Maker of drug labels seeks $412,000 in tax breaks to remain in Hauppauge

Suffolk County on Thursday offered more than $400,000 in tax breaks over 10 years to keep a Hauppauge-based manufacturer of labels used in clinical drug trials from leaving for an out-of-state location with lower costs.

The board of the county’s Industrial Development Agency voted unanimously to grant preliminary approval for a tax-aid package for Citation Healthcare Labels LLC.

Citation was founded on Long Island 60 years ago and now wants to rent a second building in Hauppauge. That 23,000-square-foot facility, at 65 Engineers Rd., is adjacent to the company’s office and factory at 55 Engineers Rd.

However, the $3.5 million plan won’t happen without IDA tax breaks, said Bruce Hanson, CEO of Citation’s parent, AWT Labels & Packaging in Minneapolis. Both companies are controlled by the private equity firm Morgan Stanley Capital Partners.

Citation “would consider not renewing its current lease [on 55 Engineers Rd.] when it expires in two years, closing the facility and moving out of New York State,” he wrote this month in an application for IDA aid.

At Thursday’s IDA meeting, responding to a question from board member Joshua Slaughter, Hanson said Citation’s preference is to expand in Hauppauge because of the skills of its 126 employees. “The culture is really fantastic … The team continues to make it happen,” he said.

But the company won’t be able to remain competitive without another 10 years of property-tax savings on its existing home at 55 Engineers Rd. plus 10 years of property-tax savings on 65 Engineers Rd., he said. Together, the savings would total $327,000.

In addition, Citation would use a sales-tax exemption of up to $84,840 for the purchase of equipment for the second building.

In return, Citation would create at least 25 jobs within the next two years. Employees earn, on average, $61,000 per year, according to IDA records.

“That’s a conservative estimate of the number of people that we will add to payroll,” said Frederick Youngs, the company’s chief operating officer. “We’re looking to continue to grow.”

Citation produces labels that are used in drug trials and was founded by Martin Bolnick in 1963. It operated in Farmingdale and Edgewood before settling in Hauppauge with 57 employees in 2015.

The IDA granted 10 years of tax breaks to support Citation’s move to Hauppauge. The company has saved more than $155,000 in property taxes since then, according to state records.

“The company has far exceeded” the promise it made in 2015 to create 12 jobs, said Kelly Murphy, the IDA’s acting executive director, noting that 69 jobs have been created.

Citation “has been very successful and they need more room to expand … They’re bursting at the seams” in their current building, she said on Thursday.

Both 55 and 65 Engineers Rd. are owned by Rechler Equity Group in Plainview. Together, the two buildings encompass 59,000 square feet.

“The cost of doing business and living on Long Island is high,” Meghan Healy, Citation’s real estate attorney, told the IDA board. “So, [the company] has explored moving its operations … But with your assistance it would be able to stay in Suffolk County.”

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.