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Gov. reconsiders drastic changes to Empire Zone program
The Business Review (Albany) - by Mike Hendricks

Gov. David Paterson is reconsidering his proposal to drastically change New York’s economic development program that gives tax breaks to companies for creating new jobs.

Paterson’s proposed state budget calls for the rules governing the Empire Zone program be rewritten to require that companies receiving the incentives demonstrate that they are providing $20 in wages and benefits for every $1 in tax breaks they receive. The new rules would apply to all companies participating in the program, including companies that were brought into the program under the old standards. The 2005 cost/benefit standard was 15 to 1.

The reaction to that proposal in the last week is prompting him to reconsider that particular part of his budget plan, the governor told an audience in Watertown Sunday night.

Paterson made his comments before a crowd of more than 600 people who came out on a frigid night to hear the governor address their questions about the state’s economic crisis. He was greeted with a sustained standing ovation from the audience.

In coming up with a budget that will close the $15.4 billion budget deficit New York faces over the next 15 months, Paterson called for toughening the Empire Zone eligibility requirements to save $272 million next year and ensure companies are creating jobs to justify the taxpayer investment.

He has been critical of the program, saying it wasted tax dollars without producing results.

At Sunday night’s town hall meeting, Paterson said that since making his proposal he has heard that the program is effective in parts of the state, such as rural northern New York, while it is ineffective in other areas.

The Sunday evening trip to Watertown was the first in a series of upstate town hall-style meetings Paterson is scheduling to present his case for his budget plan and to educate the public about the severity of the state’s economic woes.

Paterson made his comments about the Empire Zone program in response to a question from Sam Burns, a St. Lawrence County legislator, who asked if the governor would be willing to reconsider the plan if presented with evidence that it would be damaging to local economies. Burns said that companies in northern New York could not meet that 20-to-1 standard.

Paterson said that he has been consistently hearing that the 20-to-1 ratio is not going to work. He said it is entirely possible he will modify his proposal.

The governor said he is willing to look further to see what will be the right ratio.

“There are extreme problems with the Empire Zone program,” Paterson said in defense of his efforts targeting the program.

Paterson said that in some areas of the state he has determined that hundreds of thousands of state dollars were spent without creating a single job.

“We do not want to be overzealous if it is working in Jefferson County,” he said.

Watertown is in Jefferson County. St. Lawrence County is north of Watertown, abutting the Canadian border.

The governor said he is considering moderating his proposal to protect the areas where the Empire Zones are effective.

Paterson also heard from farmers, prison workers, nurses, community volunteers, educators and others questioning him about the impact of his proposed cuts to meet the state’s $15.4 billion deficit.

He told a liquor store owner he is also willing to reconsider his proposal to allow wine to be sold in grocery stores. The liquor store owner said he did not believe his store could survive if a large portion of his product is moved to grocery store shelves. Paterson said it was not his intent to do anything in his budget to hurt small businesses, which he said account for two thirds of the economy.

Several speakers asked him to reconsider his strategy of making across-the-board cuts, saying that approach threatened to kill programs that are working.

Paterson said that he does not believe the full impact of the economic crisis has been felt by the American public. He said he has no....................http://albany.bizjournals.com/albany/stories/2009/01/12/daily4.html?surround=lfn

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State to begin removing cos. from Empire Zone program
The Business Review (Albany)

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The state’s economic agency has started the process of removing companies from the Empire Zone tax credit program.

Marisa Lago, president and CEO of Empire State Development Corp., also pledged to seek the input of business lobbies as state officials develop a new tax incentive program to replace Empire Zones when they expire in June 2010.

Lago made those comments during testimony before a state Senate committee on Tuesday.

The $131.8 billion state budget, approved earlier this month, makes key changes to the Empire Zone program, which awards tax credits and tax breaks to businesses in order to lure them to move into the state or expand their operations.

This year, Empire State Development will evict any company in the program that fails to meet a new requirement: generating at least $1 of payroll and investment for every $1 that the company receives from the state.

So-called “shirt-changers” will also be removed from the program. These are companies that reincorporated or spun off a part of the business, allegedly making it look like a new business and appear as if they’d created jobs—making them eligible for more tax benefits.

Lago estimated that those two actions would remove “well under 1,000” companies from the program, located in all areas of the state. Lago said she did not have more specific data at this time.

About 9,200 companies receive Empire Zone benefits, including roughly 1,000 in the Capital Region.

Empire State Development officials have started identifying companies that fall into those two categories. Written regulations will take a few weeks to develop, Lago said; those must be in place before the department begins notifying companies that they’ll no longer be receiving Empire Zone benefits.

Any decertified company has 15 days to appeal to the Empire Zone Designation Board.

