On Sept. 11, the Ithaca Beer Company was granted a tax abatement freeze by the Tompkins County Industrial Development Agency (IDA), saving the company an estimated $159,000 over the 10-year term of the abatement in an effort to offset a recent, unexpected expense for around $350,000.
Earlier this year, Ithaca Beer had to install a new sewage pretreatment facility that significantly set the company back, said owner Dan Mitchell.
Had the facility been installed as part of a 23,800 square foot expansion in 2015, the costs would have been folded into the project financing. However, the over three-year lag in notification by the Ithaca Area Wastewater Treatment plant made it impossible to finance as a stand alone project, so Mitchell requested a tax abatement freeze to help the company recover. A public hearing for the decision was held at 5 p.m. on Friday, Sept. 6.
“The biggest reason that I was asking for it was we had just finished our latest expansion,” Mitchell said “After that one was when we were approached by the town wastewater department telling us that we have to install a major equalization system. So, when I went to the IDA, I was asking if there’s anything they could do to support this because, had it been part of the last buildout or even the one before that, it would’ve been rolled into an abatement that they already gave me.”
Prior to this decision, Ithaca Beer was on a seven-year tax abatement schedule, meaning it would slowly ease into the required state property tax percentage over a period of seven years. Ithaca Beer was on year four, where 51% abated meant paying around $50,600 in property taxes as opposed to an estimated $111,000 without the abatement.
Now, because of the IDA’s decision, Ithaca Beer has switched to a 10-year abatement schedule, with 64% abated this year, 60% next year and then descending by 10% six years. The result saves Ithaca Beer a projected $159,000 in property taxes, said Heather McDaniel, president of Tompkins County Area Development (TCAD) and administrative director for the IDA.
“As much as we would like to think that businesses have hundreds of thousands of dollars sitting around, they don’t,” McDaniel said. “This is just a way of helping them to manage their cash flow over the next couple of years by phasing in the property taxes at a more generous schedule.”
McDaniel said it’s important to support a company like Ithaca Beer that has given back to the community so much.
“He’s a brand ambassador for Ithaca all over the Northeast,” she said. “He really represents this community.”
Mitchell, too, called Ithaca Beer an “ambassador,” saying the company has helped provide hundreds of jobs and contribute largely to the local economy.
“What we’ve actually done is we’ve created a $6 million property that will get property taxes from here forward that never existed, so we created a major tax revenue for the town, and the abatement that we got was just easing us into the payments so we could get the business up and running,” Mitchell said.
The move was not without opposition, those interviewed agreed. Mike Sigler, Tompkins County legislator for District 6, is on the IDA, and he said it is not the job of the IDA to step in on what was clearly a dispute between Ithaca Beer and the Wastewater Treatment Facility.
“This is obviously a very reputable company,” Sigler said. “That’s my first impression, but I’m also concerned. I don’t think the IDA is a vehicle for what he needs in this instance. … I’m just not sure that the IDA and a tax abatement is the way to address this unexpected cost that was brought on by the wastewater treatment system.”
Sigler said the move can be seen as favoritism, prioritizing one business’s unexpected expense over another. His constituents, he said, have voiced these oppositions to him.
“I have to feel for the people that have had businesses here for, say, 20 or 30 years who have never gotten a tax break. They’ve been paying the full freight,” Sigler said. “So, when they’re calling me and saying, ‘listen, where’s our tax break?’ and I don’t have a good answer for that, that’s a problem.”
Sigler said it’s also an issue of how the IDA is seen in the eyes of the people. A move like this could sow distrust in such a crucial body.
“If people perceive it as just we’re helping out businesses without a rhyme or reason, then they’re not going to have any respect for it, and that’s something you have to be concerned about as a member,” he said. “We’re not an investment firm. We don’t pick winners and losers.”
McDaniel, however, said that this is exactly what the IDA is meant for and that small businesses don’t face nearly the same relative expense as a large company like Ithaca Beer does.
“I think the IDA and its authority is confusing. … I think that there’s this perception that we’re bailing out Ithaca Beer,” she said. “Businesses that create long-term job opportunities and sell products outside of our community bring wealth into our community that wouldn’t exist otherwise.”
McDaniel and Mitchell stressed that this is not to help a failing business; his move is to help a brand ambassador continue to thrive in Ithaca and the rest of the county.
“I don’t think Ithaca Beer is in a dire situation to where they’re going to close,” McDaniel said. “This is a show of community support for a company that is creating jobs and increasing the tax base and not to mention supports a lot of other organizations in this community.”
Though a previous statement by an Ithaca Beer representative said the request was also to cope with growing competition in the craft beer industry, Mitchell said the request was 100% geared toward offsetting the cost of the wastewater treatment system.
“All in all, it’s not a lot of money every year,” Mitchell said. “It’s a very small bit compared to everything that Ithaca Beer pays into the local economy.”
Mitchell said the whole controversy over his request has been frustrating, and it’s hard to see system-wide support for local businesses.
“My whole feeling, having gone through this process, is it’s hard to understand Ithaca’s support of local businesses and what it takes to get a manufacturing business off the ground,” he said. “We’re just asking them to understand that this was a surprise bill … and they’re making it easy on the tax side. … I don’t know how we can get across to the local economy that businesses do support a huge part of the tax revenue in our community.”
Recommended for you