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ECIDA signals leniency to companies that suddenly aren't meeting job promises

The Erie County Industrial Development Agency has a message for companies worried about not meeting their job targets because of cutbacks stemming from the coronavirus crisis: We're willing to be flexible.

Agency officials still are discussing how to apply its policies to claw back tax breaks that were awarded to companies that then fail to meet their targets for job creation or investment.

But the officials, on Thursday, signaled that they are not expecting to enforce the policy rigidly and are willing to discuss the reasons for any employment shortfalls that could trigger the recapture provisions.

"It's probably not going to mean a policy change. It's really going to just reinforce that every case is taken on a case-by-case basis," said Steven Weathers, who is retiring this month as the agency's president and CEO.

Weathers noted that about a half dozen companies already have contacted the IDA to ask about how the recapture policy might affect them, now that Gov. Andrew Cuomo has ordered vast segments of the state's economy to shut down in an attempt to stop the spread of the Covid-19 virus.

Weathers said the IDA's focus should be on helping companies rebound from the current downturn, rather than punishing them through a harsh interpretation of the agency's recapture policy.

Richard Lipsitz, the local labor leader who chairs the IDA's policy committee, said many of the companies that have received tax breaks now face a "vexing problem" as the coronavirus outbreak spreads and many are forced to reduce employment.

IDA officials said they plan to contact all of the companies that have received tax breaks through the agency this month when it conducts its quarterly employment survey at those businesses.

"We should be very sensitive to say that we recognize that this has impacted the entire community and your business," said Brenda McDuffie, the agency's chairwoman. "We should make sure people understand we're not trying to begin to think about reporting and then doing something about it. It's so we can help."

Under the IDA's recapture policy, a company is required to maintain 85% of the new jobs it promised to create, while also maintaining 100% of its existing jobs at the time it received the incentives. Those trigger points are based on a company's annual employment, based on an average of the numbers from the quarterly job survey.

Companies receiving subsidies for "retention projects" are required to maintain all of the jobs that were in place at the time the incentives were granted. Falling below that level made the company subject to an IDA review that could lead to the loss of future subsidies and a requirement that the business repay any tax breaks it already received. The agency in 2018 loosened that policy to allow for consideration of shortfalls stemming from employee turnover and other short-term job fluctuations.

The agency also plans to contact officials at two local companies that are affected by recently announced cutbacks: First Source, a Tonawanda food distributor that plans to close, and Uniland Development, which received tax incentives to build portions of the 250 Delaware Avenue complex that includes the headquarters of Delaware North Cos., which has announced deep staff cuts as its tourism and sports-related businesses have dried up.

Lipsitz said agency officials will have further discussions in May on how to handle the recapture policy after the April employment surveys have been returned and there is a more detailed picture of how the outbreak has affected employment at the firms subject to the recapture policy.

"It's daunting," Lipsitz said. There are so many questions I have. I don't know where this is going to go. None of us do."

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