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FedEx distribution center and two other projects get tax breaks

FedEx will receive more than $2 million in tax breaks through the Erie County Industrial Development Agency to build a $10.6 million office and distribution center in the Town of Tonawanda that will boost the freight and package delivery firm’s employment in the Buffalo Niagara region by more than 80 jobs.

The tax breaks that FedEx is getting through the IDA are in addition to an estimated $2.25 million in tax credits that the company is receiving through the state’s Excelsior Jobs program.

FedEx plans to build an 88,000-square-foot facility on 14 acres in the Riverview Solar Technology Park in the Town of Tonawanda as part of a project that will consolidate the office space that the company currently occupies on Ensminger Road and the warehouse that it leases on Kenmore Avenue, both in the Town of Tonawanda.

The company also considered sites in Indiana and Tennessee for the project, which is expected to be completed by next March, said Karen Fiala, the IDA’s assistant treasurer.

“It’s a great opportunity for us,” said Town of Tonawanda Supervisor Anthony Caruana. “It shows that we have the ability to attract companies that will invest in new jobs.”

FedEx, which currently has 168 jobs at the two sites that will be consolidated into the new facility, expects to add 82 additional jobs within the next two years. The company currently employs about 600 people throughout the Buffalo Niagara region.

Because of the size and scope of the project, FedEx qualifies for an enhanced package of property tax breaks that will be spread out over 10 years, Fiala said.

That entitles FedEx to a payment-in-lieu-of-taxes agreement that carries no payments through the first seven years, with payments equal to 10 percent of the property’s taxes during the eighth year, 20 percent in the ninth and 30 percent in the tenth and final year of the agreement. The property then will be fully taxable. Typical PILOT agreements carry payments of between 10 percent and 30 percent of a property’s regular tax bill during the first seven years of an abatement.

Even so, the project is expected to generate $104,300 in additional town, school and county property taxes during the 10 years covered by the abatement, IDA officials said.

The IDA also approved an estimated $61,250 in sales tax breaks for Niagara Blower Co., which is planning to build a new $1 million plant on Sawyer Avenue in the Town of Tonawanda that will triple the amount of space occupied by the manufacturer of industrial and heating equipment.

Niagara Blower plans to move about three-quarters of its manufacturing operations and about 40 percent of its office staff to the 110,000-square-foot building, while retaining its existing sites in Buffalo and Tonawanda.

The company, which currently has 110 employees, expects to add 20 new jobs within the next two years. Niagara Blower’s workforce has doubled over the last three years as demand for its heat transfer products has grown.

“The good news is it is staying in Buffalo and expanding” in the Town of Tonawanda, Caruana said.

The agency also approved $591,000 in sales and mortgage tax breaks for a $13.7 million project by developer Jake Schneider to convert a pair of long-vacant buildings on Swan Street into 50 upscale apartments and a small amount of retail space.

The project will convert the buildings at 145 and 149 Swan St., which have been empty for more than 20 years, into The Apartments at the Hub. The development also will be home to The Bike Shop, a bicycle retailer that is moving from East Aurora and will be known as the WNY Bicycle Center, along with a cafe.

The apartments will range in size between 950 and 1,500 square feet, Schneider said. Construction could begin as early as next month, with the first units ready for occupancy by next spring.

The project, which is expected to receive property tax breaks through a program administered by the City of Buffalo, is projected to generate an additional $681,000 in property tax revenues over the next 12 years.

The development qualifies for tax incentives under the new state law that restricts assistance for retail projects because the restaurant and bike shop are expected to account for only 4 percent of the project’s costs, well below the threshold set by the legislation that restricts aid to projects where more than a third of the total costs are devoted to retail space.