New York’s Empire
Zones have fierce defenders and fierce critics. While the zones are intended to
boost New York’s sagging economy, there’s little evidence that they have.
Defenders say things would be worse without them. Critics say they’re doing
more harm than good.
The City of Rochester and MonroeCounty each have an Empire Zone, but criticism has been directed
particularly at the county’s zone, which consists of numerous individual
properties in several suburban towns. Many of those properties are new suburban
office parks, which continue to be built despite an oversupply in the Greater
Rochester area.
Critics have questioned the county’s
selection process, and some Democratic County Legislators say they’re confused
as well.
The legislature was to vote earlier
this month on more changes to the county’s Empire Zone boundary. Among them:
the addition of more suburban office buildings and the removal of a few
existing properties from the zone. (The Brooks administration withdrew the
request at the last minute, waiting for revisions in the state law governing
the zones.)
Two proposed deletions got critics’
attention. One was a piece of farmland on East River Road; it was removed because county officials learned that the
Empire Zone applicant, developer Anthony Costello, didn’t yet own the property.
The other was a portion of RochesterTechnologyPark, the former Kodak Elmgrove Plant — which was the impetus
for creation of the county’s Empire Zone.
Rocco DiGiovanni, certifying officer
of the Monroe County Empire Zone, says the only part of Tech Park that would be
removed is land that can’t be developed: wetland and a pond, for instance.
DiGiovanni discussed the county’s
zone in a recent interview. An edited version follows.
City: How do
officials decide what properties should be in an Empire Zone? What’s the
criteria? Would you give them to any developer who asked?
DiGiovanni: No. There are really kind of two tracks. One is for an
existing company — a company that has good opportunities to expand and create
jobs if they had the Empire Zone status. That’s like a single-user type of
project for an existing company.
The other designation is for
developers, to occupy a site or vacant buildings or partially vacant buildings,
and I think that’s really what you’re really interested in.
We’ve developed a set of criteria.
The site has to be project-ready. It has to have the appropriate zoning in
place. It has to have infrastructure, a developer with a track record, and a
commitment to developing this site and having the wherewithal to do that
through experience and financing and that sort of thing.
Early on in the process, we sent out
to over 100 people — to developers, builders, business-park owners and so on
— explaining what the program is, asking them to submit proposals if they had
appropriate sites. And then we listed these criteria, and from that we got many
requests and applications. And subsequent to that we’ve gotten more, based on a
couple of those initial requests for proposals.
City: Do you have a
feel for how many new jobs have been brought in from outside the region? Are
they just shuffling businesses within the county?
DiGiovanni:
Well, a lot of them are jobs that could have gone to other places, and
that’s one thing that I think a lot of people overlook. For example, Genencor,
a company like that has locations in other places in the country. They have to
make expansion and consolidation decisions, they have to weigh all the options:
should we do it here, should we do it there.
That’s part of the negotiations that
we enter into with them. And that’s a tough competition, because some states
are much lower-cost to do business — let’s say the Carolinas, or Texas, or Virginia. The Empire Zone levels that playing field, and so they may
not have closed a facility somewhere else and moved the jobs here, but they did
the expansion here that could have taken place out of state.
After 9/11 and a severe economic
recession — we’re still in an economic downtime. Nationally, there’s just not
a lot of companies looking to develop facilities around the country, so you
don’t see a lot of those leads or prospects. We see some, we see more as time
goes by, and hopefully we’ll see a lot more as the economy picks up.
City: Why not make
the entire county an Empire Zone?
DiGiovanni: Well, we only work with what we have. We’re given 2 square
miles or 1280 acres. There’s 650 square miles in the county, so out of that big
area we have to pick a very limited area. So we identify those areas that are
most ready to be developed. Is it a good idea if you could put them anywhere in
the whole state, depending on a deal? That probably would make sense on a
case-by-case basis. But again, we have to play the cards we’re dealt.
The state says if you get the Empire
Zone authorization, you get 2 square miles. The original eligibility for the
county to get into the program was because Kodak shut down the Elmgrove
facility. You had 5 million square feet of manufacturing and office space that
came on the market and was vacated, and all the jobs that were lost.
Before that, we weren’t eligible to
participate in the program, but there’s a category of eligibility called
“sudden and severe job loss,” and so we became eligible. Five hundred fifty acres
of that original 2 square miles, or 1280 acres, went to RochesterTechPark. So a big chunk of it, almost half of it, went there. Over
the last two years, we’ve been allocating other areas in addition to RochesterTechPark.
City: When a
property is given Empire Zone status, are all tenants in it eligible?
DiGiovanni: No, anybody has to apply. They have to apply to become a
Qualified Empire Zone Enterprise. There’s a whole application and certification
process. We meet with a company, and we explain the program; there are
parameters that they have to figure out based on how many employees, how much
hiring they’re going to do, how much capital investment they’re going to make,
and so on. And they have to make a judgment to see if it would work for them.
And if they think it would work for them, they make the application, we package
it and send it out to the state, and then the state certifies them.
If there isn’t a net job increase
— for example, a company is in one town or the city and moves into an Empire
Zone, but they don’t create a significant number of jobs or make new capital
investments — they’re not going to get any benefits.
Just because they’re in a zone —
even if they’re a zone-qualified business — if they don’t create the jobs or make
the investments…. They have to report on that, and the state checks it with the
state Department of Labor, for example. If they had a payroll of X one year,
they have to prove that they had a payroll of X plus 20 the next year. That’s
how they verify that they made the job increase. They get the tax breaks based
on the percentage increase of jobs and how much capital investment they make.
City: But if you’re
in an Empire Zone property, you’re eligible at least to apply for these things?
DiGiovanni: Yeah.
City: Do you notify
tenants? Is it your responsibility to do that, or is it the responsibility of
the property owner?
DiGiovanni: We have gone out, the property owners have asked us to do
informational meetings, which we have done, so we’ve done a couple at Rochester
Tech Park and some other locations.
City: Is it possible
for tenants to be in an Empire Zone property and not even know they’re in one?
DiGiovanni:
Yeah. But the developers and the
owners of the properties have an incentive to pass along information about
incentives that companies would be eligible for, because if they grow and
expand, that benefits the developer. And that’s what they want to see.
City: Are Empire
Zones really enabling expansion, or would it have happened anyway?
DiGiovanni:
No, they enable expansion. Like I
said, a lot of companies here have locations elsewhere. So they have to make
those kinds of locational decisions, and a lot of
expansion and growth that we have been seeing would not have happened in these
small companies without these benefits to make the playing field more level.
This article appears in Jul 28 – Aug 3, 2004.
