Canon wins preliminary approval for an additional $7 million in tax aid

Canon U.S.A. Inc. won preliminary approval for more tax breaks from Suffolk County on Thursday, after threatening to jettison its large headquarters building in Melville and have its 1,100 employees work from home permanently.

The Japanese camera and photocopying giant requested additional help because a 10-year incentive package initially approved in 2007 for $35 million is set to expire.

That aid, from the county’s Industrial Development Agency, played a key role in Canon’s decision to relocate the headquarters from Lake Success to a former pumpkin farm on Walt Whitman Road instead of out of state. The company moved to the $500 million building in early 2013.

“Our experience [during the COVID-19 pandemic] over the past three years has proven that we don’t need a brick-and-mortar building to be successful,” Seymour Liebman, Canon's executive vice president, chief administrative officer and general counsel, wrote in a Dec. 4 letter to the IDA. “We are currently operating a hybrid model where employees work from home three days per week, and a transition to fully remote would substantially cut operating costs.”

Asked about the building’s future, Liebman told Newsday on Wednesday, “At this time, Canon U.S.A. has not decided to go fully remote. If the time comes that we do go fully remote, we will explore all options to optimize the use of our Melville headquarters.”

The IDA board voted unanimously on Thursday to grant preliminary approval for an additional $7 million in tax breaks after listening to a presentation by Liebman and other Canon representatives. Most of the savings, $6.3 million over 12 years, will be in property taxes, according to IDA records.

The IDA will hold a public hearing before its board considers granting final approval for the new incentives.

Kelly Murphy, the agency's acting executive director, said it was imperative to keep Canon in Suffolk. She cited the loss of another high-profile employer, CA Technologies, formerly known as Computer Associates International, whose Islandia headquarters is being demolished to make way for 950,000 square feet of warehouses.

"I take them at their word that they could go fully remote," she said in an interview after the meeting. "They're only using about 50% of the building now."

Daniel P. Deegan, Canon's real estate attorney, said, "We are trying to avoid moving. We're trying to stay here."

In return for the tax breaks, the company would invest $8.4 million in improvements to the wireless network, conference rooms, a training center and imaging equipment in the 696,000-square-foot building, which it owns.

Canon also would retain about 1,100 employees who earn, on average, $112,230 per year.

Liebman told Newsday that an undetermined number of administrative jobs would be created in a new “shared services hub” to provide accounting, human resources and legal support to offices throughout the United States, Canada and Latin America.

When Canon pledged to build the new headquarters and received about $100 million in government aid, the company projected its workforce would total 2,110 people by 2020. The payroll reached 1,659 in 2018 but shrank during the pandemic, according to state records.

Besides the IDA, Canon received assistance from Empire State Development, the state’s primary business-aid agency, and the state Power Authority.

Canon hasn’t requested more aid from ESD, according to agency spokeswoman Emily Mijatovic.

Canon’s contract for low-cost electricity was renewed in 2021 and will expire in 2028. The allocation has been reduced from 2,000 kilowatts to 1,740 kilowatts as the company’s headcount has fallen, said authority spokesman Paul DeMichele. A thousand kilowatts can power between 800 and 1,000 homes.

Canon spent a quarter-century looking for a new home for its headquarters, meeting numerous roadblocks along the way and scouting locations in New Jersey and Connecticut as well as on Long Island.

The 52 acres in Melville that Canon purchased from the Tilles Investment Co. for $103 million had been in contract to the Holiday Organization.

Then-Suffolk County Executive Steve Levy helped negotiate a deal where the land went to Canon, but Holiday received a payment. The broker on the transaction, Bruce Blakeman, who now serves as Nassau County Executive, earned a $6 million commission, Newsday reported in June 2007.

At Thursday's meeting, IDA board member Cris Damianos said Suffolk's economy has benefited from Canon's move, citing the company's $50 million in purchases from local companies last year and annual payroll of more than $121 million. 

"We like having you here and don't want to see you go anywhere," he told the Canon executives.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.