ALBANY COUNTY — Old habits die hard. 

Albany County last week rolled out a five-volume, 198-page strategic economic-development report that is “designed to enhance quality of life and accelerate economic growth throughout Albany County.”

One of the plan’s four explicitly-stated goals is to transform the county’s image “to counter perceptions of old-school approaches” — though unstated, almost assuredly a reference to the halcyon days of the O’Connell political machine’s six-decade reign over Albany.

To overcome that past and “create a business-friendly environment that encourages new investment and establishes the county as a magnet for talent and investment,” the plan calls for the formation of a local development corporation  to be potentially funded with tax dollars “to meet the objectives of addressing unmet economic development needs in Albany County.”

Local development corporations are private, not-for-profit entities that, according to the state comptroller, “are exempt from many of the constitutional and statutory provisions that guide the operations and financial transactions conducted by local governments,” such as public-procurement laws that require a competitive process for awarding contracts, the Freedom of Information Law, and Open Meetings Law.

 Public authorities, like the local development corporation, came into widespread use in the 1930s and ’40s, when Robert Moses used them to become the single-most powerful person in both New York City and New York State for four decades in the middle part of the 20th Century. Moses also used the public authorities to finance $27 billion (in 1968 dollars) worth of projects, which would be about $204 billion today.

 Kevin O’Connor, Albany County’s new director of economic development, responding to emailed questions from The Enterprise, wrote “There presently does not exist a funded” county Economic Development Department, and “that is why the study was undertaken … .”

The report notes that the county shut down its economic development office about 10 years ago. The homepage of the Albany County Department of Economic Development, Conservation, and Planning states that economic development is now the aegis of the county executive.

As for transparency, O’Connor states, it will be the “hallmark of any entity that is created in the county for economic development.”

O’Connor writes, “The entity will comply [with] all applicable laws,” and that it would be up to the “board of directors of the to-be-created entity” to decide if a new county-wide local development corporation had to comply with public-procurement laws, and the state’s sunshine laws.

Why — and what could be accomplished

The report states that Albany County needs two things — “a clear economic agenda for county leaders to follow and an organization that can respond quickly to economic opportunities … .”

In the other seven counties of the Capital Region, economic development is centralized under a “go-to public or quasi-public organization,” but Albany County “relies on a loose network of local municipalities and regional organizations that conduct some but not all core economic development functions.” 

The report cites the Schenectady Metroplex Development Authority as one of the public-benefit corporations in the area that has been able to “coalesc[e]  leadership to create economic opportunities, attract and retain businesses, generate new revenue, and diversify the county’s tax base.”

Metroplex was established in 1998.

Ray Gillen, chairman of the Metroplex, said that, when the new development authority was created, Schenectady, as a county, was in pretty rough shape; lacked a centrally-focused economic-development effort; and was home to one of the most-distressed downtowns in New York State. Metroplex placed a “particular emphasis” on reviving the city of Schenectady’s downtown neighborhood. 

Metroplex took about 30 groups that, in one manner or another, had been working on economic planning in Schenectady County and centralized its management, Gillen said.

Central to the public-benefit corporation’s success is its dedicated funding stream. Metroplex was created by an act of the New York State Legislature, which authorized Schenectady County to add one-half of 1 percent to its sales-tax rate to fund the new public authority. 

In 2019, Metroplex received about $8.7 million in sales-tax revenue from Schenectady County. Gillen said that 30 percent of the sales-tax revenue Metroplex receives from Schenectady County is immediately shared with the county’s municipalities, while the remaining 70 percent is invested in capital projects, mostly. 

The Albany report says that the county executive and legislature “should consider a dedicated funding stream” for the new local development corporation and recommends as a source no less that 1 percent of the county’s annual hotel-motel tax haul (currently about $1 million to $1.5 million), supplemented by member contributions.

Asked about funding the new local development corporation, O’Connor wrote that is something to be determined by the ad hoc working group that, according to the report, is to be formed to advise the county executive “with regard to specifics of forming a new private/public organization.”

Economic development, Gillen said, has evolved from the former practice of “chasing smokestacks,” or, what the Albany County report calls a “transaction-oriented” model; for example, when taxpayers help to finance the building of a privately-owned sports stadium. 

States and municipalities, according to a 2016 Brookings Institution study, spend as much as $50 billion to $80 billion every year on tax breaks and other economic incentives, “despite a mountain of evidence showing that tax incentives produce mostly marginal returns.”

Gillen said that the Metroplex model is “investing in yourself,” the community. The century-old former Labor Temple on Clinton Street, for example, had at one time been the home of 30 area unions but in recent years had housed just one. 

In 2017, the last union moved out and the property was put up for sale, purchased by a union bricklayer from Queens who converted the former union hall to mixed-use, with six sleek apartments on the building’s upper floors and street-level retail.

“We put a little money in there, we put a little help in there,” Gillen said of the Metroplex’s $22,000 grant to help restore the former Labor Temple’s facade; another $21,000 grant went toward the first-floor retail. 

“You do that hundreds of times, and you rebuild your economy,” he said. Development is a momentum business; the more projects you do, the more projects you can do, Gillen said.

Metroplex generally makes between 90 and 100 economic-development announcements a year, Gillen said. That helps to create capital assets in Schenectady County, which broadens the property-tax base, increases sales-tax revenue, and creates jobs.

Since its inception, Metroplex has expended close to $204 million on projects throughout Schenectady County, which it estimates has leveraged about $2 billion in additional project investment, while creating or retaining over 7,000 jobs.

