Fisher-Price Inc. will have to repay nearly $9,500 of the tax breaks it received in 2014 because it failed to meet its promise to retain jobs at its East Aurora complex.
The Erie County Industrial Development voted Wednesday to claw back a portion of the sales tax break that Fisher-Price received for the $8 million project because its employment levels in East Aurora last year fell 87 jobs short of the 750 positions it promised to maintain locally as part of its agreement to receive the tax subsidies.
The company averaged 667 full-time and part-time jobs during 2018 and finished the year with 593 full-time and 66 part-time employees, according to information Fisher-Price provided to the IDA.
The agency’s clawback policy for companies that fail to keep the promises to create or maintain jobs that they made to obtain tax breaks has been used sporadically by the IDA in the past few years, often with interpretations that are designed to soften the blow on businesses that have fallen on hard times.
In Fisher-Price’s case, the company’s East Aurora full-time workforce has shrunk by 25 percent since the end of 2014, when it stood at 797 people. At the same time, the company’s part-time work force has grown from just under 50 in 2014 to 66 at the end of last year.
Fisher-Price officials told the IDA that the shortfall largely reflected the difficulties that toy makers experienced after the demise of Toys R Us, which filed for bankruptcy in September 2017 and closed last year.
Fisher-Price’s owner, Mattel Inc., has since decided to move two business units now located in California to East Aurora in a move that is expected to increase local employment by at least 26 jobs. The move involves Mattel’s Thomas and Friends business, as well as all of its infant and preschool entertainment brands.
Fisher-Price is expected to seek additional tax breaks for that move, possibly as early as August, said Brenda McDuffie, the agency’s chairwoman.
With the clawback, the IDA agreed to recapture 2 percent of the $431,000 in sales tax breaks that the company received on the 2014 project.
The agency could have demanded that the company repay more than $86,000 — one-fifth of the tax breaks received over the past five years since it missed its employment target during only one of those years. But under its recapture policy, the board elected to pursue a more lenient option that pro-rated the clawback so that it recaptured an amount that was equal to the 11% job shortfall during the one-year that the company failed to meet its employment goal.
“This is similar to the policy we’ve pursued with other projects in the past, with regard to recapture,” said John Cappellino, the IDA’s executive vice president.