Amherst IDA OKs Incentives for GEICO

As anticipated, the Amherst Industrial Development Agency on Friday approved a sales tax exemption for GEICO Corp. to help the giant auto insurer bring a new insurance agency venture to its service center in Amherst.

The board of the IDA easily approved a $1,041,078 transaction allowing GEICO to buy furniture, fixtures and equipment for its 251,000 square-foot facility in CrossPoint Business Park. As a result of the agency's participation, GEICO can save $91,904 in sales taxes, which the company says is critical to the project.

"This is a new venture that GEICO is bringing to this market," Amherst IDA executive director James Allen said during the board meeting to justify the action. "It is not just an expansion of the existing facility. It could have gone somewhere else."

Gov. David A. Paterson and GEICO executives announced on Wednesday that the company will invest $2.4 million in its CrossPoint facility and add 300 jobs over the next three years as it adds a second U. S. location for its GEICO Insurance Agency.

The agency, which is based in Fredericksburg, Va., with 830 employees, takes calls from its customers around the country and sells other forms of personal insurance besides GEICO's primary auto coverage. GEISee GEICO on

CO itself does not write other property insurance, but the agency underwrites the coverage for other carriers, and will also service the policies.

The agency has already outgrown its primary location, so GEICO decided to expand it in Amherst. The second site will also serve as an emergency backup and disaster recovery location for the Virginia office.

GEICO officials said plans call for growing the business over time to as many as 1,000 jobs over 10 years, although the company's application to the Amherst IDA cites 536 jobs.

The application also indicates that GEICO expects to create 91 jobs with a payroll of $3.64 million just during the period of the agency's tax break, which is less than three years. Those jobs will support 21.4 other jobs in the community, will pay $60,861 in property taxes and $53,976 in sales taxes annually, and will bring $20.1 million in new direct economic output to the region, according to an IDA analysis.

State officials agreed to designate the project as "regionally significant" under the Empire Zone program, which would automatically include the necessary sales tax breaks. But the formal state certification process has been slowed by revisions to the Empire Zone program, so the Amherst action was necessary now so the project can go forward, Allen said.

"They have not been certified on this project because the state is in disarray," Allen said. "Hopefully, the state will certify this as an Empire Zone in the very near future. Until that time, there's no way they can get a sales tax exemption without us."

Separately, the agency also approved a $500,000 transaction for Azeros Health Plans to buy furniture and equipment for its new office at 6215 Sheridan Drive, in Sheridan Meadows. That will save the company $43,750 in sales taxes.

Azeros, run by veteran healthcare executive Ronald K. Zoeller, is a new third-party administrator of self-funded plans for employers. Zoeller is launching the new venture by acquiring assets from Independent Health Association, which in turn is shutting down that division of its own operation.

The former founder and head of North American Health Plans -- now Meritain Health --hopes to "turn around an underperforming asset." North American was started in 1983 and employed 600 when it was sold in 2005.

"He was extremely successful in that company and we are excited that he has taken over this one," Allen said.

Azeros, in its application, noted that capital is scarce for a start-up and "budgeted cash flow is very tight," so the IDA's help "is necessary" to maintain 39 jobs and increasing employment to 45 within the next year, with a payroll of $1.7 million.

According to the IDA's analysis, the new jobs will support 10 more, pay $25,209 in sales taxes and $28,424 in property taxes annually, and preserve $11 million in "direct economic output" for the region.

Finally, the IDA board amended a past resolution that had authorized the issuance of bonds to repay earlier debt and finance the construction of a library and information center for Daemen College.

Originally, Daemen opted for variable-rate tax-exempt bonds, but when the bond insurer stumbled, the company in 2008 obtained a standby letter of credit from Wachovia Bank. That letter has now expired and Wachovia, now owned by Wells Fargo & Co., is not re-issuing it, so the college is now replacing Wachovia with M&T Bank Corp.