Can someone explain how they come up with the figures for the number of jobs to be retained? If LeRoy Motors did not receive this money to expand their facility, they would have laid 35 people off?
GCEDC announces incentives for four area business expansions
Submitted by Howard B. Owens on June 13, 2012 - 3:01pm
Genesee County Economic Development Center has approved the following projects for development incentives:
Batavia Animal Hospital (Perry Vet), 3699 W. Main St. Road, Batavia, is constructing a new 6,300-square-foot facility behind its current building. The project will receive a sales tax exemption of $76,960, a mortgage tax exemption of $16,250 and a property tax exemption of $80,994. Perry Vet is investigating $1.733 million in the project. The project will create five new jobs and retain 11 jobs.
Merrill Lynch, 24 Masse Place, Batavia, is moving into new office space. Merrill Lynch is receiving a $13,360 sales tax exemption. The company's total investment is $867,000. The project will create 16 new jobs.
Genesee & Mohawk Railroad - GVT, 100 Evans St., Batavia, is adding a 2,800-square-foot headquarters building next to a 31,000-square-foot transload warehouse constructed in 2008 for $2 million. The headquarters project will receive $13,600 in sales tax exemption, $3,750 mortgage tax exemption and $42,762 property tax exemption.The company is investing $360,000. The project will create two new jobs and retain 19.
Le Roy Motors, 7000 W. Main Road, Le Roy, is expanding its current facility by 2,400 square feet and renovating its interior. Le Roy Motors will receive $33,600 sales tax exemption, $9,375 mortgage tax exemption and a $29,631 property tax exemption. The company is investing $785,000. The project will create three new jobs and retain 35 jobs.
I had the same question last year when Monroe Tractor got a sweet deal for IT'S renovation/addition....never did get an answer. Mr. Hyde doesn't have to answer to the public or address questions from the public. If I could get a mortgage tax exemption, a property tax exemption and a sales tax exemption I could create a housekeeping position and retain 1 worker(me). Can you all say CORPORATE WELFARE??
That's the beauty of a quasi-governmental entity.....they get to use tax money liberally, and have no responsibility to account for it. And when they do provide an accounting, it is provided with the aid of smoke and mirrors.
Retaining jobs is basically smoke and mirrors, pretty much something that we haven't heard much about before 2009. Essentially, the new way of accounting for employment seems to jobs added + jobs maintained (Or Saved)
While the Obama administration has used this term more than I have ever heard in my 57 years, it does transend party lines these days. So the real answer to the question is, jobs saved or retained is just a way of stating new jobs in addition to current employment or bail out to keep a business afloat depending on whether new jobs were added or not. Essentially it is a political phrase rather than an economic one.
The good news in this article is that every one of these companies listed added jobs and for just a few thousand dollars, unlike some of tyhe horror stories we have heard the last few years where each job added cost a half a million or so dollars.
This press release as far as I see is a pretty positive statement for the county
I wonder if all this job retention and job creation is gonna push Mr. Hyde's bonus past the $200,000 mark at the end of the year this year.
Kyle as dispicable as the incident where Steve Hyde awarded his own bonus was, I doubt that the county legislature will allow that again. As far as his actual bonus goes, the legislature is going to have to weigh the actual economic benefit to the county rather than the perceived one,
It will be a real interesting story come bonus time.
Why do you think, that after years of allowing the GCEDC to operate the way it does, do you think the legislature will act different this year?
John, perhaps it is wishful thinking, but the mood across the country with regard to bonuses, salaries and stipends for government and agencies, authorities and commissions is much more atune this year then I have seen in many years.
That has to impact politicians even here locally in some ways. I am nopt implying no bonuses, or even less of a bonus if the actual results support it.
It just seems to me that in the current atmosphere politically, anything perceived as wasteful or slighted is going to have an effect on how people vote, one would think politicians recognise that at this point.
Mark, the County Legislature has absolutely no say in the amount of bonus compensation awarded to GCEDC employees. Bonuses are awarded by a compensation committee made up of GCEDC Board of Director members.
Well thank you JoAnne, that is something that I didn't know.
Therefore, back to John, was wishful thinking on my part.
You are right Joanne, however the legislature CAN reduce or eliminate the money they give GCEDC from the county's taxpayers.
Well thank you Howard and Kyle, you both saved me a bit of research time.
Perhaps my wishful thinking has some merit then. Now what to do with the cup of coffee I just poured in contemplation of that research
I agree Kyle. I also hope that whatever it is that Howard is hearing comes to fruition. It would be a step in the right direction.
Mark, I would hate to see a good cup of coffee go to waste. Here's a link to the scathing final report by the NYS Authorities Budget Office regarding the GCEDC's compensation practices.
Howard can you believe all the bitchin and negativeness on giving out tax abatements on this issue.. .........I know you must think this is all a good thing..After all as you say this won't be costing the tax payer any thing.....This all just a way to shrink the tax base...Ooops sorry Howard must be bitchin again..What if these businesses don't hire, is the GCEDC going to take back the tax breaks.....
