February marked the one-year anniversary of Matthew McDonough serving as chief executive officer of the To Babylon Industrial Development Agency. He spoke with LIBN about recent deals, plans for a brewery incubator what companies should know about working with the agency.
Why are IDAs essential? An IDA’s basic function is to assist in a real estate transaction where there is a lease or sale of the building. In Babylon we become a partner, help with applications, so there is no need to have a fear of Town Hall. Our client’s paperwork becomes expedited – we don’t skip any steps but the paperwork goes to the top of the pile. [We’re working with companies] that update old industrial stock – post-World War II buildings. Some were built in the 1970s, but that’s 40 years ago. We’re helping to retain jobs. We see that Grumman’s departure has bee devastating for decades. One of the benefits of the IDA is that [our work] increases property values, and the town's assessed value goes up.
Tell us about the plans for the brewery incubator project in Babylon. It’s a multifaceted project, with taxes owed and a DEC [Department of Environmental Conservation] cleanup, which was completed, but now it's a question of who pays for the work on it. The IDA is uniquely situated to take it and work with the DEC on remediation costs. We want to offer an educational experience [to microbrewers], offering information about marketing, distributors, access to capital and more. Senior Project Manager Tom Dolan went door to door, and spoke to residents and businesses and built support on a federal, state and local level.
What are some of the IDA’s most recent deals? The IDA retained Telephonics in Farmingdale. Telephonic the business of manufacturing, researching and developing high-tech communications and radar/defense electronics products. We retained over 500 jobs at the 815 Broadhollow Road facility. They committed to a $35 million [capital expenditure] and R&D budget at the Farmingdale location over five years.
What kinds of companies are moving to Babylon? We’ve seen an increase in food manufacturing. Ultra-Thin Ready to Bake Pizza Shells, for example, moved from New Hyde Park to Deer Park. With the residential boom in Queens and Brooklyn, more companies are moving out here for warehouse space, including Merola Tile from East New York. We’re seeing pure manufacturing, millwork and metal. Many of the leaders of these companies are from here, and they live here. They’re paying a lot less here. They might have paid $300 a square foot in Brooklyn, but are now paying $115 here – it’s almost a no-brainer. Rather than move to New Jersey, they’re moving out here.
How does the IDA market itself? We’re starting a new program: the industrial corridor plan. Tom Dolan is introducing the IDA to people who are clients and those who aren’t. We will map what is going on and identify clusters, such as where pharmaceutical companies are, and maybe get them to move over to one area, like the way the diamond district is in New York. That way they get the benefits of economies of scale. We introduce ourselves as a government agency, look at what’s going on businesswise at this level, and see it at a 30,000-foot view. We found that a lot of business owners have a large network of other business owners, bankers, attorneys, accountants, groups and circles. That kind of word of mouth has been very effective.
How did you come up with this marketing plan? The idea is to look at what’s going on in these buildings. I always thought that was so interesting. You’d have a nondescript Long Island box building, for instance take Crescent Packing – they’re making veal chops, cutting sides of beef, freezing turkey and other poultry. You would never know that from looking at the outside of the building. We’re forming a type of policy to pursue and encourage certain growth.
Are you still advertising at Mets games? We don’t advertise with the Mets anymore or WFAN. We’re just with the industrial corridor plan.
Are companies still coming in from Brooklyn and Queens? The big exodus is starting to slow down. But us, it’s been very busy. Last year we had 19 closings, $217 million in investment into town, 187 jobs created, 9 retained – 2014 was close, and 2013 was similar. This year we already have five or six closings, 12 to 13 applications, 50 letters of intent from us to businesses that met with us about buildings. Now it’s competitive. There’s not that much inventory of buildings. It used to be common to have 12 to 13 closings a year. This year, we’re working extremely hard and talking to a lot of different businesses. When we get calls and emails, they get a response right away. We’ve gotten a positive response from clients about that.
What should companies know that want to work with the IDA? They need to work with architects and engineers who understand [the local] codes. We encourage people to have a pre-meeting with the building commissioner, explain what you’re looking to do, so the building commissioner can say if it’s permissible. [After looking at IDA fees, which include a $1,500 application fee, and 1.25 percent of hard costs,] they make a business decision. If fees are too high compared to what you’re saving, it may not make sense. The sweet spot is for a 10,000-square-foot building or more.
Is there anything else people should know about the IDA? The IDA is a government agency that’s here to help, work with you to get into a building, and create or maintain jobs here.