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County, agency develop new plan

October 19, 2012
By MICHAEL ANICH , The Leader Herald

JOHNSTOWN - The Fulton County Center for Regional Growth will restructure itself and form a stronger partnership with county government, officials announced Thursday.

Under the plan, the CRG will dissolve the two agencies it oversees, the Fulton County Economic Development Corp. and the Crossroads Incubator Corp.

Officials said the two agencies are facing financial difficulties, but they insisted the agencies are not bankrupt.

Article Photos

The Leader-Herald/Bill Trojan
Fulton County Center for Regional Growth Board of Directors Chairman Dustin Swanger, right, speaks as, from left, county Planning Director Jim Mraz, county Board of Supervisors Chairman Michael F. Gendron and county Administrative Officer Jon Stead listen during a news conference Thursday in Johnstown.

The CRG, parent company of the EDC and CIC, and Fulton County government conducted a news conference Thursday to announce the dissolution and launch a new business development marketing plan for the county. The dissolution process is expected to take several months.

Officials said the plan makes the CRG more accountable to the county, triples the county's taxpayer-funded allocation to the private agency to $75,000 for 2013, and allows appointment of up to four CRG board members by the county Board of Supervisors, officials said.

"Our [economic development] program needs to be restarted," board Chairman Michael F. Gendron said. "We can't and we won't give up."

Fact Box

New initiative

Fulton County and the Center for Regional Growth announced a new plan for economic development Thursday.

Among the details:

Dissolution of the Fulton County Economic Development Corp. and the Crossroads Incubator Corp., which are overseen by the CRG.

A new business development marketing plan will be developed.

The county will triple its annual allocation to the CRG to $75,000 for 2013.

The county will appoint up to four CRG board members.

CRG Board of Directors Chairman Dustin Swanger added, "There was a sense we needed to come closer together."

Officials said about five county and CRG officials have met several times since June to develop the new marketing plan, which was precipitated in part by a 2010 scandal involving the EDC and CIC. Federal income tax returns showed former EDC Senior Vice President Jeff Bray and CIC Executive Vice President Peter A. Sciocchetti received $3 million in bonuses that their boards of directors later said were not approved by them.

Officials today said that starting Jan. 1, the Board of Supervisors will have an increased role in "governance" of the CRG by requiring the CRG to annually file audited financial statements with the county board chairman. The new marketing agreement includes several other requirements as well, such as having the county's allocation go toward marketing only.

No CRG staff reductions were indicated.

The county issued a new release that said both it and the CRG believe "redesigning and restarting" how the county markets business development is necessary because of events in recent years. Events cited in the release included Bray and Sciocchetti in 2007 "convincing" the CIC to sell 11 industrial buildings - a move that left the CIC with "significantly reduced" rental income to support its operations. The release also said the recession and reduced rental income caused problems.

"The cumulative fiscal impacts on the CIC that resulted from these events have been significant," the release said. "They prompted county leaders and CRG officials to come together to determine how to overcome these events."

Gendron said problems such as the scandal "slowed business creation and job development to a crawl."

But officials said they are ready to start anew.

"I think we have a lot to offer here," Swanger said.

He pointed to job opportunities from the GlobalFoundries chip fabrication plant in Malta and the pending expansion of the Fage USA yogurt factory in Johnstown.

"We need a private-public partnership," Swanger said. "We think it's the way to go. We think Fulton County has a bright future."

County Administrative Officer Jon Stead said the new agreement is a "contract for services" and a step in the right direction.

Fulton County will execute a new and significantly strengthened marketing agreement with the CRG that includes at least five main requirements.

The county's contribution to the CRG must be used for marketing and not general CRG operations. The CRG must submit an annual marketing plan and budget to the Board of Supervisors for review and approval. The plan must identify marketing goals and objectives.

The plan will allow county supervisors to assess the CRG's success in achieving goals and objectives.

Payments to the CRG will be based on submission of monthly vouchers, similar to the method used by other county-sponsored programs.

Also, the CRG assumes the responsibility for administering all loan pools currently administered by the EDC.

Officials said the CRG must adopt a balanced 2013 budget and a staffing plan based on realistic revenues.

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 and to avoid further scandal.

CRG President and Chief Executive Officer Michael Reese administratively runs the CRG day-to-day. The agency 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.

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 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 can be reached at johnstown@leaderherald.com.

 
 

 

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