Grants for the South Buffalo Potted Breeding Farm

Erie County IDA and State Power Authority gave marijuana grow facility multimillion-dollar tax breaks and discounted hydroelectricity

A pot-growing operation in South Buffalo has received two major grants from economic development agencies.

The first, in January, came from the New York Power Authority, which approved an allocation of 2.9 megawatts of discounted hydroelectricity. A NYPA spokesperson told the Investigative Post that the authority has not calculated the value of this power.

The second grant came Wednesday from the Erie County Industrial Development Agency, which approved tax relief worth $3.1 million over 15 years.

This is the first grant the IDA has given to a marijuana grower and the second largest tax relief package it has approved for a company this year. The biggest was a $3.7 million grant package for a hotel and apartments in the old Trico building downtown.

Wednesday’s vote was unanimous, without any debate.

The cannabis production project can also benefit from state subsidies, since it is located on a brownfield site.

The $27.8 million project will create 20 full-time and 34 part-time jobs, according to the applicant, Laborers Way 1 LLC. Full-time jobs will pay between $45,000 and $150,000 annually, depending on the applicant, while part-time jobs will pay $30,000 to $40,000 per year..

Using a full-time equivalent calculation for jobs, IDA grants amount to $83,440 per job. In 2020, the average cost per job for statewide IDA grants was $5,752, according to the New York State Comptroller.

The grants break down as follows:

  • A 15-year payment in lieu of taxes agreement worth $1.9 million will reduce the company’s property tax bill from $3.3 million to $1.4 million.
  • The developer will pay 20% of their property tax bill for two years, 30% for two years, 40% for five years and 50% of their bill for six years.
  • A $1.1 million sales tax exemption on construction materials and equipment.
  • A $120,000 exemption on his mortgage registration tax.

John Cappellino, president and CEO of IDA, argued in an email to Investigative Post that the size of the grant makes sense, in part because the company will pay $85 million in salaries over 15 years. .

“It’s money spent locally on food, housing, gasoline and other goods and services,” he wrote.

Cappellino also noted that the cannabis industry “shows significant opportunities for economic growth due to changes in state legislation.”

Full-time jobs will be in positions including agricultural workers, product development specialists, technicians, marketing and administration. The grant agreement obligates the company to fill all 54 jobs within two years of building completion.

The company noted in its application that at least a portion of the jobs will go to “members of disadvantaged communities” and that “reinvestment will be focused on communities that have been significantly impacted by cannabis-related convictions.”

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Electricity subsidies are also indexed to jobs.

NYPA provides discounted hydroelectricity – generated in Lewiston – to select businesses within 30 miles of the generating plant. Electricity is sold at below market rates and, depending on energy prices, can save beneficiaries a lot of money.

The authority in January approved 2.9 megawatts for the project. In its application, the company said it would create 75 jobs, more than the 54 promised in its IDA application.

Paul DeMichele, a NYPA spokesman, said the authority can cut its allowance if the company doesn’t meet its jobs target.

How the project was born

The project is the brainchild of California developer Brad Termini, son of famed Buffalo developer Rocco Termini, and located in the business park along the old Union Ship Canal near Gallagher Beach. Termini Development Corporation — Zephyr — will build a football-field-sized cannabis production facility and offices for medical marijuana company Etain to occupy.

Tin is already present in New York, including medical dispensaries in Manhattan, Yonkers, Kingston and Syracuse, as well as a greenhouse cultivation facility in Chestertown. The company, owned by Amy, Hillary and Keeley Peckham, said in its application to IDA that it expects to receive a license to grow and sell cannabis for recreational purposes as the state deliver them.

The facility will span five acres and will include a 68,000 square foot production facility and 7,000 square feet of office space. Zephyr will build the facility and lease it to Toronto-based RIV Capital, which will then sublet the facility to Etain to cultivate and produce marijuana products.

It’s not yet known if Etain will open a dispensary in the Buffalo area, but all of the company’s sales will be in New York State.

In the grant application, Termini clarified that the Etain production facility was only the first of several planned cultivation operations at the site. The goal, according to the application, “is to create an approximately 211,000 square foot campus comprised of three buildings supporting cultivation and manufacturing operations.”

The land is owned by the Buffalo Urban Development Corp. in the Buffalo Lakeside Commerce Park and Termini is under contract to acquire the property.

The property is designated as a brownfield, which means it once housed industry and needs to be restored before development. The state Department of Environmental Conservation offers tax credits to clean up brownfields, though it’s unclear if the project qualifies. A DEC spokesperson did not respond to a request for comment.

Brad Termini did not Respond to a request for comment for this story.

Samantha Qualls, a representative for Etain, declined to comment.

Termini has political ties

Brad Termini has been cultivating the chosen ones since he unveiled the plans for the project – which it then described as occupying 1.25 million square feet and employing 500 to 1,000 people – in February 2019.

He gave $4,700 in October 2019 to Assembly Majority Leader Crystal Peoples-Stokes’ campaign committee, a key architect of the state’s legalization of adult-use marijuana. Her father, Rocco, donated $2,500 to Peoples-Stokes that same month.

In February 2020, Brad Termini donated $5,000 to Grassroots, the political club Peoples-Stokes and Mayor Byron Brown are affiliated with.

Last October, Rocco Termini gave Peoples-Stokes another $4,700.

IDA’s Cappellino noted that the Peoples-Stokes office “has not made any comments to our knowledge on this project.”

Zephyr, Brad Termini’s development company, donated $2,500 to Brown’s mayoral campaign last June, the day before the Democratic primary – as part of a influx of money to Brown from major donors in the two weeks before Brown’s main loss. Rocco Termini, meanwhile, was part of a group of property developers who put money behind Brown’s general election campaign.

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On Wednesday, Brown, who sits on the IDA board, spoke in favor of the grant agreement. He also wrote a letter to IDA on July 28 supporting the project.

“We believe this project will be a catalyst for economic development within the city by diversifying Buffalo’s local economy and creating new employment opportunities for Buffalo residents,” the mayor wrote.

“The new construction of Zephyr’s cannabis manufacturing facility is a welcome addition to the impressive revitalization efforts that continue to propel our local economy forward.

Geoff Kelly contributed to this story.

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