State of chaos leaves business in the lurch
The state’s economic development programs are in disarray, just when we need them most.
From a revolving door leadership at the state’s main economic development agency to questions over the future of one of New York’s keystone incentive programs and legislative gridlock that’s blocking billions in civic projects from advancing, we’re spinning our wheels as the recession deepens.
“It’s really a mess,” says James J. Allen, the executive director of the Amherst Industrial Development Agency.
“There’s real concern and obvious confusion over what the state role is and its capacity for economic development in 2009,” says Andrew
J. Rudnick, the president of the Buffalo Niagara Partnership. “There is no direction, few tools and a delicate marketplace to begin with.”
Take the Empire State Development agency. It’s now on its third leadership team since Gov. George Pataki left office just 2z ye 1/2 r 1/3 ago.
The latest shake-up came earlier this month with the resignation of Robert G. Wilmers, the M&TBank chairman who a year ago stepped in as the agency’s chairman with much fanfare.
Wilmers, a frequent critic of Albany’s big spending and over-regulating ways and a strong advocate for upstate interests, was hailed as a champion of reform at the state’s main development agency.
Instead, he found frustration, between internal turf battles, the steady turnover among the upper echelons of Gov. David A. Paterson’s administration and the state’s budget woes.
“I think Bob left because he felt he couldn’t make a difference,” Rudnick says.
Wilmers wasn’t the only one to leave. Just days before Wilmers announced he was quitting, Marisa Lago, who joined ESD as the agency’s No. 2 executive just last August, said she was leaving to go back to the private sector.
But the disarray goes beyond Empire State Development’s management. More than $2.1 billion in civic facility projects planned by non-profit organizations have been stalled for a year-and-a-half because the state Legislature hasn’t reauthorized industrial development agencies to help finance them.
These generally are school, health care and senior housing projects, but labor groups want contractors working on all IDA projects to pay prevailing wages, which the Associated Builders and Contractors trade group says would drive up labor costs. The dispute is blocking efforts to give IDAs back their ability to fund civic projects, as well as broader IDA reform efforts.
Meanwhile, roughly $195 million in Erie County projects, ranging from expansions at the University at Buffalo and Women’s and Children’s Hospital to St. Joseph’s High School, are up in the air, costing an estimated 20,000 jobs statewide. The gridlock already forced Buffalo’s Tapestry Charter School to scale back its plans for a permanent campus in North Buffalo.
All the while, state officials are debating changes to the lucrative, but abused, Empire Zone program, which offers tax and other incentives to businesses. The program is set to expire next year, and state officials last month notified dozens of local businesses that they could lose their incentives because they haven’t met recently revised requirements, such as generating $1 in investments and wages for every $1 in state tax incentives.
Critics say changing the Empire Zone rules for companies that qualified under the old standards sends the wrong message to businesses thinking about tapping into those incentives for a possible move or expansion in New York.
Put it all together, and it’s hardly an inviting environment for companies looking at New York. “There are still firms sitting out there, not knowing what to do because they don’t know what state policy will be,” Allen says.
That’s a high price to pay because Albany can’t get its act together.
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