as high as it is, business development will be slow.
That said, the key to keeping tax rates low in a county, is drawing business to the county. Companies such as this, have an economic impact on the community.
The initial 168 workers add to tyhe tax base, even if they do not live in Genesee County, They will be buying gas, lunch and shop in our stores, I suspect most of those new positions however will be filled locally, more work, more spending more tax dollars, in the end, it meansless of a burden on Genesee County Residence, more tax dollars coming in without raising our taxes respectively.
Finally, we would not stand a chance of attracting these companies without such abatements, they simple would have located somewhere that would offer them.
Only exception would be if our Local Representatives start to spend like drunken sailors.
I say, save the fight for where it counts, moving the Harvard Professor back to Chicago.
Bob corporate welfare is right..Pepsi a multinational billion dollar company getting this kind of tax break is disgusting....At the same time Batavia school district has to close Robert Morris school because of lack of funds..What is wrong with this picture......
The companies will also receive $5.4 million in sales tax abatement on materials and supplies for construction of the facility....thats nice to hear..how come when i go to buy home improvement items i have to pay tax on it..They not only don't have to pay property tax they don't have to pay sales tax on building items..Thats all on top of all the depreciation write offs they will be taking......It doesn't seem right..I though PILOT meant payment in lieu of taxes.....What will they be paying in lieu of taxes................
Let me get this straight... The corporations get grants, tax deferrals and free site prep; the politicians get campaign donations and photo-ops, the GCEDC officials get $40G bonuses, the farmers get to count Michigan milk tankers bound for yoghurt and county residents get higher taxes. I seem to be missing the cause for celebration.
I guess, CM we're supposed to happy about the 186 jobs it may or may not actually bring. I don't have the time or inclination to do all the math, but if you figure that the average wage in Gen. County is $32,694.00 (according to city-data.com) and the average household is around $ 49,000 per year. Using the values here: http://www.thesimpledollar.com/2010/01/04/how-the-average-american-famil...
Then figuring the county charges 8% sales tax and then has to pay half of that to the state.
Adding up Gas, oil etc, food at home, food away from home, entertainment, apparel & services, household furnishings, household supplies, alcohol and personal care = $ 16,577.00. I assume that if the person already lives in Gen. County, they are already paying for housing, so i don't count that as an add. So, if they spend all their money in county that's $ 16,577.00 x 8% = 1,326.00 in sales tax divide in 2 =
$ 663.00 in tax revenue x 186 jobs = $ 123,318.00.
Wow, I'm excited.
Most of us want an end to tax breaks and credits for companies, for cars, for farms and for selected groups of people. We would love an end to it. But as long as people can vote goodies from the treasury, this is what we get.
And like it or not, we got the jobs. Some other town is bitching how Batavia beat them our. How many jobs in the end and how much they pay, we don't know yet, but you, your friends and family can always refuse to take the jobs to show your disgust.
Let's see -- how are you harmed?
If the project isn't built ... the land sits vacant, so the assessment doesn't go up. So there's no chance to abate the taxes on the increased assessment. So explain to me how you (as a taxpayer) are losing money on the PILOT?
The PILOT costs you nothing, because if the project isn't built, the assessment doesn't go up; if it is built, the assessment goes up, but there is no cost to you of an assessment going up, only to the land owner.
On sales tax -- if the project isn't built, those materials are not purchased. Instead, the places that supply the material -- involving many New York businesses -- have unsold inventory. So again, how does this cost you money?
People seem to treat these particular abatements as if it's taking money directly from taxpayers. But facts and logic prove that line of thinking is dead wrong.
I won't argue that it's corporate welfare and corporate welfare sucks. But it's our corporate welfare. It's our community that benefits and that trumps any high-minded ideals about corporate welfare, because if GCEDC or some other agency didn't offer these incentives, projects like this wouldn't happen.
Mark, the payment in lieu of taxes is the $206 million being spent to build the plant. That means money in the local economy, jobs and opportunity for more jobs.
Dave, your formula doesn't include the multiplier effect of the additional jobs that will be created as a result of the plant being built and additional people being employed with increased demand for products and services. Your formula also doesn't account for various types of support jobs passing through -- such as truck drivers buying gas in the county, etc. I'm not sure I buy into GCEDC's formula on this, but basic economic logic tells you there will be a multiplier effect.
So let me get this straight -- people are bitching because there will be some amount of indisputable economic gain to the local economy that will cost local taxpayers absolutely NOTHING to have happen? Really?
I mean, the alternative is not to have them build here at all -- is that what you all prefer? No jobs. No new money in the economy. No local benefit at all. You would rather see no local benefit when the alternative -- a multinational, multibillion dollar company building a plant here -- costs you absolutely nothing?
