Dec 11
2025
A double-dipping Niagara Falls defense contractor
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Americarb’s existing production facility. Photo via the Niagara Gazette.
A Niagara Falls defense contractor is “double dipping” from public coffers, critics say, after winning a Department of Defense contract, a state grant and now, on Wednesday, local tax breaks.
First came the $12.6 million federal contract, announced in September.
Americarb, a materials manufacturer, was awarded the funding to develop a process for converting woven rayon fabric into “carbonized rayon phenolic,” a material that the military will use to insulate the rocket nozzles of tactical and hypersonic missiles. The company plans to expand its Niagara Falls factory and hire 40 people to perform the work.
Then on Wednesday came $3 million in property, sales and mortgage recording tax breaks from the Niagara County Industrial Development Agency.
The company is also planning to tap a $450,000 grant fund from the Empire State Development Corp., awarded in 2022 but never used.
Greg LeRoy, executive director of the subsidy watchdog group Good Jobs First, argued that federal contracts build a profit margin into the funding so companies shouldn’t also need state and local tax breaks.
“When federal contractors get state and local tax breaks, we consider that to be double-dipping,” he said. “Why should state and local taxpayers make their profit margins bigger?”
Donate to support our nonprofit newsroomInvestigative Post posed that question to leaders of the Niagara County IDA on Wednesday.
“I don’t think that’s a fair question,” Executive Director Andrea Klyczek said.
Mark Onesi, chairman of the IDA’s board of directors, said there are no legal restrictions on awarding the tax breaks to a firm already being paid by the federal government.
“Business in New York is so hard to get, okay? And without tax abatements and all that, they don’t come, they don’t expand, they don’t improve, they don’t hire new people,” Onesi said. “So why wouldn’t we, I guess, is the question?”
With a total project cost of $29 million, the IDA stands to earn $290,000 from Americarb in fees, plus a $1,000 application charge. The agency currently has a $3.2 million annual budget.
Pamm Lent, spokesperson for Empire State Development, didn’t respond to a request for comment.
Americarb argues that the different subsidies are going to different aspects of its expansion. The IDA tax breaks, Chief Technology Officer Daniel Broodo said, will help fund a physical factory expansion while the other funds will help pay for the work happening inside.
“We’re a small company. We’re trying to hire more people. We’re trying to expand capacity. Just like any other small business, [we’re looking for] any advantage we can get to help us grow capacity in Niagara Falls,” Broodo said.
That’s just how New York operates, said Ron Deutsch, director of the advocacy group New Yorkers for Fiscal Fairness.
“We have this plethora of subsidy programs, both at the state and local level, and companies will make every attempt to avail themselves of this,” he said. “Since we offer them constantly, companies will take advantage of that.”
According to its application for IDA subsidies, Americarb, located at 6100 Niagara Falls Boulevard, plans to add a fifth production building, totaling 50,000 square feet, to its campus.
The building will cost $29 million, with $12 million going towards manufacturing equipment like specialty furnaces, an improved water-cooling system, security upgrades and a “Rayon washing, drying, coating, drying and continuous high heating furnace treating system.”
Rayon is a semi-synthetic material made from breaking down and then reconstituting cellulose, like wood pulp. It can be used to make materials like artificial wool and silk. When fused with carbon, it has military applications.
According to Broodo, Americarb will effectively backfill the Department of Defense’s stock of the specialized rayon material. The Pentagon will then supply that material to other contractors that will produce missiles. Broodo declined to disclose those other contractors.
To construct the building, the IDA awarded Americarb more than $1.5 million in property tax breaks over 15 years, $1.44 million in sales tax abatements and a mortgage recording tax break of $30,000.
Through a payments-in-lieu-of-taxes agreement, Americarb will pay 20 percent of its tax bill in the first two years, 30 percent the following two years, 40 percent for five years after that and 50 percent in years 10 through 15.
The City of Niagara Falls will miss out on $871,000 in revenue as a result. The public schools will miss out on $439,000 and Niagara County will miss out on $231,000.
The Niagara Falls City School District lost out on $1.4 million in revenue in the July 2024-June 2025 fiscal year due to IDA tax breaks for previous projects.
Americarb plans to retain 40 jobs and create 40 more. The new jobs will pay an average of $70,000 a year, according to the company’s application.
The IDA subsidies amount to $79,000 per new job created, $86,250 including the state grant.
Deutsch, whose group in recent years has campaigned for IDA reform in Albany, said he’s particularly worried about how the company’s tax breaks could affect local schools. School leaders generally don’t have a seat on IDA boards and don’t have the power to veto tax subsidies that could harm a district.
“I really do think we have to do a much better job of determining if companies actually need these subsidies or if we’re just doling them out like candy, because we do that,” he said. “We need to rethink this whole paradigm that we’ve been operating under and move in a direction of not awarding subsidies.”
This Friday, Investigative Post interviews Mayor-elect Sean Ryan at the Burchfield Penney Art Center at 7 p.m. Be there!
