Geico gets another $474K in tax breaks for Amherst expansion

Sept. 23--Directors of the Amherst Industrial Development Agency gave the green-light Friday morning to tax break packages for expansion projects by Amherst Alarm and insurance giant Geico Corp., despite concerns by at least two board members that the assistance might not be necessary for the latter.

Geico, the nation's No. 2 auto insurer and largest in New York state, unveiled plans in August to expand its Amherst operation in the CrossPoint Business Park by leasing a second building down the street from its current site.

It plans to spend $11 million to renovate and equip the 86,000-square-foot building and add 600 jobs, as it continues to grow the insurance business that it handles from CrossPoint with sales, customer service and claims functions. It already employs 2,700 in Amherst, exceeding its original target of 2,500 that it set when it first came to Western New York in 2004.

In exchange, the company will receive $4 million in state Excelsior Jobs tax credits as it adds actual jobs, while saving $474,800 in sales taxes through the Amherst IDA incentives approved on Friday.

"This is our component of the very large job announcement and further commitment Geico made a few weeks ago," Amherst IDA Executive Director David Mingoia said Friday, noting this is the third time the agency has supported Geico.

The company, which committed to hiring 278 new employees within two years and the full 600 within six years, must retain 2,705 full-time equivalent jobs to keep its benefits.

Two board members questioned the appropriateness of more taxpayer assistance for Geico, which like The Buffalo News is owned by Berkshire Hathaway.

"What we're saying here is... that this building will not go forward if the residential taxpayers in Amherst don't agree to forgo the sales tax on their equipment, in addition to the $4 million that's already come up on the state side," said Michelle Marconi, a board member and frequent critic of the agency's past track record of assistance. "I find that difficult."

Member Michael R. Szukala agreed. "At some point, why would they continue to need these kinds of things? They've been very successful until now," he said. "If we give them this incentive, someone else is going to pay more."

But other board members argued that the payback in new taxes generated by the new employees would still be much greater. "There's no question this project makes sense to do on the merits, because we're going to generate more taxes than we'll give them in savings," said Steven Sanders, also an Amherst town councilman.

Marconi was the only negative vote.

Additionally, the IDA also approved just over $200,000 in tax breaks for a $3 million project by Amherst Alarm to buy, renovate and equip an existing 18,500-square-foot building on five acres at 2361 Wehrle Drive. That will enable the company to more than double its space from its current 9,000 square feet at nearby 435 Lawrence Bell Drive. The company will retain 65 jobs and add six new ones.

email: jepstein@buffnews.com

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