Read that now that you mention it Joanne, feel kind of bad that I didn't recall the proceedure. But thanks just the same.
My concern has always been the County's contribution, sometimes that that has me conflicted.
While I am not an economist, I do remember my economics classes in college, particularly with regard to economic multipliers.
I am not against bonuses per performance, and actually not against a county contribution to the GCDEC in general if the economic multpliers pan out. It seems that this information never seems to make it's way into the conversation in anything but basic terms. Predicting them and experiencing them can be a wide gap. (Multipliers that is)
My fear is that the county has been contributing based on predictions, rather than on the actual multip[lier results
Mark I am not bitchin about the abatemenst at all, They are a good thing when you look at the numbers
$3,745,000.00 In investment by the 4 companies
$242,288.00 in tax exemptions
What we don't know is how long these exemptions are for.
They are adding a total of 23 permament jobs to the county,
And remember Genesee & Mohawk Railroad - GVT spent over $2,000,000.00 on thier facility 4 short years ago that brought 19 jobs to the area that are still there.
This amounts to a tax break of $10534 per new job,
Mark ....Howard called it bitchin when i brought up the tax abatement the city was handing out....And that it wasn't costing the taxpayer anything....i agree with all the comments on GCEDC just handing out tax breaks with out proving job creation...This is just a way for Hyde to make more than then Governor Cuomo when his bonus's are added in....Do you really think that LeRoy Motors won't be able to retain 35 jobs if they don't get this tax abatement........This is a type of corporate welfare..If taxes weren't so high we wouldn't need a GCEDC........Now the city of Batavia is on that same bandwagon of handing out tax abatements...Howard claims this doesn't cost the taxpayer a thing...
Well Mark like I said in an earlier post, Jobs retained is just new political speak, I always look solely at the jobs created.
My concern isn't the tax abatements, it is the county's cash contribution to the GCEDC budget.
It is one thing to predict economic multipliers from jobs created than to experience them. Tax waivers and abatements are common businss practice across the country when regions are trying lure new businesses or to coax existing businesses to expand, contributing 50-60% of the operational budget on the other hand, especially in light of the compensation [ractices is by far another issue
The county Legislature controls who will be on the GCEDC Board, who then give out the bonuses.
The abaments do not hurt the tax payer, but the sales tax and mortgage tax exemptions do.
On the other hand, with no opposition, again why would they not continue the same way they have? While many here don't like it, there does not seem to be a major uproar.
This comment is irrelevant, but I don't know how else to let Howard know that the link to the St. Nick's article appears to be broken. THANKS!
John I don't, I think tax abatements are an effective tool.
When I added up the totals it was to point out that it was effective. $10,000 tax credit per job is outstanding, especially when you compare it to the actual spending per job with federal spending.
The county's contribution to the budget of GCDEC and tax abatements are separate issues
As far as sales tax and mortgages abatements go, I am not certain you are correct, it would depend on the economic multipliers and how they actually pan out.
The sales and mortgage taxes were not abatement's, they were exempted.
The property tax abatement, while not always popular, is a tax that will be paid later.
John I understand that, I also see $3,745,000.00 In investment by the 4 companies.
I do not remember the exact formulas but economic multipliers I am sure were considered in these awards.
If a business expands the seek a ROI or they wouldn't even consider the investment. In order to achieve an ROI on spending of that amount they have to project a sales pr revenue increase at least 5 times the investment more likely 6-7 times at a minimum.
That is new cash infused into the county, the multiplier effect would mean a portion of that cash would not only result in an increase of tax collected by that business, but by surrounding and other businesses as a result.
So while on the face a sales tax exemption, property tax exemption or mortgage tax exemption make look like a cost, it is based on the imroved property which in itself presents a net gain, and when you take into account increased sales from surrounding businesses even more a gain.
I would findit difficult to believe that the GCDEC could negotiate that deal with county without providing a detailed economic multiplier forecast for each business.
Is there some risk that the economic multipliers will not pan out? Of course their is, but is the economic effect worth the risk? That can only be determined over time by the performance of the businesses.
There is no more Ardent supporter of reduced government spending than I, but I would much rather see small when you balance the numbers, exemptions to build the local economy than no investment at all.
Notice that some of the businesses are service types. They do not generate sales tax of their own. They do pay fees and state/federal taxes, some of which may or may not come back to this area. And if the new employees do not live in Genesee County, our direct return is low. That's one reason I object to the exemption from sales and mortgage taxes.
Good point John, I totally understand your reasoning. I also know that these exemptions are very common across the country. It would be very interesting indeed if the economic impact study were made public. Overall though, I still contend that based on the four companies investment to the area, it is an overall good thing for the community in general.
I would really love to see the multiplier factors they used to justify the tax exemptions.
Jason, the link is fixed for the St. Nick's article.