Skoufis rips $32M tax breaks from Orange County board for planned winery in Goshen

GOSHEN — Workers had been blasting and preparing a construction site off Route 17M for weeks when an Orange County board approved $32 million in tax reductions last week for the giant winery and warehouse that Royal Wine Corp. is set to build there.

The size and timing of the benefits — after the project had begun — outraged state Sen. James Skoufis, a Cornwall Democrat and frequent critic of tax breaks companies are given as incentives to build or expand. He fired off a statement on Thursday denouncing the Orange County Industrial Development Agency for what he says amounts to a $582,000 taxpayer subsidy for each of the 55 new jobs Royal Wine expects to create at its new Goshen site.

He called that "perhaps the most egregious tax break ever handed out in Orange County."

"It’s the height of irresponsibility," Skoufis wrote, "and a reflection of one of two sets of facts: either they are the worst negotiators on the face of the planet or, worse, they simply do not care that taxpayers are getting ripped off left and right."

The award and criticism stoked a recurring conflict over the use of tax breaks to spur economic development. Proponents see them as an indispensable way to attract jobs and other economic activity that would otherwise go to other places, particularly those with lower taxes and labor costs. Critics pounce when the beneficiaries are major corporations or the breaks are large, arguing tax cuts were unnecessary rewards for businesses that would have come anyway.

Bill Fioravanti, CEO of the Orange County IDA, responded on Friday that Skoufis' dollars-per-job slam was short-sighted and overlooked other benefits for the county: several hundred construction jobs, mostly for local workers; a new employer for the region's food-and-beverage industry; and the addition of an eighth-generation family business with a loyal workforce.

"First and foremost, we ensure that this project actually happens, and that it happens here in Orange County," he said by email.

Fioravanti argued that Royal Wine could still could have canceled its project if the IDA denied it tax benefits because construction of its building hasn't begun. That would mean GFI Partners, the Boston company managing the development, "could then put the property back on the market for another (potentially less attractive) user," he wrote. 

In an interview on Friday, Mordy Herzog, Royal Wine's CEO, pledged that his company — makers of Kedem wine and grape juice and worldwide distributor of kosher wines and spirits — will be a "great addition to Orange County" and likely remain there for decades to come, just as it has operated in Ulster County for 40 years. The company has outgrown its Kedem-making facility in Marlboro and plans to merge it with its Bayonne, N.J. operation in a 627,000-square-foot winery and warehouse in Goshen.

"We're really excited about this project," he said. "It's the biggest project the family has done, by a long shot."

Royal Wine's tax breaks were determined by rules and formulas in the IDA's uniform tax exemption policy. The biggest was a $28 million cut in total property taxes it is projected to owe over 15 years to Goshen School District, the town of Goshen, the village of Goshen and Orange County. With its annual tax bill slashed at first and then gradually raised to the full amount, the company is slated to pay almost $31 million in property taxes during that time.

The company also will save $3.8 million in projected sales tax and $517,000 in mortgage tax through the IDA.

Royal Wine estimates the Goshen facility will employ 100 full-time workers, plus 20 part-timers during the busy harvest season from August to October. That workforce would consist of 65 employees who already work at the company's Marlboro and Bayonne sites and 55 new positions, 45 of them full-time jobs.

The IDA's rules for awarding tax breaks, last amended in 2019, don't consider the number of jobs created. Fioravanti, who took over the agency after a scandal that led a nearly complete replacement of its staff and appointed oversight board, said the recast agency will likely review and revise those rules again and may add job numbers as a factor.

Skoufis argued on Friday that the board is free to deviate from its rules, which he said are "basically guidelines," and should have done so in Royal Wine's case to match the breaks to the number of jobs. He called the awarded amounts "highway robbery."

He also scoffed at the idea that Royal Wine might have looked for another site outside of Orange if it had been denied tax breaks. He said incentives like those only are needed to spur redevelopment of long-abandoned properties and former industrial properties known as brownfields.

"This is prime real estate right along the highway," Skoufis said of the Royal Wine site. "It does not need to be induced, at least not to this level."