Mark, the payment in lieu of taxes is the $206 million being spent to build the plant. That means money in the local economy, jobs and opportunity for more jobs......
Howard i though is was meant as amount that would cover such things as police and fire protection..Street and road maintenance...Sewer and water installation..i didn't realize the amount you spend to build your building falls under the definition of PILOT.....I'm glad to see new jobs....If any thing this just proves that New York State property taxes are too high for all not just a select few..There are many businesses that have been here for years..Where are their property tax breaks..Wheres the tax breaks for the private developer to build housing sub divisions..To me its all in the hands of a few unelected people to give out tax breaks .And then they take a bonus for doing there job..All the while the county pays their base salary....I know its the game you have to play to attract company's to come ..I don't agree with it .....But as long as this is how it is then they should also be made to hire only those who live in this county,buy all building supplies in this county..They should also have to hire local contractors when at all possible.Since its Genesse County giving out the tax breaks...Lets just see what good corporate citizens they will be.......
I am aware of that Mark,
And yes it does illustrate just how high NY State taxes are.
My point is simple, If you want to bring manufacturing businesses to Genesee County, and this is a Manufacturing company, you need to make deals.
If we don't another community will, and we will spending alot on Gas to get to work.
Tax abatements were used for Target, Home Depot, Walmart, KMart the list goes on, is anyone here willing to say at this point that it wasn't worth it?
The problem is that too many confuse regional development with corporate welfare, they are not the same. This is NOT top down picking and choosing of what corporation gets what piece of the pie from the State or Federal Governnment, this is our local entities making concessions to enrich and enliven our community. Historically, communities that do that thrive, communities that don't stagnate. Micro Economics 101
I don't want to give the impression that I am anti-development or against job creation or new construction. I'm not. I'm decidedly for development and construction, it happens to be the industry in which I make my living, as it is. I get the concept of an industry cluster industrial park, I believe it works. I think we need an organization such as GCEDC to promote our area and bring in investment. I understand the multiplier effect. I can even accept that we may have to cut a deal on tax abatement's and PILOTs etc to make it happen. Personally I'm glad the yogurt plants are being built. As a salesman, however, I am paid based on actual profit made for my employer, not potential. I can blather all I want about potential to my boss, I can reach agreements and sign contracts and feel good about it and get an atta boy from my employer, but until the goods are delivered and the money is in the bank, I don't get paid my commission. I'm sick and tired of these EDC guys touting potential multiplier effects as justification for a bonus. So many times it hasn't come to fruition.
Howard, You say you don't buy into GCEDC's formula either, and yes corporate welfare sucks, "But it's our corporate welfare."? Exactly. You took me to task last year over the high speed rail issue, telling me the Pork is Pork, whether it's our pork or someone else's. Well BS is BS also. Will the community actually benefit financially? I hope so, I'll even grant that it's worth a shot. But the proof is always in the pudding.
Build the plant, put local contractors to work, do what has to be done. I'm OK with that. Actually, I'm happy about it. But don't pee on my leg and expect me to believe it's raining.
Dave, just to be clear --
The high rail project involves taking actual dollars and spending them on something of dubious benefit.
We won't have to borrow money from China to provide these tax abatements to Wave Holdings.
There's no real comparison between the two projects.
Yes, Pepsi/Muller "saves" $11 million, but it's money that would never been generated if the project isn't built. No new dollars need to be printed, no borrowing from China, no taxes raised, no deficit added to, etc. No harm, no foul.
To be clear, myself, I'm for the plant. I think the system and process for development sucks.
Seems pretty clear to me that a segment of the community doesn’t want jobs being created and are more focused on sending the Harvard Professor back to Chicago.
How do you make the leap from a plant in Batavia to Obama?
I didn't, read comment #3
Charlie, that was a Rhetorical comment, re-read it.
My comment was meant to illustrate that tax abatements are not corporate welfare, rather a business negotiation between entities, something that I know you understand.
People's frustrations indicate to me that many confuse the two.
John Roach's comment is absolutely correct, "Somewhere some community is bitchin because the plant is coming here to Batavia"
In hindsight, my sarcastic quip toward Obama might as well been misplaced, don't confuse it with my opinion of this project.
I strongly support the deal
Mark, that's good to hear. We need to live in the system we have been dealt, whether we like it or not. Turning away or downplaying good jobs for the sake of some political principle is just off the wall. These tax incentives are just what Howard explained, not a net loss for taxpayers. You guys should hold these companies a parade.
Howard, the 206M is not payment in lieu of taxes, it is capital investment made by the company. If it were payment in lieu of taxes, the GCEDC would be required to return it to the taxing jurisdictions affected by the deal. Your article clearly states that the agreement calls for 100% tax abatement during the first 6 years and 50% during years 7-10.
