Missing from the List is the Largest Financial Contributor—TaxpayersPosted: December 29, 2013
The people who put up the lions’ share of the money for this project; the taxpayers of the Village of Endicott, Endicott School District, Town of Union, Broome County, New York State and the federal government have no standing in this bankruptcy scheme nor do the workers who were to have jobs.
This IBM sale and lease was an extremely important part of the arrangement. (See box on IBM lease agreement.) EIT/Huron are two corporations formed by well connected local residents for the purpose of taking ownership in 2002 of the former IBM properties (Huron) and operation of former IBM Endicott manufacturing operation (EI). EI agreed to maintain 1900 manufacturing jobs in Endicott. EI employees were former IBM workers who were then rehired at a lower rate. Both EIT and Huron were owned by the same people. IBM agreed to maintain 2000 workers and lease space from Huron. The owners of the manufacturing unit (EI) leased property from themselves (Huron) and paid themselves monthly rent.
Taxpayers Contribution to the Huron/EIT Scheme
The Broome County Industrial Development Agency was deeded the Huron property immediately after its purchase in 2002. The IDA then leased the property back to Huron for $1 a year. The purpose of this switching game developed by the IDA, is to provide the owners of the Huron Corporation a fifty percent, ten year property tax break, the elimination of the County Mortgage Recording fee and the elimination of the sales tax on all equipment and furniture purchased for use in the plant. While the IDA is a Broome County sponsored organization and has county legislators and the county executive on the board, it does not answer to the county. It does not appear to answer to anyone.
In addition to the goodies provided by the IDA, Huron received $20.2 million in NYS Empire Zone Tax breaks for the period 2003-2005. The purpose of this largesse from NYS was for job creation. Huron created 17 jobs in that period at a cost of $1.2 million per job. EIT received $8.8 million in tax credits for creating 87 jobs, about $138,000 per job.
NYS provided millions in tax credits for the period 2002-2012. A phase out of the tax credit reimbursement began in 2012 and the state’s reimbursement rate drops by 20% per year until it ends in 2017.
The Federal Community Development Block Grant Small Cities fund, developed by the Broome County Planning office in 2002, provided EIT owners with $1 million. An additional $4.8 million in federal funds were added by Congressman Hinchey in 2009 so that EIT” could further expand their work in Broome County”.
EIT/Huron Power is Added to Your NYSEG Bill
A NYS Power Authority subsidy cut the EIT electric bill from $12,000 per year to $4,000, leaving other NYS rate payers paying for 75% of EIT’s bill.
The Upfront Public Money
EIT/Huron was purchased by the private owners for $64 million with another $34 million to be added for upgrading the business and property. The public, according to the Press, put up 85% of the purchase price.
What About the Jobs to be Created?
All of the above taxpayer support was based on the maintenance of 1900 EIT jobs and the creation of hundreds of new ones. EIT job level is now below 600.
Where Is the Worker/Taxpayer Representation?
What does our NYS Senator, our Governor, our Congressman say about the lack of standing by the taxpayers in the bankruptcy petition by EIT? What profits were made by the EIT/Huron owners while the taxpayers were getting fleeced?
IBM/Huron Lease Agreement
The key to the EIT/Huron purchase of the IBM Endicott facilities was the insistence by IBM’S financial benefactor, NYS, that IBM continue to lease a portion of the Endicott facilities from the new owners. In 2002 IBM leased 1,233,000 sq. ft. from Huron for $4.9 million per year. The lease term was ten years. At the time of purchase in 2002 the new buyers needed $35 million for upgrades of the facilities and the only way the banks would lend this sum was to guarantee the banks that they would receive the proceeds from the IBM lease. In 2006 IBM reduced the amount of space rented by more than fifty percent to 393,000 sq. ft. IBM paid $10 million for the partial buyout of the lease. An IBM confidential memo from 2006 stated.
Original Owners of EIT/Huron Real Estate LLC. % of Ownership
Lawrence E. Davis, 320 N. Jensen Road, Vestal, NY 3.5%
Thomas J Davis, 12 Avon Road, Binghamton, NY 6.0%
David Maines, 101 Corporate Parkway, P.O. Box 450,
Conklin, NY 21.25%
William Maines, 101 Corporate Parkway, P.O. Box 450
Conklin, NY 21.25%
Douglas G. Matthews, 320 N. Jensen Road, Vestal, NY 8%
James F. Matthews, 320 N. Jensen Road, Vestal, NY 3.5%
James T. Matthews, 320 N. Jensen Road, Vestal, NY 8%
Judith Matthews, 320 N. Jensen Road, Vestal, NY 3.5%
John W. Matthews, 320 N. Jensen Road, Vestal, NY 8%
Robert P. Matthews, 320 N. Jensen Road, Vestal, NY 4%
Christopher I. Mellon, 101 Corporate Parkway,
P.O. Box 450, Conklin, NY 3%
James W. Orband, 1635 Sylvia Drive, Endicott, NY 6%
Theresa Sommerfield, 320 N. Jensen Road, Vestal, NY 4%