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Debatable Plan

Local officials unsure whether Excelsior program would help area

February 7, 2010
By MICHAEL ANICH, The Leader-Herald

GLOVERSVILLE - New York state may transition from one type of economic development program to another, but local officials and business leaders are unsure whether the proposed new Excelsior Jobs Program actually would improve the state's economy.

About 30 percent of Fulton County's companies that have in the past or currently are receiving state Empire Zone benefits may not be eligible for benefits with the new program.

Michael Reese, executive vice president and chief executive officer of the Fulton County Economic Development Corp., is still reviewing the proposed program.

Article Photos

The Leader-Herald/Bill Trojan

Steve Andres, a frame builder for Pioneer Windows in Johnstown, uses a screw gun to build a window frame at the business on Thursday. Pioneer Window previously received benefits from the Empire Zone program, which the state will end June 30. Tony Fabbricatore, president of Pioneer Window, said his company would consider applying for benefits under the proposed new Excelsior Jobs Program.

He said the Excelsior Jobs Program proposed by Gov. David Paterson would replace the longtime Empire Zone Program, which the state will end June 30.

He says he's "not sold on Excelsior yet," but he said the state needs a functioning job development program that can replace the zones program.

The Empire Zone program, which Gloversville was chosen for as an initial program in 1987, didn't have as many restrictions as the newly proposed program.

Fact Box

Excelsior benefits

Excelsior Jobs Tax Credit - The backbone of the state's business attraction and expansion efforts. The new jobs incentive would provide a tax credit to companies that create and maintain a set number of new jobs in New York for five years, based on a portion of the payroll costs associated with those new jobs.

Excelsior Research and Development Tax Credit - It supports what Paterson calls "the innovation economy." Currently, the Research and Development Tax Credit is available only to businesses investing in capital equipment. The definition of the credit will be broadened to allow the use of credit to encourage additional categories of investment.

Excelsior Investment Tax Credit - It supports capital investment. Currently, companies investing in manufacturing, production or research and development property may claim an Investment Tax Credit for that investment against its corporate income tax. ITC would be expanded to encourage capital expansion in New York.

Source: Office of Gov. David Paterson

Reese said with the new Excelsior Jobs Program, the state wants to establish a $25 million small-business revolving loan fund. Additionally, New York wants to create a $25 million technology "seed" money fund. He said the state also may create a $10.6 million tourism matching program.

But Reese said the new program may not help as many local companies as the old one did.

"It's hard to figure out at this point," he said. "It's a big change in direction."

Reese said 10 out of the 34 companies currently receiving benefits in Fulton County may not under the new program.

He said large companies such as Fage and Benjamin Moore in the Johnstown Industrial Park would be able to access benefits from the new program. But smaller "service" businesses such as 391 South Main Street - a restaurant in Gloversville - that previously got Empire Zone benefits might not get Excelsior benefits.

One of the companies mentioned by Reese that is currently Empire Zone-eligible but might not be eligible for Excelsior, would be West & Company CPAs in Gloversville.

Company spokesman Elmer J. Washburn said he's not sure that may be the case, but people are waiting to see what the state does. Based on "increased employment," he said his company receives a 4 percent reduction on its sales tax as its main Empire Zone benefit. He said his company does well.

"We're trying to survive, we're trying to grow," Washburn said.

The current Empire Zone program was intended to stimulate economic development growth in a number of the state's most severely distressed areas, including Fulton County. The program seeks to assist these areas through a variety of financial incentives and economic development benefits designed to attract new businesses and to enable existing businesses to expand, and to create new jobs and encourage private investment within the designated zone.

The Empire Zone program offers incentives and tax credits to businesses that include: wage tax credit, investment tax credit, sales tax refund, real property tax abatement, utility rate reductions, telephone credits, tax reduction credit, real property tax credit and sales tax exemption.

Unlike under the Empire Zone program, which had a local zone administrative board, under the newly proposed program, the state would oversee the entire certification process.

Reese said only certain industries would qualify for Excelsior. He said the New York Job Development Corp. would certify companies and there would be no local input.

There also would be more guidelines that companies must follow through the Excelsior Jobs Program. Reese said the company in question must create a minimum of 50 new jobs to get credits within a 24-month period and retain them for five years.

Reese said this 50-job threshold might be a problem for Fulton County, which has many small businesses that may only hire 35 to 45 people.

"We [still] want those jobs here," he said.

According to the governor's Web site, Paterson's proposed Excelsior Jobs Program would "ensure more targeted, cost-effective and transparent economic development initiatives" and keep New York state "competitive in attracting jobs and capital investment."

The site says the Paterson administration has spent the past year reaching out to hundreds of businesses and communities across the state to find out how the state can best build a program that delivers what it promises. The result, according to the news release, was three aggressive tax credits for the following targeted industries - high technology, biotechnology, clean technology, finance and manufacturing. In order to receive any tax credits, a company must first demonstrate a commitment to creating jobs.

Kenneth Rose, Montgomery County's director of economic development and planning, said Excelsior doesn't have real property tax breaks that were available in the Empire Zone program.

"There's some things that are obviously omitted," Rose said.

His county was first made eligible for a state economic development zone in the 1990s.

He said his office hasn't started looking into the Excelsior program too deeply yet and hasn't determined how many local companies might be affected

Rose took note of the loss of local control under the proposed new program.

Tony Fabbricatore, president of Pioneer Window at the Johnstown Industrial Park, employs about 100 people at his window-manufacturing plant, which makes windows for public buildings in the New York City area.

He said his company's previous Empire Zone benefits have expired and he doesn't know much about the proposed Excelsior program.

He said if the new benefits "fit" into his company's plans for the future, and Pioneer Window is eligible, the company may be willing to apply for them.

He said many of the local industrial park companies, including his, have been hurt by the recession and economic downturn in recent years.

"It's come to hit us in the butt right now," Fabbricatore said. "It hasn't been good. Every company has been in a survival mode."

The governor's Web site says Excelsior would require a "new level of transparency and accountability."

Shifting employment among state locations would not count as new employment. Companies must be in good standing and in compliance with all environmental and worker protection laws, and must be current with all state and local taxes, fees and fines.

The Empire State Development Corp. would monitor compliance, and companies must agree to share information with that agency.

Companies must provide clear and detailed information regarding affiliated businesses. Annual performance reports would be required to verify compliance and to qualify for benefits.

Reese said more transparency in the state's top economic development program is "a good thing," but he said it has yet to be determined whether the new program would be easier to use by both developers and businesses.

All indications so far is Excelsior might take local developers "out of the equation," Reese said.

"Is that a good thing?" he asked. "They're definitely looking to limit the scope of this new program."

 
 

 

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