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Published in Breaking News

Gordon Food Service alleged to be in violation of agreement with NY municipality

BY Sunday, August 27, 2017 06:00am

BUFFALO, N.Y. — A subsidiary of Gordon Food Service Inc. could have to repay approximately $180,000 in tax breaks it received from a county in western New York.

The Wyoming, Mich.-based food distributor and wholesaler is alleged to be in violation of its agreement with the Erie County Industrial Development Agency (ECIDA) for a store GFS opened last year in Buffalo, N.Y.

Under the agreement, economic developers at ECIDA gave the incentives to GFS for opening a wholesale supply operation for local restaurant owners. The incentives allowed GFS to capture $393,750 in local and state sales taxes starting in January 2016.

ECIDA alleges the store no longer fits the wholesaler definition after GFS opened it to the public. Because New York laws bar the tax capture incentives from being used for retail stores and restaurants, the ECIDA says the company must now repay the capture it’s already received, according to Erie County municipal documents.

“Their business model has changed,” ECIDA President and CEO Steve Weathers said in a Wednesday report in the Buffalo News. “They’re in violation of their agreement, so we have demanded full repayment.”

However, executives at Gordon Food Service believe differently.

According to the report, GFS said initially that less than 20 percent of the project would be dedicated to retail sales, which now make up a less than a third of the store’s business under the current model.

“Gordon Food Service conducts its business with integrity and opened the Buffalo store in good faith,” a company spokesperson wrote in an email to MiBiz. “We are aware of ECIDA’s position and do not believe we are in violation of the agreement. We are currently reviewing our options with respect to the matters raised and hope to amicably resolve the situation.”

The company invested $6.9 million into the Buffalo store.

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