Economic development officials in the region had nothing to offer a Newburgh-based manufacturing company, which last week said it would be moving to Alabama or Georgia in response to inducements from economic development officials there.
And the acting head of the Orange County Industrial Development Agency called it “a flaw in the system” that the state has more mechanisms to attract business than retain existing business.
Active Ventilation Inc. has a 65,000-square-foot factory on First Street in Newburgh where it manufactures energy efficient and solar driven roof top ventilation systems. The family owned business employs a multi-cultural work force of about 20 employees and exports products to countries such as Ireland, Israel and China.
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Ethan Kolt, executive vice president of Active Ventilation, told reporters last week that, though details still remained to be worked out, the company would be leaving Newburgh due to the high tax load of city and school taxes.Municipalities in Alabama or Georgia have offered to purchase a building and lease it to the company at a reduced rate, while arranging reduced rates for utilities and taxes and paying moving expenses. Kolt said that in their discussions with New York economic development officials it became clear the state is unequipped to retain business.
“To a large extent that is true especially in their case, where they don”™t own their building,” said James O”™Donnell, administrative officer for Orange County government and acting director of the county IDA. “States bid against states. Normally what happens is when businesses are established, the new state has advantages in what they can give them. Obviously, it”™s a flaw in the system.”
He cited the example of Satin Fine Foods as a company Orange County retained, beating out offers from the state of Georgia in the process, but he said that company expanded into a new building the company would own. He said since Active Ventilation leases their building there is less programming to aid them.
“You have to go to a bigger, newer building to get the better (incentives),” he said.
He said now that the Empire Zone program has been replaced by the Excelsior program. “We”™re looking to see” if there is anything under the new economic development regimen to retain business. He said he has sought information from the state Economic Development Corp.
“I think the state has to be aggressive on both retention and attraction,” said Michael Oates, president and CEO of the Hudson Valley Economic Development Corp., a private entity that is separate from the state development corporation. “I would call on (Empire State Development) to reach out to Active Ventilation as quickly as possible.
“A family owned company that wants to grow is exactly the kind of company we want to keep here,” said Oates. “We have to be much more aggressive in our outreach to explore whatever options and opportunities could be put in place to help them change their mind and remain in the Hudson Valley.”
Oates could not suggest any specific program or funding source that could help retain the company, saying that economic development officials “have to be creative. I think there could be a variety of options that could come into play.” He said the options vary depending on the type of investment the company wants to make and the number of jobs involved.
“We”™ll certainly reach out to them as well,” Oates added.
When HVBiz contacted Empire State Development, it got an e-mail response from its public affairs department.
Lisa Wilner, public affairs director of Empire State Development, wrote, in part: “During these difficult economic times, we have streamlined operations and are focused on leveraging our assets, investing taxpayer dollars to garner the greatest return. However, the reality remains, we aren”™t always able to meet the needs of every company.
“We certainly are disappointed when a company moves out of state and we hope to be able to work with Active Ventilation to ensure that doesn”™t happen,” Wilner”™s statement continued. “But we understand that they have to do what”™s best for their business. No matter what their decision may be, we will continue to work hand-in-hand with local officials to address the needs and concerns of the local community.”
City of Newburgh office of planning and development officials praise Active Ventilation. “The ingenuity of the family and the products they make are extraordinary,” said Courtney Kain, a community development officer in Newburgh. “And they are hiring all local people, which is unique. It”™s a great operation.”
She said the city has discussed with the Kolts ways to keep the company in Newburgh, then sought resources to make it happen. “We sort of went up the chain,” said Kain, but ultimately had no success.
Do state economic retention efforts match local efforts to attract business? “That”™s a little bit gray,” said Kain. “Now, what we need to do is fill a vacancy that may occur. We weren”™t able to compete with Alabama, there”™s a lot of markets we can”™t compete with. All we can do is look at the assets available locally.”
Maureen Halahan, president and CEO of the Orange County Partnership, did not return a call to her office.
