Hundreds of companies statewide have been informed they have lost their Empire Zone certification and scores more could lose it in coming weeks, according to lists issued by the state Economic Development Corp. But like many matters connected with the controversial EZ development program, details are murky, with even those under scrutiny unsure of what”™s happening.
EZ companies regionally are affected and economic development officials and company spokespersons say they are awaiting more information regarding the data used to expel them from the program. They also await an appeals process.
Final decisions on expulsion from the program, or even the reasons behind the decisions, will not be known until follow-up letters are exchanged between state officials and EZ benefit recipients. State officials stress that of about 8,000 EZ certified companies, more than 6,400 will retain their benefits. Final decisions should be made by mid-July.
Almost 700 companies that have been certified in the EZ received single-page letters dated May 18 from Randal D. Coburn, director of the Empire Zones program, informing them that as a result of “certain statutory reforms” enacted as part of the state”™s 2009-2010 budget, all existing EZ-certified businesses had to verify they “qualify for continued participation based on new statutory requirements.”
Coburn wrote that “specifically” development officials sought to determine if companies restructured or transferred workers from one property to another to “maximize their EZ benefits” and “whether a business is providing economic returns to the state that exceed the tax benefits it is receiving.”   Â
Coburn wrote: “Based on our initial review ”¦ it appears your business does not meet the qualifications for continued certification,” adding that additional information will be provided by June 19 “that will provide details on our findings and explain the process for appealing.”    Â
A similar letter was sent to about a thousand companies statewide informing them they were being considered for expulsion. Those companies, too, were promised more information by June 19.Â
Begun in 1986 as Economic Development Zones, the program was modified and its name changed to Empire Zones in 2000. It has remained a potent source of economic activity and controversy ever since.
New York State has 82 Empire Zones, involving some 9,200 businesses employing some 380,000 people. The program reportedly cost $30 million in 2000 and $520 million last year.
The program has been controversial for some time but came under renewed fire in December 2008 when the non-partisan Citizen”™s Budget Commission issued a 16 page report saying the program was so flawed it could not be reformed and should be abolished. Instead, the Paterson administration has tried to temporarily reform the program and currently plans to end it as of June 30, 2010. No details are available on what economic development program would replace it.     Â
If a company is decertified, it would not have to pay back any tax credits taken from earlier tax years, according to Katie Krawczyk, upstate director of public affairs for ?Empire State Development. If a certified business filed a 2008 tax return this year, claiming Empire Zone tax credits, and is eventually decertified, there would be interest charged for any underpayment of taxes, but no penalties.
