The tax breaks backing Plug Power's new factory at the Vista Technology Campus
The tax breaks backing Plug Power's new $93 million factory
By Michael DeMasi
Reporter, Albany Business Review
Apr 6, 2022
Updated 52 minutes ago
Plug Power Inc. is seeking millions of dollars in tax exemptions and other financial assistance to offset its big investment at the Vista Technology Campus.
The requests, which are pending before the Albany County Industrial Development Agency, are separate from the millions of dollars in tax exemptions that have been awarded to an LLC controlled by Joe Nicolla, president of Columbia Development Cos., who put the Plug Power deal together with assistance from county and town officials.
Construction has already started on a $93.5 million, 350,000-square-foot factory and office complex on 26 acres straddling the towns of Bethlehem and New Scotland.
The two-phase project is on schedule to be completed by December. The total cost includes $55 million to build the facilities and the remainder for equipment and fit-up, such as installing hydrogen infrastructure and two electrical services.
The facilities will house Plug Power's fast-growing GenDrive business unit, which manufacturers fuel cells that power forklifts, pallet jacks and other equipment for customers such as Amazon, Walmart and Home Depot.
Plug Power (Nasdaq: PLUG) is positioning itself as a global provider of hydrogen as a form of green energy, with multiple hydrogen plants being built in North America.
The company had $502 million in revenue last year, including $162 million in the fourth-quarter, its highest quarterly revenue ever. This year's goal is $900 million to $925 million. CEO Andy Marsh expects to hit $3 billion in 2025, with 17% operating income margin.
The company had more than 2,000 full-time, part-time and temporary employees as of Dec. 31, including 785 employees at the Latham headquarters.
Plug Power expects to have 1,625 employees at the Vista campus in five years, which includes 360 workers in the GenDrive unit in Latham whose jobs will be backfilled when they move over.
The new and existing full-time jobs at Vista will have an average salary of $57,300, according to the application submitted to the IDA.
County officials are anticipating a big economic impact from the construction and new jobs, based on an analysis by Camoin Associates on behalf of Plug Power and the Advance Albany County Alliance, the county's economic development group.
The annual economic impact starting in 2026 will be 1,625 direct jobs, 363 "indirect" jobs and 284 "induced" jobs in the county, with total earnings of $167.4 million and $577 million in sales taxes, according to the analysis.
Plug Power has two requests before the IDA. One is for an estimated $1.22 million in sales tax exemptions to offset $15.2 million worth of equipment and fit-up expenses.
The other request is a $2 million grant from the IDA, also to offset the cost of equipment and fit-up. If approved, the money would be paid out of fees the IDA has collected over the years for development projects.
"Part of that is to get over some of the issues that have come up with supply chain challenges and the accelerated time frame," said Kevin O'Connor, CEO of Advance Albany County Alliance. "We were able to get them into the ground in literally months time. It's very unusual but exactly what you have to do if you’re going to site projects like this."
Doug McClaine, principle program manager at Plug Power, said the assistance is needed because the size and scope of the project are larger and a longer-term commitment than the company initially expected when it started seeking space to expand its GenDrive unit.
"Originally this wasn't planned to be as expansive of a project as it became," McClaine said. "With the Vista development, we can build a facility that would meet all of our needs rather than our short-term needs."
Plug Power is also eligible for $45 million in state tax credits tied to the job creation.
The facilities include 200,000 square feet for manufacturing, 100,000 square feet for service and 50,000 square feet for administrative offices.
Plug signed a lease for the site with Vista Development Group LLC that expires in 2027. Plug also has an option to borrow an estimated $2 million from Vista Development Group for site improvements.
The IDA scheduled a public hearing for April 11 at 7 p.m at Bethlehem Town Hall and expects to vote on the request April 13 at 5:30 p.m. during a virtual meeting.
"I am in support because it brings to Albany County a huge project," said IDA chairman Bill Clay, a county legislator who represents the 12th District in the city of Albany.
The IDA in February approved a payment in lieu of taxes (PILOT) for another entity, Vista Real Estate Development LLC, which is buying the property that will be leased to Plug Power.
The officers of Vista Real Estate Development are Nicolla, who is president of Columbia Development Cos.; Richard Rosen, vice president of Columbia Development; and Stephen Obermayer, chief financial officer of BBL Construction Services LLC, according to the IDA application.
The Vista Technology Campus was developed by Columbia. BBL Construction Services is building the Plug Power facility.
Vista Real Estate Development will receive $2.37 million in sales/compensating use tax exemptions and a $467,660 mortgage recording tax exemption.
It will also receive an exemption from property taxes in which it will make payments in lieu of taxes for 12 years. Those payments will total $3.4 million, compared to the $54,534 that would be paid if the Plug Power facilities weren't built, according to the analysis by Camoin Associates.
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