News Column

BlackRock plan for new data center in Amherst gets $9.2 million in tax breaks

July 18, 2014

By Jonathan D. Epstein, The Buffalo News, N.Y.

July 18--One of the world's largest money managers plans to set up a new $80 million data center in Amherst's CrossPoint Business Park to handle some of its global information technology needs after the Amherst Industrial Development Agency on Friday approved about $9.2 million in tax breaks.

In one of the biggest development projects in the town, New York-based BlackRock Inc. will build a 31,000-square-foot facility at 350 CrossPoint Parkway to increase its data center capacity. It will create 25 high-paying engineering-level jobs by 2018 with salaries averaging $68,000 per year, or a total payroll of $1.7 million.

The new BlackRock facility marks the latest example of data center and back-office functions coming to Western New York, as companies seek out the region's low cost of operating, the easy access to inexpensive power and telecommunications, the cooler climate and an available workforce. Similar factors were cited by Yahoo when it located its data center in Lockport, and it has since expanded that facility.

Verizon Communications also planned a data center in Somerset but withdrew it over a lawsuit. And major banks like M&T Bank Corp., HSBC Bank USA and First Niagara Financial Group have operated data centers here, while others like Bank of America Corp., Citigroup and J.P. Morgan Chase & Co. have run back-office facilities.

BlackRock officials would not say what kind of work the 24-hour facility would do or the type of data it would handle, nor would they say how many other data centers the company has. According to IDA documents, there is "potential for future expansion," though officials would not promise it.

The company also will invest in equipping the facility and in annual technology upgrades, for which it sought sales tax breaks totaling $6.87 million over 10 years. It will also receive $2.15 million in property tax savings and $164,919 in mortgage recording breaks.

Those tax breaks, particularly on sales taxes, were critical to its decision to locate in Amherst, the company said, because data centers require significant annual spending, estimated at $16.2 million for new equipment initially and $44.6 million for ongoing technology investment over the 10 years. The building construction costs were estimated at $15.9 million.

Without the approval of the Amherst IDA, BlackRock would "evaluate other options globally" in order to have a facility up and running by the end of 2015, according to IDA documents.

Even with tax breaks, BlackRock still will pay $971,216 in property taxes, including $345,560 to the town, $135,221 to the county and $490,435 to the Williamsville Central School District. That equals 10 percent of the building value for the first three years, 20 percent in the next three years and 30 percent in the final three years of the payment-in-lieu-of-taxes (PILOT). By comparison, the vacant property would pay $14,550 over 10 years.

Factoring in projected spinoff benefits in the form of new taxes paid by the employees, revenues for area businesses and related jobs created in the community as a result, the IDA cited $65.96 million in "community benefit."

"This is another project that is excellent," said Amherst IDA Executive Director James Allen. "This project could be anywhere. It doesn't have to be in Amherst or in New York."

Even the town's top official, a frequent critic of tax breaks, supported the request. "Getting BlackRock here could be very valuable," said Supervisor Barry Weinstein. "It's a tremendous amount of taxes we're giving away, but it's a great project."

The proposed building, to be located between the GEICO and Fidelis Health Care buildings, will be considered by the town Planning Board in August. Officials hope to have a "shovel in the ground" by mid- to late fall, said Uniland Development Co. Vice President Michael Montante.

BlackRock, which has been exploring a site in Western New York for eight years, considered locations throughout the state and elsewhere, particularly in Pennsylvania and Canada, before settling on Amherst. As with Yahoo, it cited the close proximity to fiber-optic telecommunications, the access and availability of low-cost hydropower and reliable power sources. BlackRock looked at other parts of the Buffalo area, said director and project manager Joshua Vallario.

"We are very appreciative of the affirmative action taken at today's meeting," said BlackRock spokeswoman Lauren Post.

The company will receive hydropower from the New York Power Authority as part of the plan, which came together with help from Buffalo Niagara Enterprise and Empire State Development Corp. The company also is seeking tax credits through the state's Excelsior Jobs program.

Separately, the IDA approved $568,197 in tax breaks for a $5.8 million project by Ellicott Development Co. to convert the former Cantalician Center at 1350 Eggert Road into commercial space and 35 market-rate apartments.

The project would create three part-time jobs with a total annual payroll of only $54,000, but the mostly two-story building has been vacant for three years, and the costs of upgrading the 91-year-old facility to meet building codes and converting it from a school to a multi-use property "are not supported by projected rental rates," according to IDA documents.

Besides the HVAC, plumbing and electrical systems, those costs include asbestos abatement, a new elevator, a sprinkler system and reglazing the windows. Other work on the 56,000-square-foot facility, originally built in 1923 as Eggert Road Elementary School, requires new landscaping, a new expanded surface parking area in the rear and relocation of the existing playground from the rear to the north end of the property.

The tax breaks include $43,700 in mortgage recording savings, $293,580 in sales tax savings and $230,917 in property tax breaks over 10 years. However, the property will pay an extra $906,723 in property taxes for the town, county and Amherst Central School District over that period through a tax exemption.

email: jepstein@buffnews.com

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(c)2014 The Buffalo News (Buffalo, N.Y.)

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Source: Buffalo News (NY)


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