Empire Zone: R.I.P.

The ends of empires have always been messy affairs and it is proving true again, with the prolonged sunset of New York”™s Empire Zones.

When it ended June 30, the state”™s most comprehensive economic development program, worth $550 million annually in tax breaks and incentives, closed with a bang as businesses and local economic development authorities sought to finalize agreements before the program expired.   But the state, facing budgetary woe, may yet change the terms of the deals.

Statewide, it is estimated more than 120 EZ agreements were reached in New York”™s 82 Empire Zones in June 2010, according to Lisa Wilner, public affairs manager of Empire State Development, which administers the program.  By comparison, there were 32 EZ deals in June of 2006, 68 in June 2007 and 40 in June 2008. She said June 2009, when only five deals were closed, was an outlier because of changes being made to the EZ program that month skews the figure.

From April through June 30 of this year, 170 EZ deals were approved, according to Willner, compared with 74, 168 and 120 in those months during 2006-08. She noted only five of the 170 approvals were finalized thus far by the state, the others have received local approval.

Rockland County agreed on two important EZ deals, said Ronald Hicks, president and CEO of the Rockland Economic Development Corp.

AERCO International Inc. of Northvale , N.J., that manufactures high efficiency boilers will bring 150 jobs to Orangetown  in a  deal worth at least $10 million in leasing a new facility being constructed now.

And Hunter Douglas of Saddle River, N.J., which manufactures custom window blinds, is moving its corporate headquarters with 93 jobs to the vacant 60,000-square- foot Blue Hill facility in Pearl River.

But Hicks said that New York economic development efforts could be hampered anew by a retroactive change in terms for standard EZ deals. Those deals typically create a 10-year schedule of tax abatements and other benefits, but there is discussion among state legislators and the governor of cutting the size of the agreed-upon benefits in half for three of the 10 years. Hicks said details are not finalized, but he worries that companies that have agreed on deals could change their minds if the terms of the EZ agreement are retroactively changed.

His concern is shared by some state officials. “If adopted, this action would amount to little more than the government borrowing from New York businesses to pay for excessive spending that lawmakers are unwilling to trim,” said state Sen. Thomas P. Morahan, who represents Rockland. “It would also cripple economic development efforts for years as it would damage the state”™s credibility as a trusted partner.”

Inquiries about the matter to EDC officials were not answered by deadline.

As a final irony of the Empire Zone, it was ended at least partly due to its cost of a half-billion outlay annually in a state grappling with huge deficits. But because any deal that was signed by June 30 is grandfathered, savings will not accrue for at least several years, according to Maggie McKeon a press aide to the governor.