Down to Business: Incentives, timing make big difference

Incentives still matter in business. So does time.

Incentives still matter in business. So does time.

Those maxims were apparent in Dollar Tree Inc.’s choice of Connecticut over New York for a new, million-square-foot Northeast distribution center.

The Virginia-based discount retailer, with more than 4,400 stores in 48 states and five Canadian provinces, already had nine centers stretched across the U.S. that could be expected to support $8 billion in annual sales. But with new, larger stores on the horizon and with fiscal 2011 sales at $6.6 billion, a 10th giant warehouse made sense.

So Dollar Tree put out feelers and eventually settled on sites in Schodack, in southern Rensselaer County, and in Windsor, Conn., not far from Bradley International Airport.

In Schodack, 100 acres off of routes 9 and 20 were targeted near Exit 11 of Interstate 90. In Windsor, a similarly sized site was found, part of a 600-acre business park called New England Tradeport that is home to several other distribution centers.

Dollar Tree “loved the site” in Schodack, said Robert Pasinella, president of the Rensselaer County Industrial Development Agency, who I asked to reflect on the beauty contest with Connecticut after that state’s governor, Dannel P. Malloy, announced late last week that the company would build in Windsor.

Pasinella said his office first learned of Dollar Tree’s interest via a referral from the Empire State Development Corp., New York’s economic development arm. Three locations in Schodack were pitched to the company: the site off of Exit 11 and two others farther south, near Exit B1 on the state Thruway’s Berkshire Spur.

But the Exit 11 site, which previously had been shown to specialty retailer Cabela’s, had some preliminary engineering work at the ready that could aid the company’s construction timeline. And Dollar Tree had an aggressive schedule when its plans became public just after Thanksgiving last year: begin building the warehouse in spring 2012 and begin shipping product from it a year later.

Still, the Exit 11 site offered a couple of challenges: tandem tractor-trailers aren’t allowed on most highways other than the Thruway, and a group of homeowners living south of the site worried about the project’s impact on their neighborhood — after all, close to 200 trucks would arrive and depart daily.

Pasinella said special action by the state Legislature could have resolved the tandem issue; “some pushback” from homeowners was anticipated, he said, although that soon mushroomed into threatened legal action. (In Windsor, homeowners in neighborhoods adjacent to the site there filed two separate lawsuits against the town over approvals given to the project, the Hartford Courant reported.) In the end, though, Windsor won “because of the availability of skilled workers, accessibility to highways and the support of our efforts from Gov. Malloy as well as other state and local representatives,” Dollar Tree CEO Bob Sasser said in a release put out by Malloy’s office on Friday that detailed the incentives promised to the project.

To land the center, valued at $104 million and employing 200 people, Connecticut offered a $7 million low-interest loan (with potential loan forgiveness based on the number of additional jobs created); a $500,000 training grant; and up to $20 million in tax credits. Construction will begin immediately.

I asked Pasinella whether losing Dollar Tree was a black eye for the Capital Region. “No,” he said. “It was just one of those projects that timetables matter.”

And the Connecticut incentives? They “tipped it,” he added.

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