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IDA plans vote on revised tax break for Somerset plant

The final step in the revision of a tax break for a coal-burning power plant in Somerset will come May 23.

The Niagara County Industrial Development Agency announced Wednesday it will vote that day on a package of reductions in the payments in lieu of taxes, or PILOTs, to be paid by the new owners of the former AES Corp. plant on Lake Road.

A hearing on the deal is set for 4 p.m. May 22 in Somerset Town Hall.

The new owners, operating under the name of Somerset Cayuga Holding Co., are a group of U.S. and foreign banks that owned bonds AES sold in 1999 to finance its purchase of the plant.

AES Eastern Energy, the company's New York subsidiary, declared bankruptcy Dec. 30 when faced with an interest payment on the bonds that it couldn't make.

After no one signed up to bid at a court-ordered auction of the plant last month, it came under the control of the bondholders.

IDA Chairman Henry M. Sloma said the new package was negotiated with a team of four consultants from RPA Advisors, a New Jersey company that assists companies in bankruptcy.

So far, no one from Somerset Cayuga Holdings or AES has appeared in any public forum to discuss plans for the plant, Niagara County's largest property taxpayer. It employs about 110 people.

Sloma said they may not speak at the May 22 hearing, either. "There's normally no dialogue at public hearings," he said.

However, Somerset Supervisor Daniel M. Engert said Friday that the new owners have pledged to put $71 million in working capital into the plant and to operate it until the new PILOT deal runs out in 2015.

Unionized workers at the plant have agreed to wage and benefit concessions, Sloma said.

The new PILOT would reduce the plant's total payments to the county, the town and the Barker Central School District from the current $14.3 million a year to just under $10.5 million next year, $6.7 million in 2014 and $5.12 million in 2015.

In other matters, the IDA board granted new 15-year PILOTs to companies in Cambria and Newfane.

Modern Tec Manufacturing on Lockport Road in Cambria plans a 10,000-square-foot, $1 million addition to its plant, according to Susan C. Langdon, IDA director of project development.

The 3-year-old company employs 16 people to produce precision machine components. It plans to install more production equipment and hire 10 more workers. The tax break will save it an estimated $130,000.

Sun Orchard Fruit Co., which processes apples on Transit Road in Newfane, will add 12 jobs in three years to its 54-person payroll. Langdon said a 24,000-square-foot addition will house a new production line.

The nearly $3.5 million project will be a boost to a company that already ships 500,000 cartons of apples per year. The tax break will save Sun Orchards an estimated $618,000.

The board also gave permission to 160 East Avenue LLC, which is redeveloping a vacant Lockport building into an outpatient surgery center, to obtain a second mortgage.

The company, owned by two Lockport surgeons, also has a $1.3 million mortgage from M&T Bank; it will add $300,000. The company was granted a 10-year PILOT in 2010.

email: tprohaska@buffnews.com