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Harper expansion has catch; Lancaster firm says it must get tax breaks

Harper International, which designs and builds complex equipment used at extremely high temperatures in the production of carbon fibers and other advanced materials, plans to expand its Lancaster campus but only if the company receives tax breaks for the project.

Officials at Harper say they plan to reconfigure their campus of five buildings -- moving out of three leased buildings and expanding the two other buildings -- in an effort to make their operations more efficient.

Harper says that it wants to stay in this area, even though 50 percent of its business comes from international customers but that it could leave town if the tax breaks are rejected.

"We're looking for what's reasonable to keep us here," said marketing manager Diana Robbins. "That is a deal-breaker, if this doesn't go through. We have options. We have options locally and out of state."

This request was discussed at length during a work session of the Lancaster Industrial Development Agency two weeks ago, and the debate turned heated at times.

Board member John L. Visone sharply objected to granting tax breaks to a company moving from leased space to newly constructed space -- while leaving the old space vacant.

"I'm saying they're playing hopscotch," Visone said then. "But what about the other building? Then it's a wash."

He argued this point with IDA Chairman Dino J. Fudoli, who is town supervisor, and IDA consultant Paul R. Leone, until Fudoli pointed out Visone's conflict of interest as owner of the buildings that Harper would vacate. Fudoli said the project, which he valued at $6 million, is worthy of IDA backing.

"This is Industrial Development Agency at its finest," Fudoli said in an interview. "This is what we should be doing."

Harper International, now headed by President Charles W. Miller Jr., has origins dating from 1924. It specializes in thermal processing solutions and made a transition in the 1990s from its origins as a maker of industrial materials furnaces.

The company doesn't disclose specific figures but said that it had record profits in 2011, when its revenues doubled from the prior year, and projects that revenues will rise by 25 percent this year.

Harper said this growth stems from increased productivity, its international customer base and an Employee Stock Ownership Plan that began in 2011.

The company regularly brings customers to its on-site research and development center, where the visitors can run tests before agreeing to buy Harper-made equipment. But the company's campus isn't efficiently laid out. "We're dragging them from building to building," Robbins said.

The company now leases space in five buildings. Two are owned by the company's former owner, Wally Bamford, and Harper will buy those buildings if the expansion goes through.

The company would move out of the other three buildings into new manufacturing, laboratory and office space connected to the two remaining buildings.

With the move and expansion, Harper would gain 3,000 square feet of lab space and 10,000 square feet of office space and would double its cubic feet of manufacturing space, she said.

The new space also would include a fitness center, part of an effort to sell Harper to the engineers and other skilled workers whom it competes to hire. "We do want to become a more attractive employer," Robbins said.

Robbins said she couldn't give an estimate of the cost of the move and expansion, but Fudoli and Leone said that it could be a $6 million project.

Robbins said the company would look at relocating from its Lancaster campus if the project doesn't receive tax breaks through the Lancaster IDA.

She declined to say where the company is considering moving but said Harper is hopeful that the expansion at 100 W. Drullard Ave. will win approval.

The company has 97 employees and expects to boost employment by 15 percent this year. "We want to retain the deep knowledge base we have in Western New York, and with our existing employees," Robbins said.

The Village of Lancaster Planning Commission is set to review the site plan for the proposed expansion at a meeting Thursday. "I don't see any problem with it," said commission Chairman James B. Allein.

The Village Board then must approve the site plan. Board members also have been asked to sell a portion of West Drullard Avenue to Harper in order to allow for the expansion.

As part of the sale, Harper would be required to grant an easement to Visone Construction, owned by John L. Visone, which otherwise would be landlocked at its nearby 79 Sheldon Ave. offices, said Village Mayor William G. Cansdale Jr.

Tuesday, Harper is expected to submit its request for tax breaks, the IDA's Leone said.

The company is asking for a break on property taxes, the sales tax on new equipment and the mortgage recording tax, Leone said, but he doesn't yet have the full value of the subsidy.

The IDA board is likely to vote on the request for tax breaks at its June meeting, but IDA members informally discussed the Harper project at a work session two weeks ago.

Visone argued against granting tax breaks to a project that would leave behind vacancies after the company's move.

As he raised his objections, Visone did not say that he owns the three buildings that would be vacated in part or entirely by the Harper expansion.

After Fudoli noted this vested interest at the IDA work session, Visone said he would not stay silent.

"I will not recuse myself from the conversation, but I will recuse myself from the vote," said Visone, who did not respond to requests to comment further.

Fudoli, in an interview, said he believes that Visone should not participate in the discussion over the Harper tax breaks.

"He can't let his personal business dealings creep in here," Fudoli said.