NORTH NORWICH – The Chenango Industrial Development Agency deviated from normal practice Wednesday and granted a business only a portion of its request for a tax abatement.
The move could result in an estimated $135,000 to the Town of North Norwich’s coffers.
According to minutes from a public hearing held at the North Norwich Town Hall the day before, Norwich Pharmaceuticals Inc. (NPI) has requested an exemption from paying a $300,000 mortgage tax refiling fee. The fee would result from refinancing a $42 million mortgage on the state Route 12 South plant, and comes along with a planned $22 million capital investment in research and development space and new equipment.
In turn, the full-service contract developer and manufacturer of prescription and over-the-counter pharmaceuticals expects to create 52 new jobs initially, plus an additional 27 by 2016. Payroll one year from now would increase from $27.2 million to $31.9 million. (The pharmaceutical company currently employs about 348.) Construction would begin in April, provided NPI officials agree with the action taken and the IDA obtains completed legal approvals from state environmental conservation authorities in sufficient time.
NPI Controller Jeff Ammons responded to the development on Thursday. He said while management appreciates receiving a portion of the abatement requested, it was important for the local business community to realize that NPI contributes significantly to upstate New York’s overall economy.
“I know they (local governments) are under a very demanding fiscal situation. At the same time, we spend probably 75 million dollars a year in labor and overhead and supplies, including capital. If you think about the multiplier effect - to what that means to the upstate economy - it is very powerful.”
The Chenango IDA adopted the resolution after considering comments from North Norwich town officials. Supervisor Dr. Robert Wansor, R-North Norwich, reportedly expressed his town’s decades worth of support for the numerous pharmaceutical entities that have moved in and out of the original Procter & Gamble Pharmaceuticals facility, but said he is concerned about the town’s financial stability.
“In all of the years we’ve had the pharmacy here, our town has accommodated and tried to help incentivize ...” he reportedly said. “We want to encourage them to be here ... and it’s exciting to hear that NPI is growing and expanding ... but we have small reserves, and money like that would be a windfall for us.” Dr. Wansor, who is in his first year as supervisor, could not be reached for comment. In the public hearing’s minutes, however, he cited the town’s need to replace a 35-year-old gradall for the highway department and a new boiler and half a roof for the town hall. “The town replaced half of a roof last year because things are tight,” Wansor reportedly said.
Instead of the full amount, the Chenango IDA Board of Directors agreed to grant only 55 percent of the filing fee exemption requested, or a $165,000 concession, which would result in $135,000 to the town.
“We have given mortgage tax exemptions in the past, but never granted a partial exemption. We can do it legally, however,” said the IDA’s counsel, James Downey.
The Chenango IDA has owned the manufacturing plant located on state Route 12 South and most of the land since the mid 1970s when it was built for P&G. Since then, it has been occupied by P&G Pharmaceuticals, OSG, Alvogen and now NPI. All of the entities that have occupied the building have been granted benefits through payment in lieu of taxes agreements.
Board member Jack Cook, R-Greene, said mortgage fees represent $120,000 per year to his town and are “a large part of your income for your town.
“We budget for it. I don’t really think it’s an added expense for a business.”
Newly-appointed IDA board member Eric Larsen, president of Laral Management of Norwich, asked whether NPI executives would feel they were being singled out. “This is a change in practice. What’s the template for this? What if the next guy (town or county official) wants a percentage?”
Commerce Chenango President Steve Craig answered that the New York State’s Legislature’s 2 percent cap mandate is a similar change in practice, constricting governments needing to raise money through the levy.
“There are a lot of moving parts in the financial equations today,” said Craig.
Downey said the ‘template’ Larsen referred to is the criteria contained within the Uniform Tax Code, which provides for IDAs to give tax advantages to businesses in turn for economic development.
IDA Chairman Randy Mohr abstained from voting on the resolution because he is a resident of North Norwich. The motion passed with board members Larsen, Cook and Hugh Kearney, retired Town of Bainbridge supervisor, voting for it. Board member Bill Ballard, a retired Norwich businessman, was absent.