Niagara Gazette

April 25, 2013

Yahoo! gets its breaks|Yahoo! tax breaks approved for expansion, will save company about $30M

BY JOE OLENICK
Niagara Gazette

Niagara Gazette —

LOCKPORT — Yahoo's expansion in the Town of Lockport is on its way, following approval of a 20-year package of property tax and sales tax breaks for the Internet giant on Thursday morning.

But, some see the expansion as something that lead to more of a future investment in Lockport by Yahoo. Town of Lockport Industrial Development Agency member Duncan Carlson said that's why he voted in favor of the incentive package.

“I have the feeling that an expansion far beyond this is the key to making this a viable project,” Carlson said. “They are interested in more land, a major expansion of the data center.

"Betting on the future, that’s why I would be inclined to support this project, not what we heard here today.”

For its second project in the town, Yahoo will invest $170 million in a second phase on its campus in the Town IDA Park. The phase will expand the Yahoo data center and add a new customer call center, creating 115 jobs.

The sheer size of the 320,000 square-foot expansion, which includes a larger parking lot and a utility substation, suggests the company potentially has plans for Lockport, Supervisor Marc R. Smith said during the hearing.

But there's nothing else to announce, Yahoo said in an email.

"We've got nothing to add beyond what we've already shared publicly: that Yahoo is pleased to be expanding our operations in Lockport to include a new data center and customer care center, through which we'll add 115 jobs to our Lockport operations," a Yahoo spokeswoman said.

The IDA Board of Directors voted to approve the tax abatements, following an hour-long public hearing in which some taxpayers criticized the tax breaks for Yahoo.

“The tax abatements for this are horrendous,” Edwina Luksch, a Newfane resident, said. “Niagara County is in dire straits... I'm all for creating jobs, but the residents - who I consider the investors - need to see a return.”

Margie Swan of Cambria agreed, saying Yahoo didn't need the abatements. The IDA needs to remember the residents, many of which are on unemployment or fixed incomes, she said.

“A multi-billion-dollar corporation doesn’t deserve all these tax breaks," Swan said.

“The ultimate in being a good corporate citizen, paying your taxes like everyone else does,” said Donald Hobel of Wheatfield.

Attorney Andrea Sammarco, speaking on behalf of Lockport construction and real estate executive Glen Miller, said Yahoo was already in the town. There's no need to draw them with incentives when they're already here or to encourage them to build on their own property, she said.

Local small business owners aren't getting this kind of break, some residents said.

“If we (small business owners) got a portion of what Yahoo is getting, we’d be able to contribute way more,” said David Mongielo.

On the other side, representatives of the town, schools and local not-for-profit groups touted the importance of the project and Yahoo as a corporate citizen.

Todd Fragale, president of the An-Jo Baseball League, said Yahoo paid $1,000 for a new infield drag and $1,200 for new dugouts and benches.

“Yahoo has been an excellent corporate citizen and sponsor. They’ve gotten involved in the community while other long-term companies have stood on the sidelines," he said.

Bonnie Stafford, principal of Fricano Primary School in the Starpoint district, Yahoo bought materials for classroom projects for two of her teachers.

The American Cancer Society and Upstate New York Transplant Services noted the support Yahoo employees give their organizations in volunteering.

Smith added that the tax breaks wasn't the act of writing Yahoo a check, but rather municipalities taking less from Yahoo in taxes.

Yahoo will have a 20-year Payment-In-Lieu-of-Taxes agreement for construction and equipment costs, as well as a 100 percent abatement of property taxes for the first 10 years of the deal. Then the exemption would be reduced by 20 percent every two years.  It's estimated the deal will save Yahoo over $30 million total.

The company is also receiving $2 million worth of state tax credits and a seven-year renewable deal with the New York Power Authority for half-price hydropower. In March, the New York Power Authority Board of Directors approved an allocation of 7,200 kilowatts of low-cost power.

The Town of Lockport does not have a town property tax, meaning the municipalities most affected would be Niagara County and the Starpoint Central School District.

The incentive package offered by state, federal and town authorities was "very generous and helped ensure our expansion in Lockport," Yahoo officials said in a statement.

"In return for these generous incentives, Yahoo has committed to giving back to the local community, specifically through our contribution of $3.5 million over seven years to the Community Foundation of Greater Buffalo," a Yahoo spokesperson said. "In addition, Yahoo's expansion in Lockport will create 115 new jobs in Western New York. We are proud to contribute to the local economy in such a positive way through this job creation."

Yahoo officials noted that over 90 percent of the original Lockport staff for the first data center in the area were local hires when the facility opened in 2010. That was a $150 million investment by Yahoo and will bring a total of 125 jobs by the end of 2014, withh 100 in Lockport, company officials said.

The center employs 77 people currently, IDA Executive Director David R. Kinyon said currently 20 percent of which live in Lockport. About 40 percent live in Niagara County.

But, Yahoo isn't exempt from the town's special district taxes, as the company paid $185,000 last year for water, sewer and fire, according to Paul Bonaro, Lockport data center operations manager.

Yahoo just needs site plan approval from the town Planning Board, which is on the May 8 and 15 meeting agenda. Kinyon said construction would start shortly after that.

Contact reporter Joe Olenick at 439-9222, ext. 6241 or follow him on Twitter @joeolenick.