Another point that should be clarified is your statement that if the assessment goes up, it will affect the landowner. GCEDC, not PEPSI/WAVE, is the landowner/titleholder and will retain title to the property and buildings for the life of the PILOT. If they didn't "own" the buildings, they could not offer a sales tax abatement.
Charlie, I think you meant comment 2.
I am not a fan of corporate welfare, but this is business. Tweak your vision on this. Batavia is a business owner, and Pepsi is a customer. Our "goods" is our scare natural resources (land, workforce , etc.); our "fees" are our taxes. The PILOT is our Sales Flier. Pepsi was looking for a place to buy these goods, and we offered the best sale price. that simple. We are still going to make money on this, still sell our goods, but we're doing it a lower selling price. Works for me, and it's not so different how any of us shop.
At the end of the day it will benefit the area, and I am for that. I'm not a fan of the system, but like I always say, until it's fixed; if you don't get it someone else will. I'm glad it was us this time.
Phil, as they call it in retail sales: A loss leader.
Look at you with the lingo!
"ax abatements were used for Target, Home Depot, Walmart, KMart the list goes on, is anyone here willing to say at this point that it wasn't worth it?"
First, I don't believe Target or Home Depot were direct beneficiaries of abatements. Cor Development, the landlord, received abatements to construct the center.
Second, companies like Walmart have received somewhere in the neighborhood of $8 billion in subsidies from communities around the US -- subsidies that helped them destroy small business after small business. Many communities have been destroyed by Walmart and other big box stores as their locally owned shops have been killed off, often in a price-war targeted fashion by Walmart.
Batavia's retail woes have more to do with urban renewal than Walmart, but here's info on the impact of Walmart on Orleans County:
The big box stores do more to damage local economies than help.
The nice thing about food processing jobs is they're hard to outsource to China.
Tax subsidies for big box retailers never make economic sense.
A goods producing job has a greater multiplier effect and therefore PILOTS and sales tax abatements make more sense -- at least there's no harm to local residents from such breaks.
It's important to draw the distinction.
I should have been more precise about Cor Development Howard.
With regard to Walmart, I was a project Coordinator for Kmart in the 90's I traveled all over the country coordinating the conversion of KMarts to Big K's, coordinated store rehabs and new store openings as well. I know all too well the Walmart Story and to some degree understand the concerns. For a long time I wouldn't set foot in a Walmart because of that.
Here lies the problem with Walmart Bashing (In many cases justified) if people didn't shop there, they wouldn't be expanding. All too often people want their cake and eat it too, They want the lower prices that larger Box stores provide until their next door nieghbor closes the store that they ran for 30 years.
The problem is that in order to thrive as a community, we have too open the community up and make it atractive for manufacturers, services and other industries. This means change, sometimes change is rapid and difficult to adjust too.
Over time new businesses do arise from the ashes, too often market conditions create those ashes.
How many grocery stores closed when Tops expanded? Remember Marchese Bell's?
My reference is to the entire complex of stores on the west end of Batavia, was that a mistake? Walmart is just one part of that.equation.
I have my nostalgic side as well, I miss the little shops and stores just like you, the problem isn't walmart or any other company, it is easy to bash corporations and blame them for change.
Our quest for lower prices drives much of what we hate, our quest for higher wages does as well. YOU CAN NOT PAY A PERSON $10.00/HR AND MAINTAIN A 25CENT HAMBURGER.
I Digress, The new Yogurt plant will have an enormous ripple effect on other businesses in the area, and open the door for new businesses that is a fact. That is all that I am saying, I am sorry I used Wally World as an example, but to deny that the development of Batavia's west end wasn't a boom for the county revenues, would be innaccurate at best
There are two issues with big box stores -- one has to do with enforcing anti-trust laws as originally intended (which was meant to protect a diversity of businesses), but that's not relevant to this discussion.
What is relevant is providing tax subsidies to retail businesses.
The subsidies that are available to the likes of Walmart are rarely made available to locally own shops, putting them at a competitive disadvantage, a disadvantage magnified by Walmart's massive buying power -- but a power fuel by years of tax subsidies.
My point being -- I see no harm in an actual job creator getting abatements to create jobs that will have a ripple effect. I object to tax subsidies to companies that do that opposite -- destroy jobs.
There is little, and even negative economic benefit to providing subsidies to retail chains. There is positive benefit, or potentially so, to giving benefits to firms that create goods producing jobs.
I think we're mostly agreeing ... just clarifying.
We are agreeing actually, this why I am getting a little passionate about this issue.
What we have here IS NOT STIMULUS nothing like it, I should have left Wally World off the list