Dealing just with hard numbers -- setting aside speculation on hoped-for new revenue and "the multiplier effect" of jobs created -- the tax abatement plan approved Thursday by the Genesee County Economic Development Center Board for a new hotel at Batavia Downs should be profitable for taxpayers, according to data obtained by The Batavian from a GCEDC staffer.
The abatements will save developers about 11.5 percent on their $5.49 million investment, and the new taxes the project generates will be about a 100-percent return to taxpayers, if you accept the notion that the project doesn't get built at all without the tax incentives. If not, it's at least 42-percent return.
By law, the developer must certify that the project requires a tax break to be feasible, according to Rachael J. Tabelski, marketing and communications director. That is a requirement for all projects considered by the GCEDC.
"We have to trust the applicant that when they say this project won't be a viable project without the tax incentives," Tabelski said.
ADK Hospitality, the hotel's developer, will save $638,000 in taxes over the next 10 years, but it won't be getting off totally free. The hotel's owners, over the next 10 years, will pay $1.1 million in various taxes.
Tabelski was quick to point out that the $638,000 in tax breaks is not money taken from taxpayers. It's just money that isn't paid to the government; money that doesn't exist if the project isn't built. Thus, the $1.1 million in taxes ADK will pay over the next decade is all new revenue for schools, the county and the state (but not the Town of Batavia, which doesn't have its own tax on property).
That figure doesn't include sales tax generated by the hotel, or any anticipated increase in sales tax generated by the hoped-for increase in business at Batavia Downs. It also doesn't include employment taxes generated by the anticipated $600,000 in payroll for 25 full-time equivalent new hires at the hotel.
The developers told the GCEDC Board that the project would generate a total of $2.8 million in tax revenue between now and 2025, but there isn't a breakdown available on what categories of taxes comprise that total. It likely covers fire district, property, bed tax, sales tax and payroll tax.
The $1.1 million in hard numbers we have includes:
- $56,000 paid to the Town of Batavia Fire District;
- $550,000 paid in county bed taxes;
- $500,000 paid in property taxes over the life of the PILOT.
A PILOT is a tax break given to developers of projects that industrial development agencies, such as GCEDC, believe will create or retain jobs. It is a reduction in taxes on the increase in assessed value of a property.
Let's say a property is valued at $100,000. A business ads a new wing to its building and increases the assessed value to $150,000. The business continues to pay all property taxes on the initial $100,000 in assessed value, but gets a reduction in taxes on that additional $50,000. PILOT agreements vary, but typically, there would be no taxes due the first two years of the increase, and then taxes would be incrementally increased every two years until the 10th year, when the property owner is paying the full tax bill on the increase in assessed value.
In the case of the hotel property, the developers are buying land from Western OTB, which is currently tax-exempt and has no assessed value. It will be assessed next year, and its assessed value will go from zero to whatever that assessed value is, and the PILOT will be calculated based on that increase, unless the project is not yet completed, in which case there will be only a partial assessment with a full assessment to come during the next annual assessment period after the project's completion.
The PILOT on this project is worth $300,000. The remaining abatements are for the mortgage tax on the purchase and on the sales taxes due on material purchased during construction.
As for the multiplier effect, that's a controversial notion to some, but the idea is that if you create a new job and pay that person money, they will spend some amount of that money locally, and the churn of that money will help pay other people's wages, lifting everyone's boats. That $600,000 in new payroll could be worth millions in economic growth locally.
These figures also don't include wages paid to construction workers and purchases made from local vendors -- if any -- during construction.
Are the construction workers
Are the construction workers for large commercial jobs like this ever local? Does the 25 new employees for the hotel take into consideration the decrease of some employees at the other hotels? If every hotel only downsizes one employee each do to the impact of sharing the same customer base, that still affects the numbers.
, if you accept the notion
, if you accept the notion that the project doesn't get built at all without the tax incentives. I don't accept that notion...it was going to be built with or with out tax breaks....according to your poll 72% believe the same thing..This is just more corporate welfare handed out by steve hyde and co.Time to rid our selves of any county legislator who believe any different..
how did those tax breaks work
how did those tax breaks work out with alpina?
As I suspected... "25 full
As I suspected... "25 full time equivalent jobs". Just what our area/economy needs more part time jobs with no benefits!
Plus the anticipated $600,000 in payroll for those 25 full-time equivalent new hires "could be worth 'millions' in economic growth locally." Are they shittin' me or what?!!! These idiots must be using some real strong mind altering substance to imagine this level of nonsense.
Consider this; 25 full time jobs divying up $6000000 = $461/wk pre-tax... and these promised 'new jobs' aren't even guaranteed full time!
What a bunch of doublespeak... Bravo GCEDC!!!
From the Small Business
From the Small Business Association:
Full-Time-Equivalent (FTE) Employee: a combination of employees, each of whom individually is not a full-time employee because they are not employed on average at least 30 hours per week, but who, in combination, are counted as the equivalent of a full-time employee
– For example, two employees, each of whom works 15 hours per week, are the equivalent of one full-time employee
Mark, I don't know if it
Mark, I don't know if it would have been built without the incentives. I heard it would not. But, with or without the incentives, we are ahead of the game. While we might have gotten more in taxes, we are will be getting more in taxes than before, which was nothing.
We all wish things like IDA's and our GCEDC were not used, but they are and will be for awhile.
Brian, with the incentives, should the GCEDC also be telling this business how many people they should hire and what pay they get? Are you suggesting we have local wages set and benefits set by a semi government agency (GCEDC) if a company gets incentives from them?
