In Yonkers last week, city administration officials were “mystified” by the state”™s recent action to remove at least 40 and potentially more than 100 companies in the city from the Empire Zone program with its tax credit incentives to spur economic development.
A total of 43 companies in Yonkers and 35 in the city of Mount Vernon in May were notified by the state Dept. of Economic Development”™s Empire Zones Program director that they appear not to qualify to continue in the program, which offers tax credits and refunds to businesses that create jobs and investment in communities. An additional 69 Empire Zone companies in Yonkers and 59 in Mount Vernon were asked to provide more information by June 30 so the state can decide whether they qualify to stay in the program under new provisions approved by state legislators this spring.
To cut state costs and eliminate tax benefits abuses in the program, lawmakers raised the cost-benefit ratio for nonmanufacturing Empire Zone businesses from 15-to-1 to 20-to-1; that is, a company must invest $20 in the zoned operation for every $1 in tax benefits. For manufacturers, the cost-benefit ratio is 10-to-1. Lawmakers also moved up the program”™s sunset date by one year to June 30, 2010.
State officials are reviewing companies to weed out “shirt-changers,” businesses that reincorporated and transferred employees or property from one business to another before Aug. 1, 2002, to maximize their Empire Zone benefits. The state”™s spring review also looks at companies to disqualify those that, after at least three years in the program, provide economic returns to the state that are less than the tax benefits they receive.
In Yonkers, the new 20-to-1 cost-benefit requirement is the primary reason why Empire Zone companies there were notified of their pending disqualification, city Planning and Development Commissioner Louis C. Kirven III said last week. Companies on that list include Stew Leonard”™s Yonkers L.L.C. and Morris Builders L.P., the Rutherford, N.J.-based developer of the Austin Avenue shopping center where the profitable and popular Stew Leonard”™s store is an anchor tenant. The New Jersey company in January reached a court settlement with the Yonkers Industrial Development Agency in the IDA”™s suit over company payments due in lieu of taxes on a brownfield site adjoining the shopping center.Â
Kirven said city officials have had “no interaction” with the state on their Empire Zone decisions and notices affecting local companies. “We don”™t think it”™s a good thing,” he said of the state”™s enforcement action, “particularly in this economic climate.”
The state, by raising cost-benefit requirements and lowering property tax credits, “is looking at a way to save money, but that”™s short-sighted,” Kirven said. “If anything, New York State should be looking at the fundamentals in terms of high taxes, high regulations, high costs of doing business.”
In competing with other states for private businesses, the Empire Zone and Industrial Development Agency incentive programs “are our equalizers,” he said. “You start to take those away, it”™s going to be much more difficult to create the economic body of New York State.”     Â
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At City Hall, “We”™re mystified as to what the state is doing and don”™t support any efforts to take away those tools,” the commissioner said.
At Stew Leonard”™s headquarters in Norwalk, Conn., “We were surprised” by the recent Empire Zone notice from the state, company spokeswoman Rachel Begun said last week. The form letter told companies that details of the state”™s review findings and the appeals process for about-to-be-booted companies will be sent by June 19.        Â
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“Really, until that happens we don”™t know anything else,” Begun said.
Kirven said Yonkers officials will hold an informational meeting for Empire Zone companies at 10 a.m. June 11 in Riverfront Library.
