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December 11, 2015

The latest on New York’s $8 billion in state government subsidies to businesses

 

Skelos Conviction Edition


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Bettina Damiani, Director of State Transparency, Reinvent Albany 

Survivors of 2015 Subsidy Games Awarded $2.25B
This week, State officials and local leaders announced the winners of the fifth round of Regional Economic Development Council, and the first ever Upstate Revitalization Initiative (URI). Three URI mega-grants worth $500 million each were awarded to the the Finger Lakes, Southern Tier, and Central New York regions. Simultaneously, the state awarded $750 million via the annual REDC process. Frequent REDC cellar-dweller New York City was only second to last with its award of $84.1 million, Western NY that includes the Buffalo came in "last" with a $83.9 million worth of awards.

The governor has been clear that the REDC process is focused on helping the most distressed parts of the state, not New York City's booming economy. NYC's successful economy (of which Upstate is a beneficiary) is fostered by its density, huge labor and capital markets and the city's efficient public infrastructure and transportation systems; not business tax giveaways. So, while the REDC, URI, etc. allow for much pomp and circumstance for officials, we wish as much attention was paid to the bricks and mortars (and the pipes) of New York's communities that attract and keep businesses strong.  

Robbing One Racino to Pay for Another?

Finger Lake Residents continue to express discontent about the Seneca County IDA subsidizing a new casino. Speakers at a public hearing blasted an IDA proposal that provides a proposed casino with more than $19 million in tax breaks and puts in place a PILOT agreement for real estate taxes. But this is no run-of-the-mill IDA proposal, it is a complex deal which involves Lago Casino and Resort paying $43.5 million to the IDA. The casino promises to hire 1,200 Full-Time Equivalent jobs with salaries averaging $42,000. (Deals like this can involve a smaller number of higher-paid employees whose salaries are averaged with more numerous, lower-paid, part-time employees).

Making matters worse, the promised benefits to the region are questionable, since half of its projected customers would come from existing state or Indian-owned racinos; could the casino project mean a transfer of jobs rather than the net creation of new jobs? David Shaw of the Finger Lake Times, who was at the meeting, reports that project was approved 8-0 yesterday. One doesn't need to look too far into history to see what happens when government and gambling mix: remember New York City OTB and the shifting of the tax burden to Atlantic City residents?   

Vague RFP, Use of Non-Profit Discouraged Potential Riverbend Bidders

Concerns started early and often, according to an extensive article about the Riverbend bidding process that led officials to choose LP Ciminelli to develop SolarCity. Several developers expressed concerns—off the record—that the original RFP was so vague they did not bid on it. Potential bidders were also concerned because the contracting process was managed by non-profit Fort Schuyler Management Company, which is not subject to the state comptroller scrutiny, and was unfamiliar. State officials rebutted criticism by noting that using state controlled non-profits allowed the project to move quickly.  

Subsidy War Breaks Out in Saratoga For Dollar General

Now, this is what we call a race to the bottom: the national chain Dollar General is asking for a whole lotta one dollar tax exemptions—$11 million of them in fact—to build a warehouse store in Saratoga. Otherwise, the General is threatening to open its store in Connecticut or Massachusetts.  

Public Meetings Worth Noting:

 

Other Business Subsidy News Worth Noting This Week:

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