A drugmaker in Hauppauge won’t receive tax breaks over 10 years to modernize one of three factories unless jobs are created, the Suffolk County Industrial Development Agency said.
The pledge by InvaGen Pharmaceuticals Inc. not to reduce its payroll of 202 employees at 600 Old Willets Path wasn’t enough to win support among IDA board members for $403,450 in tax breaks.
The manufacturer of generic prescription drugs plans to renew the lease on the Old Willets Path building and spend $2.7 million on upgrades over 4½ years to boost production. The landlord is picking up $350,000 of the modernization expenses.
Still, four of six IDA board members balked last week at granting final approval for the tax incentives, saying InvaGen must promise to expand its workforce by 2030. They suggested the company’s attorney present a new proposal at the board’s July 23 meeting.
“We’re making a commitment for 10 years of tax breaks, but they’re only saying that they ‘hope’ they could hire additional people,” said board secretary Anthony Giordano. “There has to be some other commitment, other than the fact that the company is going to stay in the building for 10 years and reinvest into it. In my opinion, they have to create jobs as well.”
Board member Joshua Slaughter agreed, adding InvaGen’s tax reduction will have to be made up by other taxpayers to fund the school district, which is facing a cut in state aid due to the coronavirus pandemic and recession. “If we’re going to be asking local taxpayers to pick up that difference, it’s usually because there’s an economic benefit,” he said.
InvaGen first received Suffolk IDA help one year after its founding in 2003 and has exceeded the 50 jobs it promised to create. The company now has 586 employees at three factories in the county, with salaries averaging $58,848 per year, according to its IDA application.
IDA chair Natalie Wright said InvaGen is a key player in Suffolk’s burgeoning pharmaceutical industry and the importance of its no-layoff pledge cannot be minimized. “That’s not something that we can say for a large majority of companies in this current economic climate. We’ve seen hundreds of thousands of people be laid off or file for unemployment,” said Wright, the county's economic development commissioner.
InvaGen cannot pledge to expand its workforce because of uncertainty created by the coronavirus-induced recession, said the company’s real estate attorney, Guy Germano.
“They want to continue in Suffolk County. … But they cannot commit today to any jobs, not knowing what the outcome is going to be of the pandemic,” he said last week. “They’re being honest, and you can penalize them for their honesty.”
Germano said InvaGen wouldn’t be the first business to win tax breaks from the Suffolk IDA without a hiring pledge. However, records show those cases usually involve threats to leave Long Island, which InvaGen hasn’t said it’s contemplating.
The IDA board suspended its discussion for about 15 minutes so Germano could telephone InvaGen executives. When he returned, he said InvaGen’s parent, Cipla Ltd. in Mumbai, India, would need to be consulted.
Germano said he will propose to InvaGen that it add eight jobs over three years. However, that’s less than the 10 to 15 jobs that InvaGen finance chief Mohit Mundra told the board, in a May 29 letter, that he “hoped to add” in the same period.