Premium Mortgage seeks tax breaks for move
A Rochester, N.Y.-based mortgage company that leases space in Amherst, N.Y., is seeking tax breaks to subsidize a nearly $3 million purchase and upgrade of a shuttered bank branch two miles away in Clarence, N.Y.
Premium Mortgage pledges to add up to 20 employees within 18 months after it moves from leased space at 2150 Wehrle Drive to the former Key Bank at 4401 Transit Road, near Main Street, according to plans submitted to the Clarence Industrial Development Agency.
Premium is headquartered in Rochester and has a main office in Amherst with small sites in Geneseo, Syracuse and Vermont, with a total workforce of 120. The company exclusively handles residential mortgages, processing 4,000 transactions last year. CEO Mike Donoghue co-founded Premium in 1999 with Amherst native Alexia Barbarossa, the company's executive vice president.
Premium has had a mortgage sales force in Amherst for about 13 years, initially owning a building on Main Street before giving up that space two years ago and leasing an office at 2150 Wehrle Drive as it began looking for a larger building to buy.
The company has added 15 employees over the past year or so just at its Amherst location, where it has about 30 workers now, Donoghue said.
"Our sales in the Buffalo region have doubled in the past two years," he said.
Also, Premium is filling a vacuum in the residential mortgage market left by the consolidation or downsizing of banks such as HSBC and First Niagara Financial Group, Donoghue said.
Premium needs more space in the Amherst area because it wants to add employees that previously served the office remotely from Rochester, such as those who work on mortgage closing, underwriting and other administrative duties, he said.
The company concentrated its search in the area near Main Street and Transit Road, on both sides of the Amherst-Clarence border, Donoghue said.
KeyBank closed its branch at 4401 Transit, a retail plaza that includes Bed, Bath & Beyond and Brennan's Bowery Bar, in 2014, because of overlap from buying a former HSBC branch. KeyBank continues to operate a branch at 4455 Transit.
Premium's current, leased building is 8,000 square feet, and the bank branch is nearly twice as large, at 15,380 square feet. In addition, one feature that drew Donoghue to this location is the presence of a Tesla Supercharger station just north of the building, closer to the Eastern Hills Mall.
"They don't even have one in Rochester," said Donoghue, who drives a Tesla electric car.
In a case where a company is seeking tax breaks to move to Clarence from another community in Erie County, the IDA's bylaws require its attorney to notify officials in that town of the request, said Paul Leone, a consultant to the agency.
Officials in the community the company is moving from are not required to formally give their blessing to the move, Leone said. The Clarence IDA asks that the company look for suitable property in its current community, but company officials are not required to certify that they exhausted their options, he said.
"We like them to look, as a courtesy," Leone said.
David Mingoia, executive director of the Amherst IDA, said Premium Mortgage didn't directly reach out to his agency to ask about potential tax breaks for staying in the town. The IDA did work with Premium's broker, Robert Roller, a partner with CBRE.
A countywide eligibility policy seeks to level the playing field, Mingoia said, and prevent companies from pitting one community against another to seek a better deal.
IDA staff haven't yet calculated the value of the tax breaks. But the largest portion would be a property tax abatement that would freeze the property's assessment for five years at its current level of $307,000. The project is eligible for the assessment freeze because it is an adaptive reuse of a vacant building by a company employing back-office workers, Leone said.
That is significant because Premium Mortgage is planning to purchase the former bank branch for $1.67 million and to invest $975,000 to retrofit the building, Leone said, and the Assessor's Office typically would raise the assessment to reflect that purchase price and investment.
Premium Mortgage also is eligible for sales tax and mortgage-recording tax breaks, Leone said. The company's total investment, including $250,000 in furnishings, would be $2.95 million, he said.
Donoghue said the deal "doesn't make economic sense" without the tax breaks and, if the company does not receive them, Premium likely would expand and hire the 10 to 20 new employees at its Rochester office. Eventually, he said he envisions growth in Buffalo outpacing growth in Rochester for the company.
"The fear that we have is that we buy a building and we put a bunch of money into it and the assessment goes up dramatically, and it makes it completely unaffordable once you've got property taxes that are like $100,000 a year," Donoghue said.
The Clarence IDA plans to hold a public hearing on the request at its May 18 meeting, and it would publicly release the tax-break calculations before the meeting, Leone said.