Riverhead IDA ups tax break by $1M for EPCAL company

02/26/2019 4:03 PM |

The Riverhead Industrial Development Agency held a special meeting Friday during which it granted Island International Exterior Fabricators an additional $1 million in tax abatements on the planned expansion of its facilities at the Enterprise Park at Calverton.

This came after the company said the $2.7 million tax abatement package granted by the IDA a just over a week earlier wasn’t enough to allow it to stay there.

Neither the News-Review nor Riverhead Local was notified of Friday’s special meeting. The IDA usually meets on the first Monday of every month.

IDA executive director Tracy Stark-James said the meeting notice was posted on the Town Hall bulletin board Feb. 14, on the IDA Facebook page Feb. 16 and on the IDA’s website. The meeting was also broadcast live on the town’s public access television station and on the town website.

Island officials wrote in a Feb. 13 letter to Ms. Stark-James: “Our preference is to stay here in Calverton, but the financial assistance that was offered does not do enough to offset these additional expenses we incur here, which would prevent us from being competitive.”

The company said it could realize savings of $5.3 million per year on labor costs if it were to move 300 manufacturing jobs to Pennsylvania. 

“This does not account for other significant savings that would also be enjoyed — lower real estate taxes and energy costs, friendlier development processes and laws, and insurance costs which would be closer to 50 percent less that what we are currently experiencing here in New York,” they wrote. 

The IDA had granted the company a tax incentive package on Feb. 4 that amounted to an estimated $2.7 million in property tax abatements over 15 years. The IDA also granted a mortgage recording tax abatement not to exceed $56,250 and sales tax abatements on materials used in construction that were not to exceed $129,375.

In December, Island had asked the IDA for full property tax abatements for 15 years on three new buildings planned at EPCAL.  They said the abatements were  needed to prevent  the company, which has more than 200 employees in Calverton,  from having to relocate.

Under its current property tax assessment Island would pay about $8.4 million in taxes over 15 years. The $2.7 million abatement would amount to about 32 percent of their property taxes, according to the IDA.

According to Richard Ehlers, attorney for the IDA, Island had sent a letter following the IDA’s Feb. 4 meeting declining that original offer, saying that the amount of the abatement granted them was not enough to keep them here.  

“They said they couldn’t stay under the terms that were granted because we cut them back too much from what they asked for,” Mr. Ehlers said. 

The IDA then “went back to the drawing board” on Friday, Feb. 22, Mr. Ehlers said, and approved a new resolution with an enhanced abatement that totals an estimated $3.7 million, or about $1 million more than the Feb. 4 abatements.

That would amount to a 44 percent abatement over their current tax rates.

The amount of the mortgage tax and sales tax abatements remain unchanged from those in the Feb. 4 resolution, and would bring the total abatement to about $3.9 million over 15 years.

Island said in filings with the IDA that the abatement will help them retain 213 manufacturing jobs at EPCAL, along with 50 to 75 professional positions and 40 construction jobs. The abatements approved Friday are contingent upon retention of all 213 manufacturing jobs and  also call for the creation of 80 new manufacturing jobs. 

“So are you going to stay?” IDA member Tony Barresi asked following Friday’s vote. 

Island’s managing partner Ed Harms answered in the affirmative. 

“We’re very appreciative of what you’ve done,” he said, adding that the company’s  employees, many of whom are from the Riverhead area, are even more appreciative.

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