Gov. Eliot Spitzer”™s downstate economic development chief has said the state will curb its financial incentive packages for project developers throughout the state as part of the administration”™s goal to ease the cost burden on taxpayers.
The state”™s tougher negotiating stance with developers should not affect projects in Westchester, a county economic development official said last week.
Patrick Foye, downstate chairman of the Empire State Development Corp. (ESDC), told the New York Sun this month that the state plans to lower the amount of subsidies and tax breaks commonly offered project developers. Those incentives often include tax-free bonds for construction and payment-in-lieu-of-tax agreements for startup businesses.
While keeping a tighter grip on the state”™s economic development dollars, Foye reportedly said state officials will be “passionate advocates for the advantages of doing business in the city and state.”
The planned cuts in development incentives will not be across the board for proposed projects, said an Empire State Development Corp. (ESDC) spokeswoman.
“We are going to evaluate each deal on a case-by-case basis to make sure that taxpayers are getting the most for their dollars,” Anna Maria Mannino said. “It”™s not a specific formula; it”™s more of a strategic goal. We want to lower the bar to make it more fair for taxpayers.”
That goal is in line with Spitzer”™s campaign pledge last year to reform the state”™s economic development strategy, which he called “fragmented, politically driven and unaccountable.” In particular, he criticized the agenda of the ESDC under Gov. George Pataki as “too often driven by political considerations rather than economic merit.”
“Decisions must be based on merit, not on politics, with the public interest, not the special interests, in mind,” he said.
Theresa Waivada, deputy director of the Westchester County Office of Economic Development, said she expects to see no change in the county”™s working partnership with ESDC under the Spitzer administration.
“We have been fortunate to have state support on some major projects, but it”™s never been comparable to the grants that have been given to New York City and on Wall Street,” she said.
In the wake of the Sept. 11 terrorist attacks, Goldman Sachs, the Wall Street investment banking firm, reportedly received $115 million from the city and state and $1.6 billion in tax-free federal bonds to build its headquarters in lower Manhattan. Its banking rival, JPMorgan Chase & Co., reportedly is seeking a large incentive package from city and state officials to build a 50-story office tower near Ground Zero.
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“I don”™t think it”™s really going to be a problem for anyone in the state,” Waivada said of the Spitzer administration”™s cost-control effort with economic development deals. “I think a lot of what was done” in the way of special subsidies for companies “happened after 9/11, and I don”™t think that”™s going to be an issue any longer.”
In Westchester, “We have reasonable projects here,” Waivada said. “I found the state has always been very fair.
“I”™m very positive about the direction that Empire State Development is taking in that they”™re going to focus more and make deals with companies based on the jobs created, their capital investment and the commitment that they”™re going to make to a community,” she said. “I think they”™re going to weigh each project on the merits of the project and I don”™t think that”™s going to negatively affect us.”
The ESDC spokeswoman said the management consulting firm A.T. Kearney in January began an extensive study of the agency”™s operations, including its economic development programs. The consultant will produce a new strategic plan for the agency at no cost to the state.
“They”™re doing a complete evaluation of the agency and they”™re going to come back with ways that we can be more efficient,” Mannino said. The report is expected to be completed in the next few weeks.
She said the state”™s incentive deals for developers “in part” will be addressed in the consultant”™s report.
The governor”™s economic development officials have not yet applied their cost-cutting strategy to any proposed project in the state, Mannino said.
“We haven”™t been here for very long and we don”™t have the test cases to show how they will be lowering that bar, but they will be coming.”
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