Hot Topics

Fourth Quarter, December 2000

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Schweizer Aircraft Expands

Schweizer Aircraft Corporation plans to expand operations at their Big Flats, NY, facility with the help of New York State Empire State Development and the Elmira Empire Zone. The project entails a building addition of at least 5,000 square feet, investments totaling between $2 and $3 million, and the addition of up to 85 new jobs.

The projected growth at Schweizer is partially a result of a $93.7-million contract that Northrop Grumman Corporation received in February 2000 from the U.S. Navy to supply unmanned helicopter surveillance systems. Schweizer will design and supply the system’s air vehicle to Northrop Grumman. The Vertical Tactical Unmanned Aerial Vehicle (VTUAV) will be able to carry a 200-pound payload 110 nautical miles, loiter three hours on station at up to 20,000 feet, and return to its point of origin. Schweizer expects to construct eight of the vehicles over the next three years with production quantities to follow. This and other new business prospects resulted in the need to expand their operations.

With the announcement of their expansion plans came several offers from competing states for Schweizer to locate their expanded operations outside New York. Schweizer is the only remaining manufacturer of complete aircraft in New York and as such has been a valuable resource to the local community and the state. In order to ensure the company’s expansion in Chemung County, local and state officials worked together to provide an incentive package of more than $5 million in combined tax credits and a capital grant.

Much of the incentive package is the result of being able to include Schweizer in the Elmira Empire Zone, (formerly Economic Development Zone). Until recently, boundary regulations prohibited the inclusion of Schweizer due to the limit on the number of sub-zones allowed. A change in the regulations earlier in the year eliminated this limit. As a result, Schweizer will be eligible for three new Empire Zone incentives created earlier in the year.

Empire Zones Expand Incentives — Communities Benefit

In May, New York Governor George Pataki announced major changes to the Economic Development Zone (EDZ) program that could allow companies locating in designated areas in New York to operate on a virtually tax-free basis for the next decade and beyond.

New York’s EDZs have been transformed into Empire Zones, where certified businesses that create and expand employment may be eligible for unprecedented tax incentives and credits. Historically, local governments have hefted the burden of property tax breaks and related local revenue concessions. Under this program, new and expanding companies will realize aggressive property tax savings, with New York State providing the savings, not just the local community.

The three new Empire Zone incentives are listed below:

Tax Reduction Tax Credit (TRTC) – Applied against business corporate taxes, personal income taxes, banking corporation taxes or insurance corporation taxes. The credit is computed by a formula based on the numbers of jobs created, the company's assets in the zone and in the state, and the income taxes owed by the company. The TRTC can reduce a company’s tax liability to zero.

Real Property Tax Credit (RPTC) – Applied against business corporate taxes, personal income taxes, banking corporation taxes or insurance corporation taxes. The credit is computed by a formula based on the numbers of jobs created and the real property taxes paid on property in the Zone. The RPTC can be refundable.

Sales Tax Exemption – Applied to the four percent New York State sales and use taxes for tangible personal property and services, including utilities, sold to a qualified business.

As a simplified example, a new business would be eligible for a 100 percent tax refund since it is starting at zero employees and investment, and creating one job is a 100 percent increase. Similarly, an existing business that has 10 employees and expands to 20 also represents a 100 percent increase in employment – making it eligible for a 100 percent property tax refund from the state and allowing it to pay virtually no income tax for 10 years.

Zone certified businesses begin earning these incentives in January 2001 for the Tax Reduction and Real Property Tax Credits and March 2001 for the Sales Tax Exemption. For more information concerning properties in the Elmira Empire Zone contact STEG at (607) 733-6513.

