CAPITAL REGION Employers facing new rules for Empire Zone tax breaks BY EDWARD MUNGER JR. Gazette Reporter
Businesses will need to meet job creation goals in three years instead of five years to maintain tax breaks under new Empire Zone rules published Wednesday. The rules for employers of at least 50 workers, outlined in the latest edition of the New York State Register, took effect Jan. 16. The changes don’t effect Empire Zone businesses that were certified or applied prior to Jan. 16, according to the Empire State Development Corp. Changes to the state’s program, which provides tax breaks to businesses in exchange for a promise to create jobs, are being implemented “to protect the integrity of the program, enhance its strategic focus, improve its cost-effectiveness, increase accountability and mitigate the impact on the General Fund,” according to the notice. Another provision in the new rules applies to all businesses certified for Empire Zone benefits after Jan. 16 and calls for more economic development benefits than prior requirements — such as wages or capital improvements — as a requirement to be certified. Prior to these new rules, the Empire Zone arrangement required that businesses provide $15 worth of benefits — such as new wages and capital improvements — for every $1 in tax breaks received. The new rule boosts that costbenefit ratio to $20 for every $1 in tax breaks. Large businesses situated outside of the boundaries of an Empire Zone, called “regionally signifi cant” projects, will be subject to the tightened time frame for job creation. Fred Quist, administrator of the Amsterdam-Florida-Glen Empire Zone in Montgomery County, said he believes regionally signifi cant projects should be able to accommodate the new request. “I think three years is realistic,” Quist said. Quist said zone administrators have been briefed on the new rules, which he said are being tightened in order to provide more of an impact economically. “For the most part, they’re trying to make the program more benefi - cial to everybody in New York,” Quist said. Since businesses that are already in the pipeline for certification won’t be impacted by the new rules, the changes may have more of an impact on businesses considering zone certification. For example, in Schoharie County, which hadn’t received an Empire Zone designation until late 2006, county Planning and Development Director Alicia Terry said the costbenefit ratio change could influence the decision of smaller businesses and those in rural areas to apply for zone benefits. “My concern is we struggle enough in rural areas of upstate New York on job creation,” Terry said. “We all learn lessons, when large employers leave communities, about diversifying the economy.” Meeting the $20 for every $1 in tax breaks is more difficult on smaller businesses, Terry said, as will the shorter time frame for creating jobs. “Going from five years to three certainly can make a difference to some benefits and, definitely, the cost-benefit ratio could also have a greater proportional effect on upstate rural communities,” Terry said. Empire State Development spokesman Warner Johnston said Wednesday the new rules follow last week’s correspondence from the state to 180 certified businesses that aren’t meeting job creation goals. Those businesses have to contact the Empire State Development Corp. within 10 days or risk decertification. The state expects the new rules will reduce the number of new businesses that qualify for benefi ts by about 30 percent. The new regulation changes should save the state money, Johnston said. “We believe it’s going to save upwards of $50 million this year,” he said. More information on the changes can be found in the Feb. 6 issue of the state Register on the Web site of the New York Department of State at http://www.dos.state.ny.us/.
The Spitzer administration has quietly changed the rules governing job creation in Empire Zones in a way that will save the state money, but doing so will also likely limit the program’s impact. The principal changes — giving participants less time to expand their businesses in exchange for tax relief, while requiring more jobs or capital improvements — will undoubtedly make it harder for companies to participate in the program. Where they used to get fi ve years to generate job growth or make capital improvements, they’re now only getting three; and where the value of new economic growth previously had to equal 15 times the value of their tax break, the ratio is now 20-1. That will save the state upwards of $50 million this year, according to an Empire State Development Corp. — not a bad thing given the state’s huge budget deficit. But by reducing the number of participants, it will probably reduce the economic impact of the program by much more. That won’t be a good thing given the general state of the economy. We’ve said in the past that the Empire Zone program needed reform, but its biggest problems have been its willingness to provide help in areas — mostly suburban — that really don’t need it, and in not doing enough to verify that the jobs being created are really new ones and not just ones that have been shifted around. If the program needs to be scaled back to save money, that’s how to do it, not by raising the bar so that employers — especially small ones in poor urban areas — may no longer reach it.
