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A proposal by the regional development council to seek more than $6 million in state funds to buy brownfield property on the former Bethlehem Steel site in Lackawanna drew questions Tuesday from a state panel assessing the progress of local economic development efforts.

Cesar A. Perales, the New York Secretary of State, told local development officials he was “taken aback” by a $16 million project backed by the Western New York Regional Economic Development Council to buy and clean up about 94 acres on the Bethlehem Steel site to turn it into a shovel-ready site for industry. The council is seeking $6.4 million in state funds to help finance the initiative.

“If you want that kind of money, I assume you’ve been talking to people who want to use it,” Perales said during a meeting between members of the state panel and local development council officials.

Howard Zemsky, the development council’s co-chairman, said the project is aimed at building on the recent success in luring a Canadian steel tubing manufacturer, Welded Tube, to a different portion of the site. A rail line running through the site also has been relocated to open up more of the property for potential development.

The main reason for the focus on the Bethlehem Steel site is to alleviate a shortage of property that can be quickly and easily converted to manufacturing and other industrial uses without requiring major investments in infrastructure, such as utility service, roads, and water and sewer lines.

“What we don’t have right now is developable sites,” Zemsky said. “We want to use brownfield sites. They’re connected to infrastructure, and close to downtown.”

Being near the heart of the metro area is important because one of the development council’s priorities is to stop suburban sprawl.

“It’s really a pay-me-now, or pay-me-later,” said Jeffrey Belt, the chief executive officer of SolEpoxy in Olean and a development council member. “We’re going to avoid the cost of sprawl and we’re going to put jobs where we need them to be.”

Too often in the past, Belt said, development projects have pushed into undeveloped land in the outskirts of the suburbs, requiring costly investments in new infrastructure and putting those jobs far from the public transportation that many unemployed workers must rely upon.

Members of the state panel, formally known as a Strategic Investment Assessment Team, also pressed council members about their efforts to bring more venture capital into the region. Council officials have long said the shortage of venture capital is a roadblock in the efforts of entrepreneurs who want to turn their ideas into viable businesses, while the region also has done poorly in converting its ample level of research funding into new businesses.

“Our region has long been strong in brains but weak in business formation,” Belt said.

To counter that, the council is backing a nationwide $5 million business plan competition and also has been courting venture capitalists, Zemsky said.

Belt said the business plan competition will help the region capture the attention of entrepreneurs from across the country and provide resources to help them develop their ventures.

“If there’s one thing we need more than venture capital, it’s a culture of entrepreneurship,” he said. “We have to encourage our entrepreneurs to keep on trying and we have to put some legs on the talent that we have.”

email: drobinson@buffnews.com