The state budget also cut the lifespan of Empire Zones by one year. The program will now end in June 2010, and the state will be developing a replacement program.

“It’s going to be a long, hot summer,” said Lago, a former Citigroup Inc. executive (NYSE: C) before joining the state in August 2008.

Lago said business lobbies will be involved in the deliberations over what the new tax incentive program will include. She said their input was “extremely helpful” in deciding to drop a previous plan to require all companies to generate at least $20 of payroll and investments for every $1 they received from the state.

“We will engage the business advocacy organizations. They are, in many ways, the constituency of Empire State Development,” Lago said.

Lago said she does not have a deadline or time frame for when she wants to finish creating the new tax incentive program.

“It’s not something that’s being thrown together,” she said

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CAPITAL REGION
Firms risk loss of tax credits
Empire Zone status in doubt
BY MICHAEL LAMENDOLA Gazette Reporter

    The state has informed 600 businesses around New York — several of them representing major projects in the Capital Region — they are in danger of losing their Empire Zone certifications. The businesses employ nearly 17,000 people.
    The list includes the massive Wal-Mart distribution center in Fulton County, the Scotia-Glenville Industrial Park in Glenville, the Parker Inn in Schenectady and First Niagara Centre in Albany County.
    Loss of certifi ca- Share your tion would make thoughts on them ineligible to this story at receive a variety www.daily  of state and local gazette.com  credits, ranging from reimbursement of property taxes to exemptions from sales tax. The credits often total hundreds of thousands of dollars in savings. Businesses must prove job creation in order to receive Empire Zone benefits.
    Businesses have not received their credits yet because they must first obtain an Empire Zone retention certificate. The requirement is new, the result of a change in the program this year.
    The state at first gave no timeline as to when it would award the certifi - cates, and then last week issued letters to businesses informing them either they would be recertified, they would have to provide additional information to become recertified, or they were at risk of being decertifi ed.
    Businesses in the second category have until June 30 to provide information and those in the third category can appeal their decertification. The state will explain the process to the businesses by June 19, according to officials with the Empire State Development Corp., which sent out the decertification letters last week.
    The ESDC is decertifying the..........>>>>............>>>>..............http://www.dailygazette.net/De.....amp;EntityId=Ar00102

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State moves to pull empire zone status from 13 area firms
Friday, July 10, 2009
By Michael Lamendola (Contact)
Gazette Reporter

CAPITOL — The state announced this week it will revoke Empire Zone certifications for 13 Schenectady County businesses, including the Parker Inn and the Galesi-owned Scotia Industrial Park and Center City building downtown.
The businesses have until July 21 to file a notice of appeal.
David Buicko, chief executive officer for the Galesi Group, said the company plans to appeal. “We are very comfortable that we comply with Empire Zone regulations,” he said.
Chris Myers, owner of the Parker Inn on State Street, was not available for comment.
Katie Krawczyk, spokeswoman for the Empire State Development Corp., said the state revoked the certifications because the companies either failed a 1-to-1 cost-benefit test or were identified as “shirt-changers.”
The 1-to-1 test measures whether a company’s gross wages and capital investments equaled the tax benefits it used and had refunded. Shirt-changers are new companies that are similar in ownership and operation to an existing business in the state and showed no growth in their employee base for the period measured.
The Empire State Development Corp., in making its determinations, looked at company-provided data from 2001 to 2007, Krawczyk said...........>>>>.........>>>>>............http://www.dailygazette.com/news/2009/jul/10/empire_0710/

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Monday, July 20, 2009, 12:04pm EDT
Senate passes business-friendly Empire Zone bills
The Business Review (Albany) - by Adam Sichko

The New York state Senate unanimously passed two bills late last week that would enact business-friendly changes to the state’s Empire Zone tax credit program.

One of the bills would amend the state budget, which enacted changes designed to shrink the expansive program. The other bill creates a 29-person panel that would create a successor program to Empire Zones when they expire, as scheduled, in June 2010.

Senators approved the bills in a session that ended in the early morning of July 17. Both Senate bills now await votes in the Assembly.

Both the Senate and Assembly have adjourned indefinitely, until Gov. David Paterson decides to call a special session.

The bills are in response to outrage within the state’s business community at the ongoing changes to the Empire Zone program, which awards tax breaks and credits to companies in exchange for pledges to retain and create jobs.

It was created in the early 1980s, intended to entice development in poorer, urban areas. Today, it costs $520 million a year and involves more than 9,000 companies.

Interest groups and most politicians have assailed the program, arguing that it’s filled with abuse and that it’s drifted from its original purpose.

The state budget mandates that companies in the program must generate at least $1 of wages, benefits, and facility investments for every $1 in tax breaks that they receive from the state. Those who fail to meet those standards will be removed from the program.

