Major changes in EDZ program
By GIB SNYDERArticle Photos
Fact Box
"It's frustrating for everybody that wants growth and to see good things happen."
- Patrick Stokes, Dunkirk/Sheridan Empire Zone Coordinator on new Empire Development Zone rules
If you think the recently-adopted New York state budget hurts the local area, it wasn't the only legislation the state passed that will have a negative impact.
Changes made to the Empire Development Zone program won't be helpful to local development officials either.
"The (Gov. David Paterson's) initial proposal did enough damage," Patrick Stokes, Dunkirk/Sheridan Empire Zone Coordinator said. "Businesses reacted on the governor's proposal alone and didn't wait to see. Like the marina here didn't want to wait and see what was going to be the final outcome. The biggest problem was Albany, because of the financial crisis, wasn't issuing certificates, which has been very difficult for us here."
Sheridan Town Supervisor John Walker is chairman of the local EDZ board and explained the need for an EDZ in Chautauqua County. There is also an EDZ in the southern end of the county.
"In the past we've had issues with industry keeping itself competitive. It was hard for industry to compete and then try to add the new equipment necessary every few years," Walker said. "The Empire Zones, through their investment credits, allowed a lot of our industry here to expand. We've re-centered ourselves around food-type industries; Nestle Purina, Cliffstar, Carriage House, that type of stuff and we've upgraded our steel products again.
"They've gone through a re-make of high-quality stainless and titanium and stuff like that. This takes expensive equipment and the investment credit and the programs that were provided by the Empire Zone allowed industry here and in the south end ... to move at a pace probably that they would not have been able to keep up without the program. I think it's created jobs for us. I know it's anchored these businesses here."
Walker said the investment each year in the northern EDZ was probably in the neighborhood of $25-30 million.
"That's a tremendous average for plants that normally would just do their business, and in the old days, leave," he said. "We're looking to keep them here and I hope that's the case."
The list of changes was sent out recently in an e-mail from Stokes to local EDZ board members and the press.
Stokes listed several that will not help, including moving the sunset date of the program up a year to June 30, 2010. Stokes said some EDZ operations may shut down earlier than that due to money shortfalls, but that should not happen locally due to proper fund management.
One of the major changes takes approval authority from local EDZ boards and transfers it to Albany.
"The biggest change is the board doesn't approve anymore, they just review, all approval begins in Albany and it makes it so they can put any date they want on it," Stokes said. "Before, the local board approved it and it was marked on such a date and they got the benefit from that date regardless of Albany. Now, they'll put a date on it. Essentially, there will be no applications after December of this year."
Walker also wasn't thrilled with that shift in decision making to Albany.
"I think it's difficult to make decisions for development when you're not there to see it. You can make a trip out here and make a drive around but you really don't get a feel for the jobs that are created, the secondary jobs that are created and what this area would be like if you took the plan away," he said. "All you can see is the numbers on a spread sheet when you're a distance away and I think that makes it difficult for anybody who has that task. That's why I think they depend on the zone coordinators like Pat (Stokes). You have somebody on the ground who knows exactly what the businesses, who knows exactly how many people they have and can see all the subsidiary work that gets done.
"I think the zone coordinators serve a very big part, it's a necessary part. I think they need to be responsible naturally. In our case we used to be responsible to the Buffalo area and Buffalo area overall was responsible to the Albany area. To move it that far away, almost a 5 1/2 hour drive, that's going to make it difficult."
Other changes in the program include:
Existing certified businesses would have to pass a 1-to-1 cost-benefit test, or risk decertification.
So called "shirt changers" would be decertified, unless allowed to continue through discretion by ESD commissioner.
Going forward, all businesses except manufacturers would have to achieve a 20-to-1 cost-to-benefit average. Manufacturers would have to achieve a 10-to-1 CBA.
The cost-benefit ratio would be calculated by dividing the sum of the estimated wages and benefits for all actual and estimated employees during the first three years of certification and the investment during the first three years of certification by estimated amount of Empire Zone benefits that may be used and refunded during the first three years of certification.
New criteria is added for certification, including a determination that the project is likely to create jobs in the zone; whether the project would result in relocation of employees from one business in the area to the applicant business, or from one region of the state to another; whether in three years preceding certification, businesses engaged in substantial labor law violation.
During 2009, ESD will conduct a review of all Empire Zone certified businesses to determine if each such business should be decertified for failing to meet the 1-to-1 cost-benefit test, and has not been determined to have committed any substantial labor violation. If businesses are determined to have met these tests, they will be issued a retention certification. Revocations could be appealed. If a retention certificate is not authorized, then business will not be allowed to carry over any unused credits.
The Real Property Tax credit would be reduced from 100 to 75 percent.
$0 for administrative funding.
Stokes explained the cost-to-benefit average.
"For every dollar benefit they want to see $20 of investment capital or creating jobs or salary investment in a certain pay range, 125 percent of the minimum wage," he said. "What the changes could mean is they want to eliminate retail out of the mix by making it 20-1. For manufacturing it's great at 10-1, that should be easy to hit.
"It's going to have good and very bad effects on us. We have more smaller businesses and it's more difficult to meet the 20-1. The good news is its 10-1 on manufacturing. The bad news is they're really going to go after people not reporting on time. If they don't report manufacturing numbers as accurately as possible, or just don't report, there is no waiting. They're looking for any excuse to decertify."
"It's frustrating for everybody that wants growth and to see good things happen. A lot of the businesses we work with and show real estate to are in different businesses."
Walker was asked if there were efforts underway to get the program reinstated.
"I have no no doubt that economic development is going to be on both sides. Elections are coming up and so on. I have no doubt economic development will rise and come up to the top," he said. "I don't know what each side has to offer, but I do hope that they realize we're not like downstate. We don't have a lot of the opportunities they have. We don't have the money they have and we need some assistance in order to keep our people here and keep the businesses we have going forward."
The next meeting for the Dunkirk/Sheridan EDZ board is set for April 23.
"It will be an interesting board meeting ... the first one without applications in a while," Stokes said.
Send comments to gsnyder@observertoday.comv
