The Erie County IDA knew there would be job loss or failed job creation scenarios when its directors approved clawback provisions slightly more than 10 years ago. Now, most IDA’s have such a provision because of state mandates.
But in the case of Sumitomo, unanimously backed by the ECIDA directors on April 23, the claw back is the largest corporate payback for previously approved tax breaks and incentives in the state, according to ECIDA Vice Chairman Richard Lipsitz.
Sumitomo owes the ECIDA $503,184 related to tax breaks it received in 2017 and 2021 for expansion and renovation work at its sprawling 2 million-square-foot plant on Sheridan Drive in the Town of Tonawanda.
Lipsitz says the clawbacks were debated internally for several months.
“If they don't meet certain job goals for a period of time of an inducement that they'd be subject to a recapture, and that's what we decided to,” Lipsitz said.
In a letter to the ECIDA, obtained by Buffalo Toronto Public Media, Mary Kasprzak, Sumitomo Senior Vice President and Chief Financial Officer, said her company has been a “good corporate citizen in Erie County for many decades.”
“Up until late last year, we had met or exceeded all of our local commitments including those with the ECIDA,” Kasprzak added in her letter.
Still, Kasprzak acknowledged the clawback provision did exist, but objects to the move.
In 2017, Sumitiomo received a combined $1.45 million in tax breaks to help finance a $9.7 million expansion and four years later, in 2021, the tire maker was approved for $1.8 million in tax breaks that helped spark an event larger expansion of the plant.
“If you come to a board like this, that the applicant should be prepared to make promises and keep those promises,” Lipsitz said. “So, the question is, if they don't, what do you do about it? We have a statute in New York that allows for recapturing we pioneered that here at the ECIDA, and I'm glad we did it.”
A county-created task force is working on a plan to find a new buyer for the Sumitomo plant. Erie County Executive Mark Poloncarz concedes it may be two years before a sale is finalized.
