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IDA, Kaz CEO clash over recapture of $12K
Agency ultimately votes not to ‘claw back’ Kaz’s PILOT savings
By Jamie Larson
Kaz Inc. CEO Richard Katzman met with the Hudson Industrial Development Agency Oct. 29, to make his case for why his company did not deserve to have $12,000 recaptured by the agency because his company may have broken the terms of an IDA tax agreement for two warehouses in Hudson by not having enough employees at the locations.
The meeting was often tense, with Katzman repeatedly telling the agency they would set a negative precedent with the recapture and stifle new business.
City officials reminded Katzman that the grant contract stipulated recapture was allowed. Officials also alluded to the damage Kaz caused to the area when it discontinued manufacturing operations from Route 9 in Greenport in May, handing over its plastic molding operation to contractors Key Tronics, with a factory in Mexico.
The closing of Kaz cost the area roughly 350 jobs. Around 50 jobs still remain at the factory today.
The IDA ultimately voted not to “claw back” Kaz’s savings from a Payment in Lieu of Taxes agreement (PILOT) with a three to one vote. The PILOT stipulated that the agreement became void when the warehouses employed less then 6.5 people, and officials believe that may have been the case even before 2009.
IDA members Hudson Mayor Richard Scalera, city Sole Assessor Garth Slocum, and Fifth Ward Alderman Richard Goetz, agreed that the recapture would be bad for future PILOTs and be more trouble than the $12,000 it was worth. Hudson Treasurer Eileen Halloran was the only member who voted in favor of the recapture.
After the meeting Halloran said that she understood the agency’s position. She also said Kaz had indicated they would fight the recapture in court, potentially costing the IDA thousands in legal fees.
“I think we sent a message,” Halloran said, “to say to this business that we expect them to meet their obligations, and if you walk away we’re going to question it. Also I think we owe it to the taxpayers to be pragmatic about the cost of lawsuits.”
While Kaz will not pay the entire amount believed to be owed to the IDA, Katzman did agree to pay the full back taxes on the warehouses from July 2009 to the present, and pay all back school taxes from the 2008-2009 school year, saying, “We wouldn’t want to do anything to hurt the school.”
During his successful argument to block the complete recapture, Katzman argued that over the time Kaz has operated in Columbia County they have continually surpassed the stipulations of their financial obligations. He argued that Kaz operated in Columbia County for 60 years, created thousands of jobs, and pumped millions of dollars into the economy.
“During that time we’ve been responsible,” Katzman said. “It would be inappropriate to have a claw-back now. I don’t think this is the message you want to send to new businesses, that if the market changes they will be punished.”
Katzman said the city should at least respect that when Kaz made the decision to close they came to the city to explain their reasoning. “We didn’t slink around in the night,” he said, “we’ve always been up front. If you want to nitpick now and count fractions of employees you can. Clearly you’re being discriminatory, and why?”
Scalera asked Katzman what his commitment is to maintaining the jobs that remain in Greenport. Katzman said he has given Kaz’s remaining county employees his word, and that should be good enough given Kaz’s record as a major employer.
Scalera said later that he understands that citizens are frustrated with Kaz leaving the community but they need to understand that the issue at hand is only in reference to the 10 warehouse jobs.
“We’re all frustrated,” Scalera said. “Kaz hurt a lot of families by making that decision.”
In addition to the money owed to the city, Scalera noted that while the IDA was focused on a $12,000 recapture, Kaz still owes $131,838 to the Hudson Community Development and Planning Agency for a loan that came due once the plant stopped manufacturing.
Scalera, who is vice president of the HCDPA said Katzman has agreed to pay that sum in total.
To reach reporter Jamie Larson, call 518-828-1616, ext. 2269, or e-mail jlarson@registerstar.com.
The meeting was often tense, with Katzman repeatedly telling the agency they would set a negative precedent with the recapture and stifle new business.
City officials reminded Katzman that the grant contract stipulated recapture was allowed. Officials also alluded to the damage Kaz caused to the area when it discontinued manufacturing operations from Route 9 in Greenport in May, handing over its plastic molding operation to contractors Key Tronics, with a factory in Mexico.
The closing of Kaz cost the area roughly 350 jobs. Around 50 jobs still remain at the factory today.
The IDA ultimately voted not to “claw back” Kaz’s savings from a Payment in Lieu of Taxes agreement (PILOT) with a three to one vote. The PILOT stipulated that the agreement became void when the warehouses employed less then 6.5 people, and officials believe that may have been the case even before 2009.
IDA members Hudson Mayor Richard Scalera, city Sole Assessor Garth Slocum, and Fifth Ward Alderman Richard Goetz, agreed that the recapture would be bad for future PILOTs and be more trouble than the $12,000 it was worth. Hudson Treasurer Eileen Halloran was the only member who voted in favor of the recapture.
After the meeting Halloran said that she understood the agency’s position. She also said Kaz had indicated they would fight the recapture in court, potentially costing the IDA thousands in legal fees.
“I think we sent a message,” Halloran said, “to say to this business that we expect them to meet their obligations, and if you walk away we’re going to question it. Also I think we owe it to the taxpayers to be pragmatic about the cost of lawsuits.”
While Kaz will not pay the entire amount believed to be owed to the IDA, Katzman did agree to pay the full back taxes on the warehouses from July 2009 to the present, and pay all back school taxes from the 2008-2009 school year, saying, “We wouldn’t want to do anything to hurt the school.”
During his successful argument to block the complete recapture, Katzman argued that over the time Kaz has operated in Columbia County they have continually surpassed the stipulations of their financial obligations. He argued that Kaz operated in Columbia County for 60 years, created thousands of jobs, and pumped millions of dollars into the economy.
“During that time we’ve been responsible,” Katzman said. “It would be inappropriate to have a claw-back now. I don’t think this is the message you want to send to new businesses, that if the market changes they will be punished.”
Katzman said the city should at least respect that when Kaz made the decision to close they came to the city to explain their reasoning. “We didn’t slink around in the night,” he said, “we’ve always been up front. If you want to nitpick now and count fractions of employees you can. Clearly you’re being discriminatory, and why?”
Scalera asked Katzman what his commitment is to maintaining the jobs that remain in Greenport. Katzman said he has given Kaz’s remaining county employees his word, and that should be good enough given Kaz’s record as a major employer.
Scalera said later that he understands that citizens are frustrated with Kaz leaving the community but they need to understand that the issue at hand is only in reference to the 10 warehouse jobs.
“We’re all frustrated,” Scalera said. “Kaz hurt a lot of families by making that decision.”
In addition to the money owed to the city, Scalera noted that while the IDA was focused on a $12,000 recapture, Kaz still owes $131,838 to the Hudson Community Development and Planning Agency for a loan that came due once the plant stopped manufacturing.
Scalera, who is vice president of the HCDPA said Katzman has agreed to pay that sum in total.
To reach reporter Jamie Larson, call 518-828-1616, ext. 2269, or e-mail jlarson@registerstar.com.
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