The $5.2 million FedEx Freight project in the Rotterdam Industrial Park is back in the state’s Empire Zone program.
The Empire Zone Designation Board on Friday voted to reinstate the project, reversing a decision made by Empire State Development Corp. in June 2009 to decertify it.
The project’s reinstatement means FedEx Freight will continue to pay full property taxes to Schenectady County, Rotterdam and the local school district, totaling $142,000, said Ray Gillen, commissioner of economic development and planning for Schenectady County. The state reimburses the company for the taxes it pays.
If the decertification had been upheld, the project would have reverted to a Payment in Lieu of Taxes agreement that would have cut taxes to approximately $88,000 per year, Gillen said, but there would be no state reimbursement.
David Buicko, chief operating officer for the Galesi Group, praised the board’s decision. Galesi owns the Rotterdam Industrial Park and the building in which FedEx Freight is located, under the name of Northeastern Industrial Park Holdings. “A lot of people took advantage of the Empire Zone program and did it the wrong way. We did it the right way,” Buicko said.
Buicko said Northeastern Industrial Park Holdings invested abut $6 million to construct a 53,535-square-foot distribution center for Federal Express. .
“It was a breakthrough project for the community, and both Empire State Development and the state Office of General Services were very involved in the successful effort to bring this new distribution facility to Schenectady County,” said Susan Savage, chairwoman of the Schenectady County Legislature, who wrote a letter to the state appeals board in support of the project.
“Many successful projects followed as Federal Express is such a prominent name in distribution. As a result of this first project, we have seen Railex build a $25 million distribution facility at the former Army Depot, while the Golub Corporation invested $15 million in a frozen foods distribution center. Collectively, these three distribution projects have now created almost 500 new jobs,” Savage said.
The state revoked Empire Zone certifications from 640 companies last year, retroactive to Jan. 1, 2008, saying that the companies either failed a 1-to-1 cost-benefit test or were identified as “shirt-changers.” More than half appealed.
Shirt-changers are new companies that are similar in ownership and operation to an existing business in the state and showed no growth in their employee base for the period measured.
The 1-to-1 test measures whether a company’s gross wages and capital investments equaled the tax benefits it used and had refunded.
Gillen said the FedEx Freight project’s test measure is 9.21-to-1.
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