Comptroller rips Empire Zone program Monday, February 11, 2008 The Associated Press
ALBANY — State Comptroller Thomas DiNapoli says the state’s multimillion dollar Empire Zone program isn’t monitored closely enough to determine whether it’s effective at retaining and attracting jobs. DiNapoli says it’s time for the state to rethink the program, which gives millions of dollars in tax breaks to companies. The issue was also a topic today at a state budget hearing on economic development programs. Westchester Assemblyman Richard Brodsky says Empire Zones are failing to turn around the upstate economy. Instead, he says the state should consider helping businesses pay employees better to create an economic engine that would help communities thrive.
State Comptroller Thomas DiNapoli says the state’s multimillion dollar Empire Zone program isn’t monitored closely enough to determine whether it’s effective at retaining and attracting jobs....
How does this differ from the Schenectady Metroplex Development Authority?
We’ve said in the past that the Empire Zone program needed reform, but its biggest problems have been its willingness to provide help in areas — mostly suburban — that really don’t need it, and in not doing enough to verify that the jobs being created are really new ones and not just ones that have been shifted around.
Isn't that what Villa Italia did. Was just shifted from Rotterdam to the City of Schenectady? Hmmmmm!
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
That's OK. Money is getting shifted around in a predominantly democratic county. As long as Democrats control the tax dollars and are giving the money to other democrats then it's working. Who cares if it creates jobs, as long as it creates party loyalty.
Empire zone must be too large to control, unlike crooked Metroplex. Republicans must be benefiting from Empire Zone.
http://www.dailygazette.com Comptroller says Empire Zone program falls short BY MICHAEL GORMLEY The Associated Press
State Comptroller Thomas DiNapoli said Monday that the state’s multimillion-dollar Empire Zone program isn’t monitored closely enough to determine whether it’s effective at retaining and attracting jobs. The Democrat said it’s time for the state to rethink the program, which gives millions of dollars in tax breaks to companies. The Empire Zone program was also a topic Monday at a state budget hearing on economic development programs. Westchester Assemblyman Richard Brodsky said Empire Zones have failed to turn around the upstate economy. He proposed a new approach, including helping businesses pay employees higher, union-level wages to CAPITOL create an economic engine that would help communities thrive. “If these programs were for poor people, it would have been shot down years ago,” Brodsky said. He noted the $30 million bailout of dairy farmers in 2007 was a success because it sent checks directly to 5,100 farmers hurt by falling prices. He said the farmers used that money in their communities, creating a positive ripple effect in the economy. Gov. Eliot Spitzer’s economic development chiefs, Dan Gundersen and Patrick Foye, told legislators at the hearing that the program is being changed. They said aid is now being more clearly targeted to need in each region. As a candidate, Spitzer had been critical of Empire Zones under the Pataki administration, saying they were long used to help political cronies and failed to provide the jobs that were promised. DiNapoli, a Democrat, found that officials failed to determine if job creation claims in Empire Zones were accurate. His report was based on reviews of Empire Zones in municipalities including Buffalo, Syracuse, Rochester, Tonawanda and Yonkers and in Broome County. A 2004 comptroller’s office report found similar concerns in those areas. “New York should take another look at the Empire Zone program,” DiNapoli said. “We need to know if we’re getting a bang for the taxpayers’ buck. If officials representing local zones can’t demonstrate that the program is working, and if local governments and taxpayers are not benefiting from a program that’s supposed to generate economic development and create jobs, it calls into question the value of the program.” After years of criticism, Monday’s comments could signal the beginning of an overhaul of the system that was at the core of economic development efforts by Pataki and the Legislature. Senate Republican leader Joseph Bruno of Rensselaer County agreed he could support some changes in Empire Zones to make sure the jobs that are promised are realized. But he said there’s no need to scrap the program. “I think they have been effective,” Bruno said.
