Buffalo News: Sodexo gets tax breaks to expand
The Buffalo News.com
Business Published: August 18, 2015, 03:26 PM
Sodexo gets tax breaks to consolidate local operations 4 service center locations to operate under one roof
BY: Jonathan D. Epstein (mailto:firstname.lastname@example.org)
The Erie County Industrial Development Agency on Tuesday awarded $5.2 million in tax breaks for two projects that will see more than 150,000 square feet of office and warehouse space built in Tonawanda and Cheektowaga.
Uniland Development Co. plans to build a threestory office facility for Sodexo Inc., with 109,170 square feet of space at the Airborne Business Park near the Buffalo Niagara International Airport.
The $21.06 million Class A office building on 6.2 acres at 400 Airborne Parkway will be fully occupied by Sodexo, the global corporate facilities and foodservice manager that maintains its North America Service Center in Western New York. The service center handles backoffice professional services - such as accounting, information technology and human resources - for Sodexo's operations in North America, and is the primary location for these functions.
Locally, the company serves 45 clients, with 1,200 employees in all and $35.1 million in 2014 revenues just in Erie County.
Sodexo, a subsidiary of Parisbased Sodexo Alliance S.A., plans to consolidate its four existing servicecenter locations in Amherst - three on Earhardt Drive and one on Lawrence Bell Drive - into one facility, bringing all 511 employees under one roof. All four current sites, totaling 125,000 square feet, are Uniland buildings where the leases expire in November.
Officials said the company considered staying put, consolidating or relocating the entire operation to Maryland, which last year offered a standard package of benefits to attract the company to bring the jobs to that state's Montgomery County, where Sodexo already has significant operations. Consolidation locally was the preference, but ECIDA help was needed to justify the project, according to documents submitted to the agency.
That didn't sit well with ECIDA Vice Chairman Richard Lipsitz, president of the Western New York Area Labor Federation, who objected to the company's implied threat to leave Western New York if ECIDA rejected the request. Critics from the Coalition for Economic Justice also had previously protested the application at a public hearing, citing the company's wages and saying Sodexo's size - it reported $24.8 billion in revenues and $1.3 billion in operating profits in 2013 - doesn't justify help.
"I don't like having a gun put to our head, and that's whatI feel is happening here," Lipsitz said. "I don't like losing good jobs. They're goodpaying jobs. ButI don't like feeling that way, and not only that, I don't like being forced to vote on that basis."
Others, including the town supervisors of both Amherst and Cheektowaga, expressed support, however, and cautioned against putting such a sizable operation at risk. Even Erie County Executive Mark C. Poloncarz, often a lone critic of ECIDA largesse, especially when it involves an intertown move, conceded that this was different.
"There is that chance it could move," said Cheektowaga Town Supervisor Mary Holtz. "I'd rather not take that chance."
The new building, with 36,000squarefoot floorplates and 10foot ceilings, will feature a "sleek, modern" design with curved metal panels and tinted soundproof glass windows on the outside. Uniland hopes to break ground by October and finish construction by spring 2017. The developer will allow Sodexo to remain in the current sites past their lease expiration, until the new building is done.
ECIDA approved $3.92 million in tax incentives for Uniland, including $948,940 in sales tax savings, $2.8 million in property tax breaks and $172,500 in mortgage recording tax savings.
The project is supposed to yield $744,000 in tax revenues over the 10-year abatement.
In exchange, Sodexo and Uniland pledged to retain all 511 jobs, which includes a $30 million annual payroll. Except for 13 employees receiving $10.37 an hour, the employees are paid between $18.10 and $79.66 per hour. Another 118 temporary construction jobs will also be created for the Uniland project.
In addition, Sodexo itself plans to spend $6.08 million on the building's interior, including furniture, fixtures, equipment, technology and infrastructure. ECIDA separately approved $467,000 in sales tax breaks on that portion of the project. Sodexo is also getting a $750,000 grant from Empire State Development Corp., after the company's site selector, Mohr Partners Inc., began examining options and reached out to Buffalo Niagara Enterprise for assistance.
Also on Tuesday, ECIDA approved $860,250 in tax breaks for Zaepfel Development Co.'s $3.3 million
proposal to build a 40,000squarefoot facility at 95 Pirson Parkway, in Tonawanda's North Youngmann Commerce Center, for MJ Mechanical. That will allow it to expand from its current 25,000 square feet at 2040 Military Road, which it has outgrown.
MJ Mechanical is a fullservice commercial and industrial heating, ventilation, air conditioning and refrigeration contractor, with clients in Western and Central New York and northern Pennsylvania. It also provides sheetmetal fabrication. The company now employs 141, plus two parttime workers, and expects to grow to 170 workers, with five parttimers.
The incentives include $131,250 in sales tax savings, $19,000 in mortgage tax savings and $710,000 in property tax breaks.
"Youngmann was not too long ago a vacant parcel of land," Poloncarz said. "It is now one of the most active locations for construction in our region. It's getting to the point where it's going to be full very soon. So I support this project."