General Motors will save nearly $2.6 million in property taxes over 15 years at its expanded Tonawanda engine factory as a result of a record-setting economic package approved by the Erie County Industrial Development Agency Wednesday.
The agency moved to provide tax breaks to help one growing Goliath and several Davids at its monthly board meeting. The actions were aimed at preserving 4,133 GM jobs and aiding four other firms that intend to add 268 workers.
The GM project is the biggest the agency's ever handled -- a $293 million plant modification. The project includes $263 million in machinery and equipment and $10 million for a 150,000 square-foot addition to the 2.5 million square-foot plant.
The expansion and new equipment will allow 4,133 workers at the plant to make GM's new "global engine," a power system that is expected to replace current versions of GM's four-cylinder engines.
GM chose the Tonawanda site for the project over other GM sites largely because of the quality of the work force, said Ronald W. Coan, the IDA's executive director.
Plant Manager Arvin Jones said GM has invested $121 million in the engine factory in the past 10 years. He said getting the global engine contract will help the Tonawanda facility remain competitive with other GM units and will help keep the work force stable.
The deal allows for tax savings on production equipment, too, but Coan said the IDA hasn't figured out which equipment is for non-production machinery. He estimates that the IDA's involvement will help the company save about $400,000 in sales tax payments.
GM agrees to pay a total of $12.47 million in property taxes and special district fees during 15 years, or $2.59 million less than if the IDA was not agreeing to take title to the property and lease it back to the company.
He said GM will finance the deal and the IDA won't issue bonds. The deal will probably be completed in the spring.
The IDA will benefit as it gets fees from projects in which it is involved. GM will pay it between $625,000 to $937,500, Coan estimated.
The project is more than $110 million greater than the next largest project handled by the IDA. That involved financial assistance on an $80 million project for the Outokumpu American Brass Co. plant on Sayre street.
"This is the perfect utilization of our powers," said William A. O'Loughlin Jr., the agency's chairman, referring to the assistance of an industrial firm.
In an IDA hearing Sept. 27 on the plan to provide sales tax and property tax breaks and potentially issue bonds for the GM project, Jerry McCormick, president of the United Auto Workers Local 774; Carl J. Calabrese, Tonawanda's supervisor, and Stanley J. Keysa, director of planning for Erie County, applauded the plan.
"This investment in the plant and the resulting job security that it represents is good for the Tonawanda employees and the community," McCormick said.
The agency helped some smaller companies as well by:
Agreeing to enter into an arrangement to take title and lease assets worth $1.05 million to Plesh Industries at One River Rock Drive in Buffalo. The maker of heavy duty material handling equipment will build a 6,000 square-foot addition to its plant. The company, which would expand its work force to 50 from 47 in two years, would save $106,374 in property taxes and $22,000 in sales tax as a result of the deal.
Approved issuing $2 million in bonds to help Scarp Property Associates and its sub-lease of space to Austin Air Systems Ltd. The money will be used to buy and fix up a 480,000 square-foot manufacturing facility at 500 Elk St. to allow Austin to move from quarters at 701 Seneca St. Austin intends to increase its work force to 136 from 41.
Authorized the sale of $6 million in bonds to help finance the 75,000 square-foot addition to Wilson Greatbatch's Clarence battery factory. The company could have expanded elsewhere, Coan said. By growing at its 10,000 Wehrle Drive location it will increase its work force to 619 from 577 in two years. It will benefit from $685,685 in property tax savings and about $200,000 in sales tax savings.
Agreed to issue a bond worth $580,000 to help Volland Electric Equipment Corp. expand at its 75 Innsbruck Drive plant in Cheektowaga. The company will add 6,500 square feet of space to its 25,000 square-foot plant where it fixes and sells motors, cranes, hoists, welders and switch gears. The company will benefit by paying $69,900 less in property taxes over 15 years and it will save an estimated $14,000 on sales tax. It intends to add nine workers in two years for a staff of 95.