Cattaraugus IDA to hold public hearing on Great Lakes Cheese tax breaks

The Cattaraugus County Industrial Development Agency board of directors listen to a presentation from Great Lakes Cheese Co. officials Tuesday. The company is considering building a $500 million cheese plant near Franklinville.

ELLICOTTVILLE — The Cattaraugus County Industrial Development Agency board agreed Tuesday to set a public hearing on tax breaks for a proposed $505 million cheese plant along Route 16 near Franklinville.

Several Great Lakes Cheese officials attended the IDA meeting as site studies continued to confirm the suitability of the site straddling the Franklinville-Farmersvile town line.

The IDA became involved in the proposed project on June 3, the day after Great Lakes pulled the plug on a proposed site along Interstate 86 in Belvidere in Allegany County after a two-year search for a site to replace the current cheese plant in Cuba.

Jason Schwab, a farmer from Freedom who owns property in the towns of Franklinville and Farmersville, contacted Great Lakes Cheese officials to offer them the site, which is about 16 miles from Cuba. The IDA became involved almost immediately.

The Cattaraugus County Legislature provided $150,000 for site studies.

The IDA’s focus, executive director Corey Wiktor said, is on the 230 Great Lakes Cheese employees currently working at the Cuba cheese plant and another 200 workers the company plans to hire to operate the new plant.

IDA is also mindful of the Southern Tier dairy farmers who currently ship 2 million gallons of milk a day to the Cuba cheese plant and the 2 million additional gallons of milk that will be needed daily when the new plant comes online.

“The IDA is not approving anything today except to set a public hearing,” Wiktor said.

Great Lakes Cheese has asked for tax exemptions estimated at $153 million on sales taxes, mortgage recording fee and a payment in lieu of taxes (P.I.L.O.T.) agreement.

“It is not a Cattaraugus County vs. Allegany County” issue, said Mathew Wilkinson, Great Lakes Cheese vice president for technology and business development. “We are looking to stay competitive with California, Texas and Michigan.” The cheese industry is very competitive, he added.

Wiktor said the IDA tax breaks are about staying competitive with other sites. Great Lakes Cheese is also considering a Genesee County site for the new plant.

Great Lakes Cheese officials have said they want to retain the 230 existing employees at the Cuba plant. A new plant near Franklinville is only 16 miles from the Cuba plant, which is more likely to retain the employees than a site in LeRoy.

Under the proposed P.I.L.O.T., Great Lakes would have a 100% property tax exemption for 20 years. In year 21, the exemption would drop to 70%; in year 22, 60%; in year 23, 50%; in year 24, 40%; and 30% in year 25. In the 26th year, the plant would pay full property taxes to the towns, Franklinville Central School District and Cattaraugus County.

If it is built, the company will continue paying taxes on the current value of the land while the improvements will be exempt under the P.I.L.O.T.

There are indirect benefits as well, IDA officials said. Construction will demand $58 million in goods and services from the non-residential manufacturing construction supply chain. Also, the project demands $339 million worth of goods and services from the local cheese manufacturing supply chain, supporting 704 full-time employees in the regional supply chain.

The facility will produce $351 million in output, and spending from all employees at the direct and indirect levels will create a demand for $37 million in goods and services in the regional economy through consumer spending.

“Payroll for retaining 230 direct employee positions, supporting 704 indirect employees, and over 200 new employee positions will produce over $63 million in annual payroll for the region,” the IDA wrote in a letter to officials in Cattaraugus County, the Franklinville school district and towns of Franklinville and Farmersville.

“The project will produce $350 million of economic benefits over the term of the P.I.L.O.T. agreement and receive $153 million in total tax exemptions,” the letter states.

IDA chairman Thomas Buffamante thanked Wiktor and everyone involved in the promoting the project, and thanked Great Lakes Cheese “for giving us this opportunity.”

Wilkinson said company officials “wouldn’t be sitting here” if they weren’t committed to retaining the 230 employees. “When we invest $500 million, you know we are not going to go away any time soon.”

Kurt Epprecht, vice president for cheese quality and dairy policy, and a descendent of the founder of the Ohio-based company started in 1958, spoke of the company culture that values the existing employees.

He suggested a larger company that is not 20% owned by employees probably would not look to build such a plant in rural New York. The company has another cheese plant in Adams, Jefferson County.

“It’s been a difficult process,” Epprecht said. “We need to do this for the dairy and the (employees) families.”

“Everybody is all in on this,” Joseph Snyder, a county legislator and member of the IDA board of directors told the company officials. “It’s reassuring to know there is family ownership behind it.”

Wilkinson said one of the biggest issues will be the electric power that will need to be brought to the site from a Machias powerline at a cost of $25 million. It will need to cross a state forest. All parties are in conversations with the state Department of Environmental Conservation and Empire State Development.

There will be no talk of eminent domain with this project as there was in Allegany County, where the Allegany County IDA voted to state eminent domain proceedings against the owner of the site in Belvidere. That, plus the $50 million cost of bringing power to the site cause Great Lakes Cheese to pull the plug on the site.

Joining Wilkinson and Epprecht at the IDA meeting from Great Lakes Cheese were Thomas Easton, director of risk management and sourcing and John Jennings, the Adams plant manager.

Following public hearings on the proposed project and the deviation from the regular manufacturing P.I.L.O.T., the IDA will meet in special session next month to further discuss the project and could vote at that time on the package of exemptions for the project.

Wiktor said the IDA will present information from the site studies to company officials after they are received next month.

Great Lakes Cheese Co. would like to begin construction on the new plant later this year and complete it by 2023.

(Contact reporter Rick Miller at rmiller@oleantimesherald.com. Follow him on Twitter, @RMillerOTH)

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