FedEx and the Kansas City, Mo. company developing the $54 million transportation hub in Hamburg will receive an estimated $8 million in tax breaks over the next 10 years.
The project and the people working there will generate an estimated $9.04 million in tax and other revenue over the same period, according to a cost-benefit analysis performed by the Erie County Industrial Development Agency.
Michael Bartlett, executive director of Hamburg’s IDA, said he asked the larger agency to perform the analysis, after a reporter asked him about the tax breaks last week.
Incentives on the project will save the owners, over the next 10 years, an estimated:
• $4.9 million on Town of Hamburg, Frontier Central School District and Erie County property taxes.
• $2.8 million on sales tax for construction materials and equipment for the plant.
• $308,000 in mortgage tax abatement.
Revenues that will be received over the next 10 years from the project include an estimated:
• $1.24 million in payments in lieu taxes of town, school and county property taxes.
• $1.8 million in regional sales tax.
• $4.5 million in state income tax generated by employees working at FedEx.
• $1.5 million in sales tax on items employees purchase.
The Hamburg IDA granted a standard PILOT, or payment in lieu of taxes, which gradually increases payments to 100 percent of the tax bill over a 10-year period. Bartlett said the property, which was owned by the Hamburg Land Development Corp., was vacant and generating no tax revenue before it was purchased for the FedEx project.
“You’ve got to compare that number with zero,” he said of the property tax break, “because that’s what that property was paying with no activity going on.”
Bartlett said he just recently requested the cost benefit analysis, and the report “basically confirms” what the IDA board had discussed before granting the incentives. Details on the estimates of the tax incentives are not listed in the minutes of the board meetings.
State Sen. Marc Panepinto sent a Freedom of Information Law request to the Hamburg IDA last month requesting public records on the PILOT agreement, as well as other documents relating to the project.
The IDA last week approved the request from JR Fort Collins, an affiliate of Jones Development now developing the project, to increase the total cost to $54 million. Bartlett said the project has run into some cost overruns, and the approval of the new total allows the additional costs to be included in the incentives. He said the project will not receive the incentives until it spends money on the building and improvements to the property.
The project also includes the construction of a $2 million road, which will be a public road going through the property, opening up the rest of the property for development.
Bartlett said since the FedEx deal has been approved and under construction, the IDA has been contacted by other companies interested in building in the Lake Erie Commerce Park.