Business First: ECIDA oks Sodexo tax breaks on $27 million development
Despite having an aggressive and incentive-laden pitch from the state of Maryland, Sodexo Inc. will build its regional service center in Cheektowaga.
The deal was cemented Tuesdau when the Erie County Industrial Development Agency's directors approved a series of tax breaks for Sodexo and its landlord, Uniland Development Co. The action by the ECIDA will trigger a $27.13 million investment in Cheektowaga and the retention of 511 jobs at the center.
"This is not a small situation if we were to lose Sodexo," said Erie County Legislator Edward Rath III, an ECIDA director.
Sodexo's annual payroll exceeds $30 million, with many of its employees earning average annual salaries of $62,000.
While the incentives — a combination of sales, mortgage recording and property tax breaks — were approved by the vast majority of the ECIDA directors, one, Richard Lipsitz Jr. - the board's vice chairman and Western New York Area Labor Federation president, argued against the package.
Local officials were facing an Aug. 28 deadline to inform Sodexo whether the incentive package would be accepted or not.
Lipsitz questioned whether Maryland's offer for tax breaks and other incentives was "real."
"I don't like having a gun put to my head," Lipsitz said. "I don't feel like being forced to vote a certain way."
The company's U.S. corporate office is located in Gaithersburg, Md.
The Sodexo deal has been in the region's economic development pipeline for nearly one year. The ECIDA, along with the Buffalo Niagara Enterprise, has been working with the company for that long, officials said.
Maryland's offer was real, local leaders said, and didn't want to play economic development brinksmanship with the company, especially knowing the risk.
"We can't be putting these jobs at risk," Rath said.
Sodexo looked at more than 30 local sites before pinpointing Uniland's proposal to construct a 108,000-square-foot building that will help anchor the Airborne Business Park on Holtz Road near the Buffalo Niagara International Airport. The site will replace four separate facilities that Sodexo leases in Amherst.
Operating under one consolidated building has been a top priority for Sodexo.
"We've enjoyed a long and successful partnership with the Western New York community and we look forward to a bright future together," said Scott Brooks, Sodexo senior finance director.
Sodexo has more than 45 clients in the eight Western New York counties, including Kaleida Health, KeyBank, Niagara University and the Elmwood Franklin School. It provides food service and other operations including janitorial and building management services.
With the IDA approval in hand, Uniland expects to start work on the Sodexo building this fall and it should be tenant-ready by spring 2017.
The ECIDA tax breaks amount to $4.855 million, spread over a 10-year payment-in-lieu-of-taxes period.
Yet, the new building will generate an estimated $354,000 in new taxes annually for the Town of Cheektowaga, Erie County and the Cheektowaga Central School District.