NUCOR – First Recipient of Empire Zone Incentives in Chemung County

The Vulcraft NUCOR Corporation’s steel fabrication plant currently under construction in the Elmira Empire Zone provides a prime example of the impact of the new Empire Zone legislation. When the Chemung County (Elmira MSA) community competed successfully against other communities to land this $50-million, 300-employee manufacturing facility, the community had to offer a competitive 20-year abatement on school, town and county property taxes. However, just prior to closing on the purchase of 100 acres and a sale leaseback transaction with the Chemung County Industrial Development Agency, the community learned that Governor Pataki had signed the Empire Zone legislation.

As a result, STEG and the community requested that NUCOR consider renegotiating the local economic incentive package. Now, the community will receive more than $2 million in property tax revenue it would have abated, while NUCOR will receive a 100 percent refund of property taxes it pays each year for 10 years from New York State. Then, in years 11-14, their refund will be reduced by 20 percent each year until, in the fifteenth year, they will pay the full amount. NUCOR recognized that these local property tax revenues would only enhance their investment in the community, as the funds go towards education, infrastructure, fire protection, roads and related services that benefit the company and its employees.

NUCOR also enjoys an Empire Zone incentive that eliminates the company’s New York State income (corporate franchise) tax burden to zero for 10 years. In addition, effective March 2001, NUCOR will be exempt from paying the four percent New York State Sales and Use Tax on purchases (including telephone and energy bills) for the following 10 years.

City Businesses Expand

In August 2000, STEG assisted three City of Elmira businesses with expansion projects.

The Hilliard Corporation broke ground on a 30,000- square-foot facility, which will house new machinery purchased to produce motion control products, a new product line for Hilliard. Hilliard will add 25 new jobs to its current 340 employees. Hilliard also produces clutches and brakes for industrial applications and oil reclaiming and filtration products for turbo machinery and industrial markets.

F.M. Howell & Company is building a 10,000-square-foot addition to accommodate its expanding folding carton business. A new computer-to-plate system and folding machinery also will support the company's growing contract packaging business. The company anticipates adding 20 employees.

Construction began in September on an addition to Fagan Engineers’ Elmira headquarters. The 4,000-square-foot addition will more than double the size of their existing facility, providing the company with needed field crew space, equipment storage, and laboratory testing space. Fagan Engineers currently employs 24 individuals and plans to use a portion of the new facility for future employment growth. Fagan Engineers specializes in civil and environmental consulting engineering for projects such as landfills and water and wastewater treatment systems.

   

    

 

   

  

   

    

   

Corning Incorporated Newest Tenant of ACP

Corning Incorporated recently announced that it will relocate its financial transaction processing functions from its current location in the company’s headquarters in downtown Corning, NY, to a new facility to be built in the Airport Corporate Park (ACP) in Chemung County.

“As Corning’s growth accelerates, we continue to focus on driving toward world-class financial processes,” said Katherine A. Asbeck, Corning vice president and controller. “This building will give us more space from which we can further integrate our financial processes and take advantage of new technology to service Corning’s businesses.” Corning’s payroll, accounts payable and accounts receivable, as well as other financial processing functions, will be housed in the facility.

Dubbed the Shared Services Center by Corning, the new, expanded operations will be housed in 60,000 square feet leased from developer

Yunis-Welliver, designed by the Sear-Brown Group and built by Welliver McGuire on an eight-acre lot directly across from World Kitchen’s corporate headquarters. Approximately 125 administrative employees will be relocated to the center, with up to 150 finance-related positions being added over the next three years. Chemung County Executive Thomas Santulli predicted it would be “the gem of the Airport Corporate Park.”

In 1996 Empire State Development, along with the New York State Department of Transportation Industrial Access Program, provided seed funding to the Chemung County IDA to develop the Airport Corporate Park. Since then, $34 million has been invested in new buildings. In 1999, STEG and the Chemung County IDA purchased 30 acres of land adjacent to the park in anticipation of this latest expansion, and Empire State Development provided a $500,000 grant for the Corning project infrastructure and site work. The development of the $7-million Shared Services Center brings the 150-acre Airport Corporate Park to near capacity, and the 150 new jobs anticipated by Corning will bring the park to more than 800 workers total.