IBM Corp. is considering investing $36 million in its Poughkeepsie facility to improve the security of the power supply there and to expand its data center space by 40,000 square feet to accommodate a growing client base.
Seeing the carrot of such investment being dangled, the Dutchess County Industrial Development Agency is considering extending and improving an existing tax break, to help safeguard the jobs there and perhaps even create new ones. IBM, with some 11,600 employees in two facilities, is Dutchess County”™s largest employer.
At a preliminary discussion April 23, Dutchess County IDA officials and the company discussed continuing a tax abatement from 1993 that has already received two five-year extensions, with additional perks being added to the package.
There is no guarantee IBM will invest the funding in Poughkeepsie. Wayne Spinei, IBM”™s program manager for economic development and real estate operations, told IDA board members the company has other data processing centers that are also being considered for the investment.
Poughkeepsie is an “older facility” Spinei said, but extending the tax abatement would be “a tremendous benefit” in terms of convincing IBM to make the $36 million investment there.
“Basically, the investments are to improve the security and reliability of the center, adding uninterrupted power supply and back-up capacity,” IBM spokesman Jeff Couture said after the meeting. He said the center does not serve internal IBM needs, but does data processing for large commercial clients such as banks. While the Poughkeepsie center is performing well, the business is a competitive one, he said.
“It needs upgrading to stay competitive,” he said. “This investment will keep the work and the jobs there, and there is potential for additional jobs being created.”
He said agreeing to continue the tax abatement would strongly influence the company to make the investment in Poughkeepsie.
Normally, IBM must pay state sales or use tax on hardware and software that one of its divisions transfers to another. Such internal “sales” may total millions of dollars annually, thought the amount is considered proprietary and not released publicly. The deal being considered would exempt IBM from paying the state”™s 4 percent tax, with a new inducement that could reduce the county”™s 3.75 percent tax if improvements to the facility are constructed and employment targets attained.
The county IDA authorized holding a public hearing on the proposal when it is formalized, but details of that hearing have not been decided.