SCHENECTADY COUNTY Report: $7M results in few jobs Empire Zone lured businesses BY KATHLEEN MOORE Gazette Reporter
More than $7 million in state taxpayer money was used over the course of one year to add just 31 jobs in Schenectady County, according to the 2007 Empire Zone annual report. The Empire Zone businesses, which are primarily located in the city, spent $54 million to expand or start new companies in exchange for $7.2 million in tax reimbusements and sales tax exemptions, the report said. It refers to activity from 2006; the next report is expected this summer. The report makes it clear that Empire Zone benefits successfully encouraged some businesses to relocate and invest in this area. But the report also calls into question the other goal of the program — job growth, particularly among residents in the city’s “economically distressed” areas of Hamilton Hill, Vale and Central State Street. Very few zone businesses are located in that area and in the zone as a whole, almost none of the businesses offered statistics on how many area residents they employed. The Empire Zone businesses do employ many people: Countywide they had a total employment of 5,364 workers at 167 companies in 2006, according to the report. But state officials have questioned whether such figures are accurate after discovering widespread misstatements in other cities’ reports, and have criticized the statewide program for not fueling enough job growth each year. In Schenectady County, there was an increase of just 31 workers over the previous year, despite the addition of many new businesses with goals of regular job growth. Some of those businesses apparently never even opened, including Camelo Donuts. Others quickly closed — including Sushiart Japanese Restaurant — and still others never met their development goals. Among the latter is the Minority Contractors Technical Assistance Program, MCTAP, which still employs just two people and has yet to open its training center after five years in the program. OUTLOOK IMPROVING There may be better news on the jobs front in the next report, because several zone businesses that were in construction in 2006 — including the Hampton Inn and Movieland — will be able to point to job creation in 2007. Movieland, which opened in May 2007, employs five full-timers and 10 part-timers. The Hampton Inn, which opened in June 2007, has hired about 24 full-timers and six part-timers. In Rotterdam, Railex has opened with Empire Zone benefits and has about 140 employees. Each business pays its taxes, which are then reimbursed by the state. “There are a lot of people,” said county economic development chief Ray Gillen, who chairs the Metroplex Development Authority. He expects the 2008 report to show many more jobs. He argued the 2007 report at least showed that developers are investing in the area. “The investment numbers are pretty good,” he said, noting that $54 million was spent for $7.2 million in tax credits and exemptions. “It confirms the level of investment we’ve been saying. There’s substantial new investment.” But the report also lists several new additions to the zone that didn’t expand or add any jobs. Among them are Acme Press, which is 85 years old and has nine full-time workers now — but was listed as having 11 when it was added to the zone in 2006. Sepsa North America, which relocated to Schenectady in 2006, has 33 workers now, one less than it lists as having when it came to the city. It had promised to employ 100 workers by the first quarter of 2008. One success story could be Villa Italia, which moved to Schenectady from Rotterdam partly because of the Empire Zone benefits. Walk-in business has increased by more than 60 percent since the move to the city’s downtown. As business grew, so did the jobs. The pastry bakery had 37 full- and part-time employees when it opened in 2005. Now it has 52 employees, of which roughly half are part-time, owner Bob Mallozzi said. He spoke highly of the tax credit program, in which the state reimburses him for the local taxes he pays. “It’s been really beneficial,” he said. “It was definitely part of our decision to move here … We exceeded the amount we needed to hire by a lot.” He is also one of the few employers who tracked the number of employees from the city’s distressed area. Two of his workers live in the Hill-Vale neighborhoods. ORIGINAL PLAN The original purpose of the state’s Empire Zone program was to encourage job creation and business growth in economically distressed areas. The goal was for businesses to relocate to such areas and hire employees who lived there. But the Empire Zone philosophy has changed. According to the state’s development department, the zones are now supposed to “attract new businesses to New York State and to enable existing businesses to expand and create more jobs.” The zones have been widely expanded; in Schenectady County, businesses can now locate in Glenville and Rotterdam as well as the city. In response to criticism about the effectiveness of the program, legislators have recently tried to rein in the Empire Zone program in many ways. Mayor Brian U. Stratton has tried to push through a rule that would require Empire Zone businesses in Rotterdam and Glenville to hire a percentage of their workers from Schenectady’s distressed areas. State legislators also tightened the geographic rules for the program to stop municipalities from extending their zone well beyond the distressed areas. Now there can be just three non-adjacant zones in each area. The change forced Schenectady to jettison some of its zone areas — the city had extended its zone to virtually every commercial property in Schenectady, although businesses could not claim the benefits unless they projected substantial investment or job growth. Most recently, state Comptroller Thomas DiNapoli said such reforms were not enough. He said the program isn’t monitored closely enough to determine whether it’s effective at retaining and attracting jobs. “New York should take another look at the Empire Zone program,” DiNapoli said in February. “We need to know if we’re getting a bang for the taxpayers’ buck.” A spokesman for the comptroller’s office reiterated that this week, saying the taxpayers need to closely review the Empire Zone reports to decide whether their money is being well spent by the state. “We have advocated for increased transparency and accountability so that public policy makers, local officials and most importantly the taxpayers can understand and determine whether the benefits provided are cost-effective,” said spokesman William Reynolds.
