More than Two Million SF of Industrial Projects Seeking Approvals in the Town of Montgomery

John Jordan | August 2019

Rendering of the new Medline Industries building

MONTGOMERY—This Orange County community is currently reviewing plans that would add nearly 2.4 million square feet of warehouse distribution space to its commercial tax base.

At present, global healthcare products firm Medline Industries, Inc. is seeking approval from the Montgomery Town Planning Board for a $120-million, 1.3-million-square-foot distribution facility. The firm is moving operations from Wawayanda where it has outgrown its facilities there. Medline has sold the Wawayanda site to Morgan Stanley who plans to lease the building. Medline will remain as a fully taxpaying tenant until it relocates to Montgomery, the company stated.

In addition, a project called “Project Sailfish,” which according to sources and multiple published reports will be leased by e-commerce giant Amazon, is also in the approval process in Montgomery. Bluewater Property Group is seeking approvals for its plan to build a 1,015,740-square-foot fulfillment center that has been estimated to cost approximately $85 million to build.

Hundreds of residents, Medline employees and members of organized labor packed the Valley Central Middle School for a Planning Board public hearing on Aug. 13 concerning the project’s Draft Environmental Impact Statement, Site Plan and Special Exception Use Permit.

Dmitry Dukhan, vice president of real estate facilities for Medline, said the project “is by far the biggest investment we have ever made in a community.” The company, headquartered in Northfield, IL, currently has 42 distribution facilities nationwide.

The firm has committed to growing its workforce from 340 to 700 in five years. He told the crowd at the session that approximately 250 of the new jobs will be filled by residents of the Montgomery-Maybrook area. The company currently employs approximately 50 workers from the Montgomery area, he noted. An incentive package, including an expected PILOT agreement with the Town of Montgomery Industrial Development Agency, had not been finalized at press time.

Dukhan addressed what he said was one of the chief concerns from local residents about the project, noting that no Medline trucks will travel through the Village of Montgomery.

“This facility will strictly be a distribution center,” he stressed. “There will be no sterilization of any kind taking place at our distribution center.”

Maureen Halahan, president of the Orange County Partnership, testified that the Medline project will help stabilize the tax base in the Town of Montgomery. She said that at present, according to an Orange County Partnership study, approximately 35% of the town’s taxes were paid by 12% of the tax base—commercial property owners.

“We are asking that you approve the Medline project, which will soon be one of the highest taxpayers in your town and one of your largest employers,” she said.

Realtor RJ Smith of Rand Commercial, who brokered the sale of the 105-acre parcel between Medline and Aden Brook Farm, also spoke in favor of the project, noting that the Medline plant is being proposed for a commercial zone that the town has earmarked for strictly commercial development.

“This corridor is identified going back to the 1960s in multiple Comprehensive Plans and zoning changes as the corridor for economic development…” Smith said. “The Town of Montgomery is a role model in preserving open space, using land use techniques to do it properly and to facilitate economic development. It is appropriate and well-planned.”

In addition to real estate and business advocacy groups and Medline employees who testified, a number of representatives from the Hudson Valley building traders also expressed support. Representatives of organized labor told Real Estate In-Depth that they expect some union participation in the project, but as yet no Project Labor Agreement has been reached between Medline and the Hudson Valley Building and Construction Trades Council of Newburgh.

A number of residents questioned the project’s scope and recommended that the town impose a building moratorium to study the impacts that Medline and “Project Sailfish” projects might have on the community.

State Sen. James Skoufis issued a blistering rebuke of the project, stating that the firm is relocating from Wawayanda just before its PILOT for its facility there runs out this year and it would then have to pay the full tax rate.

Noting that the firm is now in talks with the Montgomery Industrial Development Agency on a PILOT agreement, Sen. Skoufis requested the Planning Board, before it considers the project’s merits, “make it clear to these folks that they need to get their hands out of the pockets of Montgomery residents. Our message should be loud and simple: ‘pay your damn taxes.”

Pending the final PILOT agreement, Medline has reported the Valley Central School District will receive approximately $14 million in tax dollars over 15 years, compared to the $12,957 annually it receives today. Once the PILOT expires, Medline will pay more than $2.5 million a year in taxes. The site’s current total tax burden is $45,000.

Medline in its application with the Town of Montgomery IDA filed in January of this year is seeking approximately for $17.6 million in real property tax exemptions and $8 million in New York State sales tax exemptions in connection with the project.

Earlier this month, The State of Mississippi and Medline announced a new, larger Medline Mid-South distribution center to be built in Southaven, Mississippi that will enable the company to serve the region’s growing healthcare needs and provide 450 local jobs.

The announcement comes as healthcare in the region continues to grow rapidly, and the new distribution center will enable Medline to expand its warehousing needs as medical supply and product demands increase from local healthcare providers.

“We have a critical role in healthcare that ensures healthcare providers have the supplies they need where they need them for each and every patient,” says  Dukhan. “We’ve got a great workforce here already, and we this new location is ideal for a distribution hub for nearby hospitals, nursing homes, physician offices, surgical centers as well as for other our distribution centers.”

John Jordan
Editor, Real Estate In-Depth