So far, Empire State Development Corp., the state’s economic agency, has identified 544 companies statewide that will be kicked out of the program. That includes close to 50 in the Capital Region.

The state is still evaluating data from 1,390 firms, including about 130 area companies. Decisions on those businesses are not expected this month, state officials have said.

Companies have until July 21 to notify the state whether they intend to appeal the state’s judgments.

The state has sparked controversy by applying the budget’s new standards to the 2008 tax year, which would help generate the $90 million in savings budgeted in the Empire Zone program this year. As a result, thousands of businesses have been required to pay tens of thousands of taxes up front and wait for refunds.

Refunds will begin to be processed on July 30.

One of the Senate bills would date the changes effective to the 2009 tax year. Doing so would create a $90 million hole in the state budget.

“Making such changes to be retroactive to the 2008 tax year will hurt our economy and hinder our recovery from the current economic downturn,” the bill’s sponsor, Sen. William Stachowski (D-Buffalo) wrote in a memo attached to the bill. “The recent changes to the Empire Zone program are to dramatic to take place without any warning issued to the business community.”

Assemblyman Robin Schimminger (D-Buffalo), who is sponsoring the Senate bill in the Assembly, said the bill would provide companies advance warning whether their benefits would remain or be taken away, and give them time to plan accordingly.

“In its simplest implementation, the correction would negate efforts ... to block refunds,” Schimminger said.

Schimminger said if the bill passes the Assembly and is signed into law later this year, legislators could include a clause enabling companies to recoup money they lost by having to comply with the current state policies.

“But obviously, such a cumbersome process would drive participating companies nuts,” Schimminger added.
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The state budget mandates that companies in the program must generate at least $1 of wages, benefits, and facility investments for every $1 in tax breaks that they receive from the state. Those who fail to meet those standards will be removed from the program.

So far, Empire State Development Corp., the state’s economic agency, has identified 544 companies statewide that will be kicked out of the program. That includes close to 50 in the Capital Region.

The state is still evaluating data from 1,390 firms, including about 130 area companies. Decisions on those businesses are not expected this month, state officials have said.

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em·pire
Pronunciation:\ˈem-ˌpī(-ə)r\
Function:noun
Etymology:Middle English, from Anglo-French empire, empirie, from Latin imperium absolute authority, empire, from imperare to command — more at emperor
Date:14th century
1 a (1): a major political unit having a territory of great extent or a number of territories or peoples under a single sovereign authority ; especially : one having an emperor as chief of state (2): the territory of such a political unit b: something resembling a political empire ; especially : an extensive territory or enterprise under single domination or control
2: imperial sovereignty, rule, or dominion
3capitalized [Empire State, nickname for New York] : a juicy apple with dark red skin that is a cross between a McIntosh apple and a Red Delicious apple

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Under Pataki, Empire Zones turned into corporate welfare

    I took a very personal interest in the Sept. 6 article, “Officials glad for Empire Zones’ end.”
    As Gloversville councilman in the 1980s, I carried a door-to-door survey to my constituents in one of the poorest neighborhoods in the city to prove that targeting the benefits on residents of that area would be beneficial. Gloversville subsequently received an Empire Zone (then called an Economic Development Zone, or EDZ) in the first round and has since had many successes (and at least one failure) in its program.
    Even though one of the features of the program was to be specially enhanced incentives for hiring residents of the zone, no one (to my knowledge) ever returned to the neighborhood to see what, if any, benefit occurred there. Of course, when Gov. Pataki took over in 1995, this aspect of the program was seldom, if ever, mentioned, let alone emphasized.
    Metroplex Chairman Ray Gillen is absolutely correct in saying that this program needs to return to its roots if it is to have any lasting social value.
    But what I believe was much more beneficial to Gloversville in the long term was the federal Urban Development Action Grant (UDAG) program. This was a Jimmy Carter initiative (later squelched by Ronald Reagan) that gave money to local governments, which loaned it to businesses at belowmarket interest rates. The beauty of the concept was that the repayment of the loans stayed in the community!
    The Fulton County Economic Development Corp. (EDC)) then began forming its “Crossroads Incubator” subsidiaries and began to actually own the means of production (land and buildings) and reap a “social profit” in the form of “lease-to-own” payments by businesses. Thus, EDC has been able to produce positive economic development successes year after year (see Sept. 4 Gazette story on the second Estee Commons project).
    Somehow, it doesn’t seem to have occurred to the conservative Republicans who lead Fulton County that this is really an almost pure form of socialism. (But, then, I won’t tell them if you don’t!)
    In summary, I agree with Gov. Paterson and Chairman Gillen that the “Pataki concept” of Empire Zones is only a disguised form of “corporate welfare” that was far corrupted from its original intent and ought to be scrapped. But perhaps the earlier “Carter concept” of UDAGs has proved itself beyond anyone’s expectations. The core of that concept is decentralization of economic development decision-making, combined with a persistent (and very carefully policed) aversion to corruption in the local execution of the process. (This is nearly the same conceptual basis as Metroplex.)

