Cuomo looks to revive Job Development Authority
Before embarking on a $52.3 million capital project at its Rensselaer facilities, Regeneron Pharmaceuticals Inc., based in Tarrytown, sought financial assistance in the form of state incentives from the state Urban Development Corp. (UDC).
In March, UDC ”“ which does business as Empire State Development Corp. ”“ proposed making a $200,000 grant to Regeneron to assist in the financing of the project, which is expected to retain 190 jobs and create 50 more within five years of the funds”™ disbursement.
As the state”™s chief economic development engine, Empire State Development (ESD) is charged with promoting job creation and private investment by means of state-backed loans, grants and tax credits.
In the past, state incentives have generally been confined to larger companies such as Regeneron making major capital investments, as high expenses to apply for ESD assistance deterred potential applicants with smaller projects.
Now, though, state economic development officials are attempting to resuscitate the Job Development Authority, a public benefit corporation devoted to promoting manufacturing and small business growth.
The authority has been largely inactive ever since a series of bad deals during the latter years of Gov. Mario Cuomo”™s administration forced a substantial bailout from UDC shortly after Gov. George Pataki took office in 1995.
Under Pataki and Charles Gargano, then the newly appointed commissioner of the state Department of Economic Development and chairman and CEO of the Urban Development Corp., UDC was rebranded and consolidated as Empire State Development Corp. and the Job Development Authority was reorganized under the ESD umbrella.
Seventeen years later, state officials confirmed they are in the process of rebuilding and rebranding the JDA as a program that will provide direct loans to manufacturers and other eligible businesses within the state to assist with the financing of building acquisitions and renovations or major capital purchases.
“We are at the very early stages of rebuilding this program to grow our capacity for financial assistance and improve access to capital for small businesses,” said ESD spokesman Jason Conwell.
The JDA will work with local development corporations throughout the state to identify small businesses that might benefit from state assistance.
Whereas JDA formerly guaranteed bank loans similar to how the U.S. Small Business Administration operates, the revived authority will make loans directly to qualified applicants. Any associated fees will be minimal so as not to exclude potential borrowers, sources said.
Manufacturers will be eligible for tax-exempt loans under JDA.
The state is aiming to unveil the redesigned JDA in 2013.
A former top UDC executive said the authority has “tremendous potential” to spur investment and hiring among small businesses, but warned against repeating past mistakes that led to the authority”™s demise.
“It was a terrific tool. It is a terrific tool,” said the official, who spoke on the condition of anonymity. “I think it will work really well for a county like Westchester.”
However, the source said, “there will be issues that have to be dealt with first.”
“Where it went awry is they did loans that were just too big. It was doing things that were outside the scope of the original mandate.”
Carolyn Bachan, senior vice president of loans and grants for UDC under Pataki and one of the officials involved in the JDA reorganization, agreed that the authority could be very effective under the right circumstances.
“One of the big problems with JDA when Pataki came into office was it was grossly overextended on some really, really big, bad deals from the last year of the Mario Cuomo administration,” she said.
“The first order of business was making it solvent again, which was accomplished with a huge infusion of cash from UDC,” she said. “I think JDA can be revived if it has good project underwriting and good bond underwriting.”
Since taking office in January 2011, Gov. Andrew Cuomo has assumed the burden of reinventing the state”™s economic development apparatus in the wake of one of the worst recessions to hit the U.S. and New York state.
In his first year as governor, the Cuomo administration awarded $800 million as part of a regional economic development awards competition and was instrumental in engineering a $4.4 billion private investment by a coalition of computer chip developers that was led by IBM Corp. and Intel Corp.
Following what has been widely deemed a breakthrough year for state government, Cuomo has promised a second round of regional economic development awards and later this year will appoint a New York Works Task Force to oversee the coordination of $16 billion in capital funds among the state”™s 45 agencies and authorities.
James Fossett, senior fellow at the Nelson A. Rockefeller Institute of Government in Albany, said Cuomo has taken a more active role in promoting economic development than past governors.
“There are a couple of things where he is really striking in a direction his predecessors didn”™t,” Fossett said. “I think it shows he certainly wants to be involved … He”™s been willing to invest some political chips in this process, which is more than most governors generally do.”