General Electric will receive $5 million in assistance from the Metroplex Development Authority, plus tax breaks, toward construction of its $100 million sodium-storage battery plant on the GE Energy Campus off Erie Boulevard.
GE officially announced it would build the battery plant in Schenectady County, bringing 350 jobs to the facility, during a news conference Wednesday afternoon. At the same event, Metroplex announced the list of economic incentives it offered GE to lure the economic prize to the county.
“Our economic development team worked hard, competed and won,” said Susan Savage, D-Niskayuna, chairwoman of the Schenectady County Legislature.
GE’s announcement comes a day after 1,150 unionized members of IUE-CWA Local 301 voted 2-to-1 to accept an amendment to the national contract. GE said the agreement was essential to its decision to site the plant in Schenectady, as it will provide significant cost savings to the company.
GE plans to convert Building 66 into the facility, moving turbine operations there to Building 273. The battery plant will open by 2011 and is projected to produce approximately 10 million cells annually when at full capacity.
U.S. Rep. Paul Tonko, D-Amsterdam, who attended the news conference, called GE’s battery technology transformational, adding it “will unlock doors of untold possibilities.”
Said Tonko: “There is a green energy global race, and this shows us we are in the race and we are in the race to win.”
Metroplex will cover the $5 million award to GE by issuing federal “Recovery Zone Facility” bonds. Schenectady County recently received $7.3 million under the federal stimulus program, said Metroplex Chairman Ray Gillen.
The bonds are tax-exempt debt, Gillen said, “meaning bond buyers are exempt from federal and state taxes on income resulting from bonds. This all translates into very low interest rates on bonds. This in turn reduces borrowing costs for Metroplex.”
Metroplex will also put in place a payment-in-lieu-of-taxes agreement, or PILOT, with GE. The agreement settles a contentious issue regarding the new assessment for GE’s city property.
GE’s assessment more than doubled, from $36 million to $77.8 million, when the city went to full value this year. In March, GE officials said they were shocked by the change and said the property should be assessed at $56 million. The company paid taxes on $36 million under the city’s 64 percent equalization rate, a rate set by the state to indicate how inaccurate the city’s assessments are in comparison to current sales data.
Gillen said the PILOT sets the value of GE’s property in the city at $65 million and keeps it there for the next 10 years. The new value will generate an additional $250,000 in property taxes annually, he said, and GE could pay more in taxes if the tax rate increases.
“The PILOT encourages GE to make additional investments in the campus. It is similar to the PILOT that was done in Niskayuna for GE’s Global Research Center, which is locked in for 10 years. That agreement helped to facilitate four expansions at the center,” Gillen said.
The Metroplex incentives are in addition to $15 million New York state is providing GE through its New York Battery and Energy Storage Technology Consortium, announced in May.
GE had hoped to receive some of $2 billion in federal stimulus money for advanced battery projects, but learned Wednesday the federal Department of Energy has earmarked the money for other purposes. GE Chief Executive Officer Jeff Immelt said in May the company would build the plant regardless of whether it received federal stimulus money.
GE spokeswoman Christine Horne said Wednesday, “We are disappointed, but we are still absolutely committed to building the plant and moving forward.”
GE sees renewable energy as a growth area and has invested more than $150 million in advanced battery technology. The company sees advanced battery manufacturing growing into a $1 billion business over the next decade.
In 2007, GE announced it would add 500 high-paying, white-collar jobs by relocating its Renewable Energy Global Headquarters to Schenectady. The company is developing products to create energy from wind and sunlight as well as from its traditional technology using fossil fuels. Approximately 150 of the new jobs are for the product management and customer service center.
As part of this deal, the state committed $5 million for the project. Schenectady County and the city of Schenectady will provide tax abatements of approximately $825,000 each to GE over a period of 10 years. The city has also agreed to provide $2 million in sales tax savings on investments for building materials, furniture and fixtures.
GE’s announcement to invest in Schenectady is welcome news, local officials said, especially in light of company actions elsewhere to reduce costs. During the last year, it has cut staff and closed plants as its income decreased. In the second quarter, for example, income plunged from $5.2 billion in 2008 to $2.7 billion in 2009.