Editors NOTE: Mr. Griffin is getting $13,000.00 a month for being on the Hornell IDA and SCIDA. IDAs tax exemptions drive up property taxes for residents that are forced to make up the difference of the corporate welfare. Sen Winner's law firm represents Fortuna Energy gas developers who seeks to benefit from IDA exemptions. SCIDA operates as a criminal enterprise. Steuben County would be served well with the abolishment of the IDAs.
Area representatives to Albany and local industrial development agency leaders are up in arms over a new piece of legislation seeking to reform IDAs, but the assemblyman who wrote the bill said he is open to compromise if it helps the bill pass.
So far this year, 28 separate bills — not counting identical bills introduced into each house of the Legislature — have been introduced to regulate IDAs.
One of the bills, named the Hoyt Bill after its sponsor, Assemblyman Sam Hoyt, D-Buffalo, is a combination of many of the reforms, including some local leaders feel will drive business out of the state.
The biggest impact of the 32-point bill, said State Sen. George Winner, R-Elmira, is requiring construction workers to be paid prevailing wages for all construction work and a “living wage” for all employees beyond the life of the project.
“Those mandates would create a significant increase in costs ... and remove any real advantage of using an IDA,” he said. “That’s the death of IDAs upstate.”
Winner said one IDA attempted to make those changes and it effectively stopped all new development.
“Ulster (County IDA) put something like that in place,” Winner said, adding that organization had to repeal the measure after 18 months because no applications for assistance were submitted in that time.
“Couple it with the fact that we no longer have an effective Empire Zone,” Winner said, and there is little to bring business to upstate.
And the legislation would cause even more harm in the southern parts of Steuben and Chemung counties.
“It would become almost laughable,” Winner said, to try and attract businesses close to the Pennsylvania border because there would be almost no benefit to companies to choose New York over the Pennsylvania’s Northern Tier.
Hornell IDA Executive Director Jim Griffin said the biggest problem is not when building the projects, but when it comes to paying employees through the long term.
“The living wage is the big stickler around here,” he said, adding the living wage for the area is around $11.50 an hour.
“A lot of our jobs are second income jobs,” Griffin said. “A lot of families need those second income jobs.”
With that provision, the IDA would not have been able to assist Wal-Mart or Lowe’s in Hornell, which likely would have led to the businesses going somewhere else.
The prevailing wage regulations on building projects are moot points, Griffin said, because most projects are union-shop projects already.
“We encourage them (to pay prevailing wage) because it keeps peace in the valley,” he said, adding work on the Lowe’s in Hornell is being constructed using union labor. “They (Lowe’s) could have brought in some contractor from Wisconsin to build it, but they didn’t.”
Griffin said local IDAs are important because they can focus on a wider variety of projects than a state system could.
“The value, to me, of IDAs is they respond to area needs,” he said. “For some areas it’s tourism, for some it’s commercial. For some, it’s industrial. For the state to take on economic development with a blanket policy, it doesn’t make sense to me.”
Griffin also said if local IDAs are rendered useless, nothing else is available to bring business to the area.
“Right now, at this stage of New York’s history, there’s nothing else,” he added, citing the upcoming sunset of the Empire Zone program in 2010 and the loss of state economic development loan money.
John Foels, director of the Allegany County DA, said the impacts of wage restrictions could be dire, especially for the many civic projects on hold.
“What that basically does is drive the cost up 25-30 percent,” Foels said.
Before those projects go through, Foels said, the state will need to re-adopt a law allowing IDAs to assist not-for-profit organizations.
Our ability to do those projects sunset over a year ago,” he said. “We have a project pending in Cuba for Cuba Memorial Hospital for an assisted living campus ... There’s a considerable amount of these projects on hold around the state.”
A far as regulations requiring more reporting and disclosure, Foels said that would not be a problem.
“We do very extensive reporting to the Comptroller’s Office annually,” he said. “We’re very used to it.”
Assemblyman James Bacalles, R-Corning, agreed the prevailing and living wage clauses would seriously increase the cost of projects.
“If the Hoyt bill becomes law, you might as well not have an IDA. It’s as simple as that,” Bacalles said.
“In two years, they only did projects that were exempt from that rule because they were already in the planning stages,” he said.
One part of the legislation — restricting IDA developments outside of brownfields unless there is a reason why it is not feasible — would shut down local IDAs because few brownfields are located in the area.
“He’s trying to eliminate IDAs in rural areas,” Bacalles said, adding the move would push for more development in urban areas where many brownfields are located. “It works well for his district, but not the rest of us.
“The only brownfield we have in Steuben County is the old foundry site for Ingersoll-Rand,” he said, adding there are other possible sites for use, but businesses already occupy those locations.
Leaders have said they do support many of the measures in the bill, however.
Requiring IDA boards to have members from education and environmental groups could help offer input to groups affected by projects.
“PILOT agreements have an impact on school taxes,” Winner said, adding letting schools have input on project negotiations could help secure better deals for everyone involved.
Other regulation changes, including shutting down IDAs with no outstanding debt, will clean up the system.
“I think they’re getting at IDAs that haven't done anything,” Winner said. “Our IDAs are very active.”
Winner also said IDAs should crack down on companies that do not follow the laws governing their projects.
“If it’s a violation, it should be corrected,” he added.
Could there be a compromise?
Hoyt said in an interview with The Evening Tribune this morning he recognizes some of the measures in his bill are controversial for rural business development, but he knows some kind of reform is needed to clean up the system.
"There's widespread — almost unanimous — support for IDA reform," he said. "I suspect my friends George and Jim probably support 90-percent of the bill. I've said from Day 1 that I am willing to compromise to get the bill done."
Hoyt said measures requiring prevailing and living wages are important for IDA projects because he has seen too many projects where minimum-wage jobs are the result of government investment.
“There’s been all sorts of information in many reports from the Comptroller’s Office that show, like many public authorities, IDAs are wasting taxpayer dollars,” he said. “They’re meant to attract good jobs. We want to make sure those create jobs with good wages.”
Hoyt also defended the increased restrictions on developments outside of brownfields, saying the intent of the clause is to stop urban sprawl and save taxpayers money.
“We’ve seen in many of our communities too much sprawl,” he said, adding instead of moving to the suburban areas, IDAs need “to encourage development where there is already infrastructure, saving the taxpayers money.”
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