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Economic agency plans changes

Sources cite poor financial condition

October 17, 2012
By MICHAEL ANICH , The Leader Herald

JOHNSTOWN - The Fulton County Center for Regional Growth - parent company of the Fulton County Economic Development Corp. and the Crossroads Incubator Corp. - will dissolve those two groups because of their poor fiscal condition, sources say.

Sources connected with county government who spoke on condition of anonymity said the Board of Supervisors and the CRG will announce the changes publicly soon.

"They're in serious financial trouble," one source said of the CRG.

The same source said the new CRG organization will get out of the real estate business and become more accountable to county government. The agency will focus on marketing the area to potential businesses and industry.

Sources also said the changes have been in the works for some time and county government will play more of a role in the CRG, which is a private, nonprofit agency for economic development in the county.

The state of the CRG, EDC and CIC were discussed by the Board of Supervisors Oct. 9 with county Planning Director James Mraz in a closed-door executive session, several sources said.

A county source said several supervisors, led by Board of Supervisors Chairman Michael F. Gendron, have been meeting with CRG, EDC and CIC officials in private meetings for weeks to develop plans.

The source said the CIC is in bad financial shape. A separate source said the EDC and CIC are "both broke."

A source said the CRG also is having trouble meeting its payroll and bank obligations.

CIC Board of Directors Chairman Thomas Bell today said a news conference will take place at 3 p.m. Monday at the county building.

"We're kind of moving forward on a new plan to increase the county's involvement in economic development," Bell said.

He wouldn't say whether the EDC and CIC will become defunct. "That's possible. I can't flat out deny that," he said.

He said the Board of Supervisors wants the ability to appoint board members to the county's economic development agency.

CRG Chairman Dustin Swanger couldn't be reached for comment Tuesday.

Bell said the CIC - the real estate entity of the CRG - has been on a "downhill slide" for some time. He said when Finkle Distributors closed a few years ago and vacated its building on Enterprise Road in the Johnstown Industrial Park, the CIC received a large lease payment. He said the CIC has been using that money to make payments on real estate holdings, but that fund is now "diminishing."

Bell said proposed changes with the CRG and county government are evolving.

"There's still things that are falling into place that I'm not involved with," Bell said.

A source said the CIC can't pay bills in November for such properties as the Estee Commons property in Gloversville and the Nathan Littauer Hospital primary care clinic in Perth.

The EDC and CIC have existed for years as separate corporations running the county's economic development program. The groups use some public money but consider themselves private agencies.

The organizations were involved in a scandal in 2010, when federal income tax returns showed former EDC Senior Vice President Jeff Bray and CIC Executive Vice President Peter A. Sciocchetti received a total of $3 million in bonuses that their boards of directors later said were not approved by them.

In March, the CRG was formed as the new parent company of the EDC and CIC, with three separate boards of directors. Officials of all three entities said reorganization was for "transparency" reasons, especially to avoid further scandal. By July, the CRG insisted many questions were answered about the scandal and the agency requested county government triple its $25,000 allocation for 2012 to $75,000 for 2013, a funding level that used to be in place.

Sources wouldn't say whether the county has acted yet on the CRG's request for a $50,000 increase in its allocation.

The Leader-Herald obtained a copy of a proposed 2013 allocation agreement between the county and CRG. The proposed agreement, which includes a $75,000 allocation, states, "The county desires to develop and implement a comprehensive Business Development Marketing Plan that focuses on the retention of existing jobs and creation of new jobs."

The agreement also says the CRG has to submit to the Board of Supervisors by Jan. 15, 2014, a 2013 annual report that identifies, among other things, all work initiated in the marketing plan and businesses attracted to the county in 2013.

Contacted Tuesday about the CRG situation and having no comment on the alleged restructuring were Gendron, Mraz, County Administrative Officer Jon Stead; Ephratah Supervisor Todd Bradt, chairman of the Board of Supervisors' Economic Development and Environment Committee; and CRG President and Chief Executive Officer Michael Reese.

Reese administratively runs the CRG day-to-day. The agency, located at the Johnstown Professional Office Complex, is served by a five-person staff consisting of Jamie Levendusky, director of accounting and administration; Becky McCloskey, administrative assistant; Susan M. Jennings, administrative assistant; and Michael Martuscello, maintenance supervisor.

Fulton County's economic development agencies have touted possible development this summer in light of high rates of unemployment in the county.

The CRG also has been in the news recently for other reasons.

The CRG continues to insist it is a private agency. Lawyers for both the CRG and the state Authorities Budget Office, which insists the CRG is a public agency, stated their cases before the state Supreme Court's Appellate Division on Oct. 10 in Albany. A decision by the judiciary panel is expected by year's end.

The state Attorney General's Office earlier this year confirmed it concluded its own investigation into the bonuses scandal but has taken no action. Lawyers for the CRG continue to try to recover the bonus money in court.

Meanwhile, the city of Gloversville is trying to have an EDC loan fund returned to Gloversville.

The EDC said Friday it has negotiated in good faith with the city over the transfer of the $2.5 million loan fund and hopes to settle the dispute outside of court.

Michael Anich covers Johnstown and Fulton County news. He can be reached at johnstown@leaderherald.com.

 
 

 

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