Orange County IDA Approves Incentives For Controversial Matrix Project

John Jordan | May 2016

NEW WINDSOR—The third time was the charm for Matrix Development Group to secure more than $10 million in incentives for its major distribution project in the Town of Newburgh. The project was granted the incentives despite the objections of the local building trades who charged that the project continues to violate the Orange County Industrial Development Agency’s local hiring requirements.

On May 12, the Orange County IDA granted the incentive package involving mortgage and sales tax exemptions for the 565,000-square-foot warehouse distribution project despite the vociferous objections of Hudson Valley Building & Construction Trades Council representatives Todd Diorio and Mike Gaydos. A number of IDA Directors, who voted to grant the incentives, did so with reservations, including former Orange County Executive Edward Diana. IDA Member and Chairman of the Orange County Legislature Steve Brescia was the sole dissenting vote on granting the incentive package to Matrix. IDA Chairman Robert Armistead and members Mary Ellen Rogulski, John Steinberg and Henry VanLeeuwen joined Diana in voting to grant the incentives. Diana stressed that the IDA, which is now considering hiring a monitor to check compliance with IDA required work rules, would “claw back” on incentives granted if any firm was found in non-compliance.

The center of the controversy over the Matrix project and others that were granted incentives over the past year is ensuring compliance with the IDA’s local labor policy. The IDA Board held two sessions in April but did not vote until it got more information on whether Matrix was in compliance with the local hiring ordinance that calls for any firm receiving incentives to hire 85% of its workforce from a seven county area in the Hudson Valley.

A large tenant at the development to be built in the Town of Newburgh is AmerisourceBergen, which announced plans to build a major distribution facility there in June 2015. The company at that time also announced plans to build distribution facilities in Olive Branch, MS and Shakopee, MN. Empire State Development has provided AmerisourceBergen with up to $1 million in performance-based Excelsior Jobs Program Tax Credits. AmerisourceBergen has agreed to hire 121 new employees in the next two years and maintain those staffing levels through at least 2025 in connection with those state incentives.

Matrix executives at a meeting in late April told the IDA that it was seeking labor harmony and is committed to complying with the 85% local labor mandate.

While Diorio and Gaydos have charged that Matrix and most other firms that have received incentives over the past year since the requirement was put in place are not in compliance, Chairman Robert Armistead countered saying that the IDA believes all are now in compliance. He added that in analyzing the Matrix project’s payroll records for site work undertaken there, approximately 84% of the workers reside in the seven county Hudson Valley region.

After the vote, Diorio told reporters, “The IDA folded to corporate pressure. They put corporate greed ahead of construction workers from Orange County and surrounding counties. They stood with local labor for a short period of time, but then folded.” He personally thanked Brescia for his vote against the incentives.

He said that because the labor policy that passed last year was “weak” and did not include prevailing wage requirements, he predicted that the Matrix project will end up having about 50% of the workforce being from outside the area. He predicted, “A lot of it will go non-union, non-local.”

After the vote was taken, Armistead responded to Diorio’s charges concerning project compliance, saying, “We are focusing on some jobs that may be out of compliance. And we will do claw-backs and that is a fact.” In another exchange with Diorio, the IDA Chairman said the Board planned on “tweaking the labor policy.”

The IDA announced at the session that it had received five proposals from consultants seeking to provide labor-monitoring services on construction projects that receive benefits from the agency. The IDA staff is conducting an expedited review of the proposals and hopes to make a selection recommendation at the next meeting of the Board of Directors on June 9th.

According to the IDA there are currently nine active projects under construction that received assistance from the IDA, with a number of new projects expected to move forward in the next few months.

“The spirit of the local labor policy is to ensure that it’s our local residents who go to work when the IDA gives a company benefits,” Chairman Armistead said. “It’s essential that companies keep their promises. If they don’t adhere to the labor policy they agreed to, we will have zero tolerance.

Diorio said that the Hudson Valley Building & Construction Trades Council is one of the five consultants that submitted a proposal to serve as the labor monitor.
Photo Caption: The Orange County IDA approved incentives for the Matrix warehouse distribution project in the Town of Newburgh at its May 12th session. FILE PHOTO

John Jordan
Editor, Real Estate In-Depth