Lockport Union-Sun & Journal Online

April 18, 2013

Auto dealer's tax relief bid nixed

By Joyce M. Miles
Lockport Union-Sun & Journal

Lockport Union-Sun & Journal — The Niagara County Industrial Development Agency board of directors on Wednesday rejected Ki-Po Automotive’s request for tax breaks to underwrite its acquisition of a Chevrolet dealership facility in Ransomville.

On a 4-2 vote, the board denied Ki-Po’s application for a 10-year Commercial Payment in Lieu of Taxes compact conveying sales and mortgage recording tax exemptions, and 10 years of reduced property tax, on the existing showroom and a proposed addition at 2534 Youngstown-Lockport Road. The IDA board is composed of nine directors, and PILOTs are only granted on a minimum of five votes in favor. Three directors were absent from the Wednesday morning meeting.

Ki-Po made its request shortly before enactment of the 2013-2014 New York State budget, which restored an old prohibition on IDAs granting tax breaks on retail development projects.

Commercial development is considered to be retail in nature when one-third or more of the project is dedicated to walk-in business. Exceptions to the ban on tax relief are allowed for tourism destinations including hotels and malls, projects located in “highly distressed” areas and projects that make available “unique” goods and services available in the host municipality.

NCIDA could justify tax relief for Ki-Po on the basis that a Chevy dealership is unique and preserves jobs in the hamlet of Ransomville, agency attorney Mark Gabriele advised.

But the board trustees whose “no” votes sunk the application, Stephen F. Brady and Michael W. McNally, said they couldn’t stand by that statement.

“It’s retail. I just didn’t feel comfortable” approving tax breaks, McNally said.

Brady worried the board would set a precedent for using the unique services exception to get around the retail ban. “There’s a lot of communities in Niagara County that don’t have a car dealership,” he said.

Ki-Po, which currently leases the Ransomville showroom, is eyeing buying the facility, renovating and expanding it to conform with new GM Chevrolet Division branding mandates. It could move the existing business to a new location but prefers to stay in Ransomville, company executives said previously. If it doesn’t renovate and expand the existing facility, it’s risking renewal of its GM franchise agreement there, they added.

Ki-Po’s tax-relief application said it would invest $1.5 million to purchase and update the facility and would add five full-time and three part-time jobs with expansion. 

NCIDA staff projected tax savings of $112,000 over 10 years for KI-PO, and $143,000 tax savings over 15 years, the PILOT term that the company proposed whereas commercial PILOTs are almost always for 10 years. NCIDA directors refused to put the longer-term agreement to a vote.

Ki-Po is free to apply for tax breaks on Ransomville showroom expansion again, Gabriele said, but he advised its next request should not be so “aggressive.” Given the directors’ mixed feelings about whether the project is ordinary or unique retail development, they might be more open to a shorter-term compact, that is, a five-year PILOT, he said.

After the amendments to state IDA law, when an agency finds that a retail project qualifies for tax breaks because it’s in a distressed area or makes unique products and services available, it also has to find that the project will create or retain private-sector jobs before tax breaks can be offered — and the chief executive officer of the municipality that the IDA was formed to aid has to sign off on, or “confirm,” the IDA’s findings in order for the breaks to be legal. 

In Niagara County, NCIDA-approved tax breaks for distressed-area or unique retail development would be confirmed by County Manager Jeffrey Glatz, according to Gabriele.