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EDC scandal was among top stories

December 27, 2010
By BILL ACKERBAUER, The Leader-Herald

EDITOR'S NOTE: As 2010 draws to a close, The Leader-Herald is reviewing the top local news stories of the year. Today, we look at local economy stories of 2010.

Economic development efforts in Fulton County were overshadowed this year by a scandal over bonuses paid to two agency executives. News about the payments broke in May, and public outrage grew over the summer with revelations about the size of the bonuses - about $3 million - and questions about their oversight.

The boards of directors at the Fulton County Economic Development Corp. and its real estate affiliate, the Crossroads Incubator Corp., said they had no knowledge of the bonuses paid to the agencies' top executives. EDC Executive Vice President Jeff Bray and his CIC counterpart, Peter Sciocchetti, each were paid bonuses of about $1.5 million over several years. Tax records revealed some of the payments were made from the Crossroads II Incubator Corp., an otherwise dormant entity.

Article Photos

Yogurt manufacturer Fage USA in Johnstown, above, got approval this year to begin a $26 million expansion project at its plant in the Johnstown Industrial Park.

The Leader-Herald/Bill Trojan

Bray and Sciocchetti were fired in July, and county officials asked the state attorney general's office to investigate the matter. The attorney general's office became the third state entity to begin investigating the matter, following the state Authorities Budget Office and the Assembly Committee on Corporations, Authorities and Commissions.

The budget office declared this year that the EDC is a public agency and threatened to sanction or dissolve the EDC if it doesn't comply with that assessment. EDC officials disputed the claim, arguing it is a private, nonprofit corporation, which could shield some of its records from public scrutiny.

The Assembly committee, meanwhile, conducted several public hearings and summoned Bray and Sciocchetti to testify, but they refused to appear before the panel in Albany.

Meanwhile, the EDC and CIC have attempted to continue their efforts to promote industry in the county, although the future of the CIC's unfinished Estee Commons condominium project in Gloversville is uncertain.

Counties eye joint industrial park

Though they both have vacant space in existing industrial parks, Fulton and Montgomery counties decided this year to take the first step toward establishing a new one on Route 30A between Johnstown and Fonda.

The proposed 300-acre regional business park would be south of and adjacent to the existing Johnstown Industrial Park, home to a 900,000-square-foot Walmart Regional Food Distribution Center and other businesses.

The land, now in the town of Mohawk, would be annexed by the city of Johnstown.

Each county has budgeted $150,000 for legal fees and preliminary engineering and design costs for the project in 2011.

County leaders say the park is needed because shovel-ready sites are in demand, and the site will be attractive because it could have sewer and water service and it is close to the state Thruway.

"We're looking to sites that can be used to attract 200,000 to 500,000 square feet of business space," Fulton County Planning Director James Mraz said. "You want to be able to handle that type of project if it comes along."

Walmart project gets green light

After more than six years of planning and regulatory review, Walmart Stores Inc. received the go-ahead to build a supercenter on South Kingsboro Avenue Extension in Gloversville.

Since it was first proposed, city leaders have hailed the retail development, which is expected to generate needed jobs, sales tax revenue and the possibility of further development around the site. Walmart expects to break ground in April.

In a related development, Gloversville Mayor Dayton King and Johnstown Town Supervisor Roy Palmateer signed a long-awaited revenue-sharing agreement at a ceremony this month. The agreement, which was unanimously approved by the Town Board and the city Common Council, provides a 60-40 split in sales and property tax revenues from developments in the town that require city water and sewer service. The state Senate and Assembly passed special legislation authorizing the deal.

Canajoharie faces loss of Beech-Nut

The Beech-Nut Nutrition Corp. focused this year on moving operations from its longtime industrial base in Canajoharie to its new headquarters in the town of Florida. Meanwhile, the village braced for the expected loss of water and sewer revenue from the company's shutdown, but it got a reprieve as the company decided to continue using its Canajoharie facility longer than expected.

"Despite the state of the economy, Beech-Nut has a lot of orders to fill, and that's great," a Beech-Nut spokesman said in November.

At that time, the company had about 160 employees working in Canajoharie and 240 at the new site.

The village owes a debt of about $2.8 million for water and sewer system upgrades it made in the late 1990s, an investment aimed at enticing Beech-Nut to stay in the village. On Nov. 1, the village drastically increased its water and sewer rates to compensate for Beech-Nut's expected departure.

In recent months, the village's economic outlook improved considerably, as candy manufacturer Richardson Brands shifted more jobs to its Canajoharie facility. The company, which makes candy, gum and other products, plans to double its work force to more than 300 workers in the next three to five years.

Another sign that the village is due for a turnaround came this month, when a water-bottling company based in Tennessee said it plans to build a plant on village-owned watershed land in Ephratah. The company, CG Roxane, would pay up to a half-million dollars a year for water, officials said.

Canajoharie's municipal water, which comes from natural underground springs, was judged the best-tasting in the state this year.

Finkle Distributors sold

In August, a California-based Core-Mark Holding Co. purchased a local distribution company for $43 million and announced plans to vacate its facilities in the Johnstown Industrial Park.

More than 100 of Finkle Distributors' 240 local employees lost their jobs.

Finkle Distributors Chief Executive Officer Dan Finkle, who planned to stay on with Core-Mark as an executive, said the distribution of cigarettes - a major part of the local company's business - is "dying" as a profit generator.

The Crossroads Incubator Corp., which owns the larger of the two buildings used by Finkle in the industrial park, has begun trying to court a new tenant for the site.

Fage USA plans major expansion

Yogurt manufacturer Fage USA got approval this year to begin a $26 million expansion project at its plant in the Johnstown Industrial Park.

In 2009, the city was awarded a $750,000 Community Development Block Grant from the state Housing Trust Fund Corp.'s Office of Community Renewal to help Fage with the expansion.

Fage is planning a 19,000-square-foot addition to its 125,000-square-foot plant. The plant employs about 115 people now and is required to hire at least 25 more with the expansion, according to the terms of the grant.

Gloversville EDC buys Schine building

In November, downtown Gloversville's historic Schine Building was purchased at auction by the Gloversville Economic Development Corp.

Michael Teetz of Glove City Realty placed the $48,000 bid on behalf of the Gloversville EDC for the 29,000-square-foot building on North Main Street.

The GEDC loaned $70,000 to the previous owners of the building, also known as Memorial Hall. That loan had gone into default.

The Gloversville EDC also owns the Argersinger Building, which is at about 85 percent capacity and houses nonprofit agencies. It's not on the tax rolls, but the Schine Building will be, said Gloversville EDC Secretary Wally Hart.

Assistant City Editor Bill Ackerbauer can be reached at backerbauer@leaderherald.com.

 
 

 

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