John, the ends should not
John, the ends should not justify the means. Whether or not the county makes money on this is immaterial. It is wrong, morally and against the NYS Constitution to support private enterprise with public funds. Period. Yes, every county and a lot of municipalities have been doing it and will continue to. My Mom told me when I was 10, that just because my friends were doing something wrong, it was not an excuse for me. It really doesn't matter if the county will make money anyways, the taxpayers will never see a dime of it. Mr. Patel from the Clarion also just got punked, how is this hotel any more of a tourist attraction than his with a water park? It is a slap in the face to every other hotelier in Batavia, this will cost at least some of them business. Its not new business. However, the taxes they pay will help to fund this. Lastly, the state legislature hypocritically put rules on its countermand of the constitution by forbidding IDA money to go to retail establishments, unless they were tourist destinations. The GCEDC did it for COR development a few years back, they refused Mr. Patel, but now they are doing for this project. Seems inconsistent, even by NY standards.
Dave, I am not defending the
Dave, I am not defending the GCEDC or any IDA. And I think our IDA is out of control. Just stating that we are ahead in taxes one way or the other.
And Mr. Patel had received incentives more than once, so his crying about this is lame.
Agree, totally out of control
Agree, totally out of control. Not only is the hardly any oversight, the county legislature thinks the GCEDC is the greatest thing since peanut butter in a jar. I didn't check up on Mr. Patel's past incentives, now that you mention it I do remember there being a bit of controversy when the water park was being built. Regardless, he does have a point.
Favorite line: "Tabelski was
Favorite line: "Tabelski was quick to point out that the $638,000 in tax breaks is not money taken from taxpayers. It's just money that isn't paid to the government..." Even with the follow-up of "money that doesn't exist if the project isn't built", I raised my feet really quickly.
I wish communities didn't compete against each other using these incentives, but the reality is they do. Regardless, a line of bull is still a line of bull. Be honest with the process and PR, and maybe folks will not be as disgusted with the players.
John The the whole thing
John The the whole thing smells..Building a hotel connected to a state run gambling casino, receiving a waiver from property tax and sales tax that we are all made to pay under threat of violence is not right.. To then claim it will hire part time workers,at the same time show no proof that it will not cause any other hotels in the area to let go of workers,show just how BS this abatement came about..And all the county legislators are part of it..They are the ones who have to designate this a tourist destination.. To me the fix was in the minute this corporate welfare was asked for...Having a public hearing is a farce.The county legislators should be ashamed for playing this game with the public..Why don't we hear from them on this issue..
No John, I didn't say or
No John, I didn't say or suggest anything even close. Nice try.
John Roach says; "We all wish
John Roach says; "We all wish things like IDA's and our GCEDC were not used"... ?
If "we all" don't want it, why does it continue?
Because "we all" in this case
Because "we all" in this case may mean Batavia/Genesee County, but may not mean the folks in Monroe, Erie, or other competing counties.
Companies will go to the places that will lead to the most profit - it is the capitalist (and efficient) way. Localities that don't offer incentives will lose out to otherwise competitive localities that do offer them. So, they all offer them.
Again - I'm not saying they are right or ideal, just a reality of how things are.
Mark, I did not say it didn't
Mark, I did not say it didn't smell. I did say we are ahead on property taxes, incentives or not. We are not losing taxes.
Brian, I meant "we" on this site in this discussion. Nobody here has said they are really happy IDA's are around.
"It is wrong, morally and
"It is wrong, morally and against the NYS Constitution to support private enterprise with public funds. Period."
IDA's should be done away with as they are antiquated and really are no longer needed. Every time a private developer wants to build whatever, the first thing they do is run to the local IDA to get the corporate welfare.
Too bad someone in Congress wasn't more on the ball when then POTUS Bush was handing out federal corporate welfare to the automakers, and implemented a prohibition of our tax dollars funding the mismanagement of private corporations.
Not doublespeak, Brian.
Not doublespeak, Brian. Hydespeak. He's been doing it for years and "We the Sheople" continue to allow it.
"We have to trust the
"We have to trust the applicant that when they say this project won't be a viable project without the tax incentives," Tabelski said."
Then why do we need you and your overpaid cronies, Mr. Tabelski? If GCEDC simply needs to "trust the applicant?, wouldn't the county coffers be better served by trusting ALL SUCCESSFUL BUSINESSES
The problem with the grants,
The problem with the grants, deferrals and site perks offered by IDAs, there is no contract establishing quid pro quo. The taxpayers should be indemnified in the agreement against failure of the beneficiary to live up to its end of the bargain. Number of permanent and temporary jobs, local hiring opportunities, job titles, wage schedules, term of operations; each should be spelled out in the terms of agreement along with penalties ascribed for breech of agreement. Terms of obligation for beneficiaries should be universal within the state, establishing a level playing field. On a side note- the IDAs should not be off-budget agencies. IDA salaries should be subject to public regulation, and any profit generated by the IDA should be incorporated into the municipality's general fund. No more bonuses!
I'm not swallowing ADK would
I'm not swallowing ADK would have backed out without the welfare, and the "need" for another hotel in this general area to begin with doesn't make sense with all the other ones within a mile of the track. I might be less skeptical if the other places were regularly filled to capacity or they weren't so close to Batavia Downs but that's not the case. GCEDC has quite a reputation for being more than generous with corporate welfare but they went an extra mile or two on this one claiming it to be a tourist attraction?
Something smells fishy here to me and this smell doesn't come with fries & coleslaw!
"The taxpayers should be
"The taxpayers should be indemnified in the agreement against failure of the beneficiary to live up to its end of the bargain. "
Look at the failed Medley Center project in Irondequoit? Millions of dollars in PILOT approved to Scott Congel, and now the Irondequoit School District has filed suit because he failed to meet payment deadlines.