I would like to know exactly how many MILLIONS of tax payer monies have gone toward the Empire Zone since it's inception. Right from the beginning!! And how many NEW jobs 'collectively' have been created, right from the beginning!! And also what are the average earnings of these NEW jobs.
And as far as Villa Italia... If they employ 52 people,(?) How many are family members? Do they all work exclusively at Villa Italia 100% of the time and not at one of their other locations? And how much is the wage of the 'non-family' members? And how many hours/week does each employee work at Villa Italia.
It is also refreshing to hear that Villa Italia employs 2 from the Hill-Vale area. But what positions do they hold? What is their job?
And what are the wages for the Hampton Inn employees and the Bow-Tie Cinema employees. Anyone can toss around the words 'NEW JOBS'. But what kind of wages and benefits are these 'NEW JOBS' paying?
Clearly NOT a good return on our invested dollar.
And then we hear this..
Quoted Text
Mayor Brian U. Stratton has tried to push through a rule that would require Empire Zone businesses in Rotterdam and Glenville to hire a percentage of their workers from Schenectady’s distressed areas.
People should be hired for a job based on qualifications not geography. GEEZZZZZZZZ!!
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
Most people make more money from welfare and the tons of other taxpaid government programs than they can make working a few hours at a theater or a bakery.
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
One success story could be Villa Italia, which moved to Schenectady from Rotterdam partly because of the Empire Zone benefits. Walk-in business has increased by more than 60 percent since the move to the city’s downtown.
60% of what figure? Now we all know that Villa Italia does not make most of it's money from walk-in business. Selling a conoli here and there does not make the large profit margin for them. They own 3 banquet facilities, that I know of, and their bakery products usually are supplied in the cost of weddings, anniversaries, birthdays and any other type of banquet gathering. They also ship their bakery products thru-out the country. That surely is the main money maker for them.
So 'relocating' to Broadway in Schenectady, clearly did not enhance their business. It may have increased their profit margin by taking advantage of the Empire Zone benefits. But certainly not by the walk-in's. They are not a Dunkin Donuts who rely almost soly on walk-ins.
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
I've been in there - the business HAS picked up to be honest. I used to go there in Rotterdam, it was never like it is now. People coming in for coffee, coffee meetings, deserts, etc. I was in there a couple weeks ago, and both people in front of me spent a couple hundred bucks on pastries (obscene $ / obscenely good)
But, there are downsides to it. Parking sucks, prices are (I consider) high, and the coffee is too "bold" for my taste.
I hesistate to patronize any business that took govt handouts from taxpayers (which they did) - and I especially hate what they're doing to Suhrada - but if you're trying to impress people with pastries - VI has what you're looking for.
I've been in there - the business HAS picked up to be honest. I used to go there in Rotterdam, it was never like it is now. People coming in for coffee, coffee meetings, deserts, etc. I was in there a couple weeks ago, and both people in front of me spent a couple hundred bucks on pastries (obscene $ / obscenely good)
I don't think the fact that business has picked up can be attributed to Empire Zone benefits. It is more than likely the good reputation they have built up in that area through the many years they spent in Rotterdam. I think they should pat themselves on the back for offering fantastic pastries, coffee, and good service on a consistant basis.
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