For the first time, the Erie County Industrial Development Agency will claw back financial incentives from a company that failed to live up to the job commitments it made in exchange for tax breaks.
Citing cuts of more than 100 jobs since the company received new benefits two years ago, the agency’s board members effectively canceled property tax breaks that Derrick Corp. was set to begin receiving and opened the door to it losing the sales tax benefits it already has received.
The board agreed to give the company two years to restore the jobs and comply with its employment pledges before the agency takes further action to recoup the remaining incentives that Derrick had already received. That’s a total of $514,000 so far.
By an 11-4 vote, Cheektowaga-based Derrick became the poster child for the agency’s new recapture policy, which only went into effect in the last two years and has been cited as setting a standard for other IDAs around the state to follow. In doing so, the board fired a shot across the bow of other companies receiving benefits, demonstrating that they have to live up to their promises.
Directors led by Erie County Executive Mark Poloncarz rejected arguments by the company’s supporters that the oil-and-gas equipment manufacturer had a good track record of compliance and was suffering from a sudden downturn in one of its core industries. They argued the agency should give Derrick a chance to turn around rather than penalize it.
But while Poloncarz and others on the board expressed sympathy for the company’s position, members also said the company had a duty to comply with the board’s policies.
“While it’s fair to say Derrick has been a very, very good employer to this area, they did agree to the recapture policy in the most recent IDA benefits that were provided,” Poloncarz said. “The recapture policy means something. If we pass a policy, and then we ignore it, what have we said, as a precedent?”
Derrick Vice President Daniel E. Ronan declined to comment.