The gloom has been evident in the two years since the economy plunged into recession, evident in the small, but growing number of Westchester businesses voting with their proverbial feet.
Last year Starwood Hotels & Resorts Worldwide Inc. announced plans to move its headquarters and 800 jobs from White Plains to a new campus in Stamford, Conn., in return for $90 million in local and state tax breaks.
And just last week, Cadent Energy Partners, a private equity firm that invests in small- to medium-sized energy companies, relocated to 6,589 square feet at Stamford”™s High Ridge Corporate Center, from 4,300 square feet at 800 Westchester Ave. in Rye Brook.
“The difference in state taxes played a role in our decision to move into Connecticut,” Jennifer Cochran, Cadent”™s vice president of finance, told the Stamford Advocate last month. She declined to discuss the move with the Business Journal, citing both relocation and financial reporting deadlines.
How has Westchester gone from Golden Apple to tarnished apple?
“We are a part of, and associated with, the state of New York. That is becoming more and more difficult as we go forward. Just the idea of the MTA tax ”” they can call it an MTA tax. I look at it as a nuisance tax,” said John R. McCarthy, president of McCarthy Associates, a White Plains commercial real estate brokerage.
“Those things definitely weigh heavy on the larger companies. But the mid-size companies and smaller companies, they all say, ”˜Unless there”™s immediate need, why do I have to be in Westchester County?”™ I think that”™s the biggest challenge that we have collectively going forward.”
Business community feels taxed out
The Metropolitan Commuter Transportation Mobility Tax cemented a business consensus ”“ expressed in months of public events and weeks of interviews with the Business Journal ”“ that Westchester”™s challenges reflect in part reduced clout with state officials. Every Democratic member of the county”™s Albany delegation voted for the MTA tax, whose $1.5 billion a year revenue estimate proved overoptimistic.
Westchester”™s tax climate would have been worse had Gov. David Paterson won legislative approval this year for his proposed penny-per-ounce tax on non-diet soda, one business leader says. Several state lawmakers joined Purchase-based PepsiCo Inc. in opposing the measure, citing the company”™s 1,600 Westchester jobs.
“You can”™t keep hitting Pepsi with a soda tax and expect them to stay here,” said Charles W. Brown, who will become chairman of The Business Council of Westchester”™s board of directors in January. Brown and his wife, Renee, run construction firm C.W. Brown Inc. in Armonk.
“I think it”™s time that we bring business back to Westchester and make Westchester business-friendly,” Brown said. “It”™s time for the building departments in the different municipalities to work together to attract companies and reward the ones that are here in helping them to prosper. What do some of the major corporations like Pepsi or Morgan Stanley or MasterCard, what do they need? What are they looking for to help grow their business? They don”™t need more taxes.”
Echoed McCarthy: “Can you imagine the state of Georgia ever implementing or even bringing a sugar bottle bill up out of committee with Coca-Cola there? It would never happen.”
Political wrangling taking a toll
Westchester County Executive Robert P. Astorino says sentiments business owners shared with him recently weren”™t much different from what he heard when he got elected a year ago.
“There”™s a little movement. They”™re getting a little more confident. But still, there”™s a lot of apprehension,” Astorino said in an interview. “There”™s uncertainty at the federal level. There”™s craziness in Albany. Clearly, if you are in Westchester, the high taxes and cost of doing your business here makes it very difficult to stay.”
Astorino won election in part on promises to shrink county government and stop rising county taxes. On Nov. 9, he released a $1.8 billion budget calling for a 1 percent cut in county property taxes, $33 million in spending cuts and 705 fewer jobs, including 226 layoffs. The Board of Legislators has begun its review.
“The negative publicity we”™ve been getting with cutbacks and things like that in government, that”™s been hurtful. That communicates negative things to people who want to open businesses here,” said Andrew J. Spano, whom Astorino unseated as county executive.
Dr. Farrokh Hormozi, chair of public administration and professor of economics at Pace University in White Plains, cited a dilemma at the state level “to the extent that the officials have problems coming to agreement on a budget and have problems getting the state”™s economy back to a state of growth.”
“During the last quarter, particularly, because of the political wrangling that took place between the candidates, not only for the governor”™s office, but for Assembly and for other offices, the negative attitude that was portrayed just to get themselves elected, these type of things have a serious psychological impact on people. They just want to wait and see what will happen, so they do not hire people or grow their businesses.”
Some advantages, but much less influence
Robert F. Weinberg, partner and president of Robert Martin Co. L.L.C. in Elmsford, applauds Astorino”™s moves to shrink county government and thinks Albany should follow suit: “New York state just costs too much to run, and that”™s got to be addressed.”
Robert Martin is one of a handful of developers still based in Westchester. The decline in the number of county-based real estate firms and corporate giants has eroded Westchester”™s job base, said Alfred B. DelBello, county executive from 1974 to 1982.
“Westchester has lost a lot of influence. It no longer has the clout that it used to have,” said DelBello, now a partner in the White Plains law firm DelBello Donnellan Weingarten Wise & Wiederkehr L.L.P. and Westchester County Association chairman.
“There are very few companies that have their CEOs in Westchester County. The last ones are PepsiCo and IBM and MasterCard. A lot of the other companies are much smaller, with far less clout. Or they have their operations dispersed, particularly the real estate companies.”
He and others interviewed agreed that Westchester retains many advantages ”“ proximity to Manhattan, an educated work force, Metro-North Railroad”™s three commuter lines, and one of the region”™s lowest unemployment rates.
“I just have not seen statistics that are worse than anybody around us. Most of the time, they”™re better,” said Spano, who served as county executive from 1998 to 2009.
Yet Westchester is the nation”™s highest-taxed county in the Tax Foundation”™s annual surveys. Spano dismissed the ranking as misleading, saying it reflects the high value of Westchester properties. When those are accounted for, he said, Westchester ranks 49th.
“That”™s why campaigns are so tough,” Spano lamented. “You can”™t walk out there with someone saying it”™s the highest taxed county in the country and say, but we”™re only 49th in tax rate. You can”™t run on that stuff.”
