Schenectady County

SI Group seeks $4.2 million in tax breaks

Officials from the SI Group have asked Rotterdam’s Industrial Development Agency to broker a 15-year
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Officials from the SI Group have asked Rotterdam’s Industrial Development Agency to broker a 15-year tax agreement with the town, county and Schalmont school district that will save the company more than $4.2 million.

The Niskayuna-based chemical company has asked for an annual exemption worth $242,000 over the duration of the payment-in-lieu-of-taxes agreement. In addition, SI wants a $616,000 sales tax exemption while converting the plant’s old natural gas boiler to a biomass unit.

Company officials indicated the project would require a $12 million investment in the plant and would result in the creation of seven full-time jobs. The project would make the plant financially viable and generate $600,000 in new capital, according to a proposal submitted to the IDA in December. The plant is on a 40-acre site in Rotterdam Junction.

IDA Chairman Angelo Santabarbara said the agency will weigh the impact of such an agreement. He said the goal is to obtain an economic benefit for the town while ensuring the company maintains its facility in Rotterdam.

“It has got to benefit the town,” he said Monday. “If it’s not going to benefit Rotterdam, we’re not going to do it.”

Company officials reached late Monday indicated the total exemption is likely to change before a final agreement is reached. They were unable to provide any further information.

Details of how the agreement would affect school, county and town taxes have not been released. A public meeting on the proposal is set for 7 p.m. Feb. 26 in the Rotterdam Town Hall.

The SI Group launched its biomass initiative after receiving a $1 million grant from the New York State Energy Research and Development Authority in 2006. Plans for the wood-fired boiler have already passed the state’s environmental quality review with the town Planning Board.

The company projected employing 50 workers during construction on the project, which is expected to last nearly two years. Afterward, the company anticipates creating one additional management position, two skilled or unskilled jobs and four semi-skilled positions.

In their initial presentation to the IDA, the SI Group indicated the boiler project would help the company avoid natural gas costs and also to control its tax bill. Fuel costs and taxes contributed to the Rotterdam facility’s operating loss over the last five years, the company claims.

County Attorney Chris Gardner said the PILOT appears excessive after considering the low level of economic development the SI Group has offered. He also questioned why the company would require such a tax break after receiving a hefty state grant.

“We’re carefully studying it as to whether the county will take a position or not,” he said. “It does seem to be a little bit rich.”

After reviewing the application, Gardner said, it wasn’t clear whether any of the seven jobs proposed would be permanent or high-paying.

“Is this the best way to spend over $4 million worth of taxpayer money?” he asked. “It’s not even clear if there are any new jobs at all.”

Supervisor Steve Tommasone was more optimistic. He said securing the PILOT would end costly tax reduction litigation with the company and help ensure the SI Group maintains a presence in Rotterdam.

Tommasone said the potential loss of tax revenues is outweighed by the potential loss of 182 jobs if the SI Group decides to shut down the production facility. He said the agreement would also leave open the possibility of future expansion at the plant.

“Sure we’re going to lose some revenue,” he said. “But the amount of revenue we’ll lose pales in comparison to the jobs that are there.”

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