    MIKE DAILEY
    Amsterdam

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  In summary, I agree with Gov. Paterson and Chairman Gillen that the “Pataki concept” of Empire Zones is only a disguised form of “corporate welfare” that was far corrupted from its original intent and ought to be scrapped. But perhaps the earlier “Carter concept” of UDAGs has proved itself beyond anyone’s expectations. The core of that concept is decentralization of economic development decision-making, combined with a persistent (and very carefully policed) aversion to corruption in the local execution of the process. (This is nearly the same conceptual basis as Metroplex.)

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Thursday, January 7, 2010, 11:48am EST
State of the State: Empire Zones to end
The Business Review (Albany) - by Adam Sichko

New York Gov. David Paterson reiterated his goal on Jan. 6 of ending the state’s Empire Zone program—but companies now in the program can stay years after it expires.

The Empire Zone program, which is the state’s signature business tax incentive, is scheduled to end June 30. More than 9,000 companies statewide—including roughly 1,000 in the Capital Region—receive tax credits in exchange for pledges to retain and create jobs, ideally in poorer, urban areas.

Paterson and other state officials have repeatedly said they want to replace Empire Zones with a new set of incentives called the Excelsior Jobs Program. Paterson and other critics have attacked Empire Zones for supplying millions of dollars of tax breaks to companies that generate few jobs in return.

“We’re going to put it where it belongs—in the past. We will no longer provide tax credits for businesses that do not provide the jobs we were promised,” Paterson said in his Jan. 6 State of the State address, to applause from the audience.

But that doesn’t mean companies in the program today will lose their benefits when Empire Zones end in June.

Companies receive 10 years of tax credits. Companies will be allowed to receive the remaining years of their tax benefits, if they continue to meet the new minimum standard of generating $1 of wages, benefits and investments for every $1 received from the state.

For instance, a company in its fifth year in the program will receive its remaining five years of benefits, if they comply with the program’s requirements...............>>>>.................>>>>..................http://albany.bizjournals.com/albany/stories/2010/01/04/daily24.html?surround=lfn

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Friday, April 2, 2010, 12:34pm EDT  |  Modified: Friday, April 2, 2010, 12:40pm
13 companies reinstated into Empire Zone program
The Business Review (Albany) - by Adam Sichko

A state board voted Friday to reinstate 13 Capital Region entities into the Empire Zone program.

The 6-0 vote reverses Empire State Development Corp.’s prior decision to revoke almost $1 million of annual tax credits from the entities.

Businesses warned that the loss of tax credits would have caused hundreds of layoffs, crippling mortgage defaults, bankruptcies and even moves to other states. Municipal officials, already dealing with high unemployment, pleaded with the state to spare companies in their towns.

In particular, Friday’s vote was a major victory for Schenectady County.

Combined, Galesi Group and BBL Construction Services have used Empire Zone benefits to lure major employers to downtown Schenectady—especially MVP Health Care Inc., which occupies a 175,000-square-foot headquarters with 1,050 employees on site.

The developers used Empire Zone benefits to cut tax bills and offer below-market rent.

MVP had said it would not renew its lease at the seven-story building if Galesi lost its tax credits, said MVP president and CEO David Oliker. MVP’s lease will end in 2016, if Empire Zone benefits disappear.

“The benefits of the Empire Zone made downtown Schenectady a competitive location,” Oliker wrote to state officials.

“If the Empire State Development Corp. reneges on its commitment, our operating costs would increase to such an extent that we would have no choice but to ... begin a search for alternative locations with lower real property taxes,” Oliker said.

In addition, Galesi and BBL retained Empire Zone tax credits for a downtown building that house Bow Tie Cinema and Siemens. The Parker Inn also gets to keep its Empire Zone benefits.

“Naturally, we’re thankful and relieved,” said Chris Myers, who owns the inn and employs 20 people there. The inn receives between $30,000 and $50,000 of Empire Zone benefits each year.

“That can make or break an entire year for us,” Myers said.

Also, Empire Zone benefits for the Glenville Business and Technology Park were saved by the vote.

The companies will now need to amend their 2008 tax returns in order to claim their benefits....................>>>>.............................>>>>.....................http://albany.bizjournals.com/albany/stories/2010/03/29/daily47.html?surround=lfn