The minority view

The commercial and residential property-tax levy for Albany County this year was about $95 million, while the county’s projected revenue from sales tax was estimated to be about $290 million, said Mark Grimm, Albany County legislator and Guilderland Republican.

“Three times what Albany County is due in property taxes,” he said, adding that’s why it’s so important to support all of this economic activity — “it pays [for] the county’s social programs.”

Grimm said he appreciated the county being candid and detailed about its own shortcomings in the report, but added there had been one omission — legislative culture.

“If you’re talking about a big economic program, you’ve got to address the elephant in the room,” he said, and the Democrat-dominated county legislature has a history of passing bills that make it harder to do business in the county. 

“You can’t say you’re for economic development on the one hand,” Grimm said, and keep passing legislation that is anti-business on the other. With economic development in Albany County, Grimm said, “You can’t just talk about executive action, you have to talk about legislative action as well.”

Two examples cited by Grimm were the fair hotel consumer practices law, which was passed by the county legislature but was vetoed by County Executive Daniel McCoy, and the precious metals exchange and secondhand dealers reporting law, which Grimm said would have required someone who had more than two garage sales a year to have obtained a secondhand-dealers license; it was narrowly defeated in the legislature. 

The fair hotel consumer practices law would have required Albany County hotels to inform guests about picket lines, infestations, or construction. Hotels would have been required to offer guests refunds in the case of such disruptions. 

Grimm used the example of a picket line or boycott, because just the threat of one would have forced a hotel to call its upcoming guests to make them aware of the situation — it had also been the genesis of the bill. The New York Hotel and Motel Trades Council had been picketing the Hilton Albany and, when some guests were not willing to cross the picket line, they were faced with exorbitant cancellation fees.

Grimm also takes issue with the report’s preferred method for implementing a new county-wide economic strategy — the local development corporation.

“Every politician I’ve ever met has talked about transparency, but they don’t necessarily act that way,” he said  

Transparency is a bit of a lodestar for Grimm.

“I’ve worked for 20 years on that brand,” he said.  

Grimm said he would like to see provisions in the local development corporation charter that ensure it complies with public-procurement laws, as well as the state’s two sunshine laws.. 

Where government fails, he said, is when the public isn’t paying attention.

“But something like this, it’s like authorities, one of the most abused things in state government is [that] there are hundreds of [them] and nobody is really keeping an eye on what they are doing,” Grimm said of the 583 state and local public authorities in New York State — or nearly 1,200, depending on who’s counting.

Grimm, who is one of nine Republicans in the 39-seat county legislature,  said he wouldn’t agree to anything that doesn’t have full transparency.

And he also wondered about the makeup of the proposed local development corporation’s 15-member board of directors.

“Who’s picking these people?” Grimm asked. 

A county-wide local development corporation board of directors would be “comprised of business and civic leaders, philanthropic, academic and nonprofit executives, along with public sector officials,” according to the report.

“The makeup of the board says a lot about what their intentions are,” Grimm said, pointing to the Albany County Business Advisory Board, which provided “input, guidance, and expertise throughout the planning process” of the county report, as an example.  

There wasn’t a single county legislator on the advisory board, Grimm said; the board of the new local development corporation should include politicians because reforming economic development in the county is an inherently political exercise.

And for all the report’s talk about inclusivity, Grimm said he counted 16 men (one of whom is a person of color) and two women on the advisory board. The board of the new local development corporation should include small-business owners, persons of color, people who work at not-for-profits, and more women, he said.

Building on strength

Grimm said that Albany County has a lot of strengths on which it can build to achieve the plan’s overarching goals. He named the county’s very-educated workforce; the state government, which not only employs a lot of county residents but also pays well and has good benefits; the university system; the county’s locus at the junction of major interstates, routes 90 and 87, as well as the Hudson River; a major arena, which a lot of places don’t have; and Saratoga County, with reach that extends into the Albany County during the summer track season.

In particular, the report recommends that Albany County “nurture, retain, and attract” jobs that are part of the innovation economy, like cybersecurity, and financial and insurance technology.

With one campus of the State University of New York Polytechnic Institute in his own backyard and an increase in sector-specific education like the University at Albany’s emergency preparedness, homeland security, and cybersecurity program, or the bachelor’s in cybersecurity now offered by The College of Saint Rose, Grimm said, Albany County in a strong position to nurture those tech jobs.

SUNY Polytech is mentioned once in the county report.

Perhaps that’s because it suffers from some of the similar problems that an Albany County local development corporation would. In the not-too-distant past, SUNY Polytech’s two not-for-profit real-estate corporations came under fire for engaging in some very shady deals and then using their state-affiliated not-for-profit status to flout FOIL requests. 

Not only is Albany a tech area, Grimm said, it’s also a government area.

 The state Office of Information Technology Services has a billion-dollar budget and about 3,500 employees who support another 50 state agencies, while the state’s Division of Homeland Security and Emergency Services employs roughly 600 workers and has a budget of $1.5 billion.

New York has a state government payroll that is 255,000 names long and has a current budget of about $172 billion — which is larger than the combined state budgets of 17 states.

But to attract all of that tech talent, Grimm said, Albany has to be made a more exciting place to live. “‘I want to move to Albany, New York’: [We] have to have young people talking like that,” Grimm said, because it’s not like young people aren’t being drawn to Albany, it’s just that they flee the area following commencement in May.

Asked how to get those young people to stay, Grimm said that it’s a lot of the quality-of-life issues that the county report points to. But it’s not like the county is completely bereft of culture, he said; it’s already got a solid foundation — for example, the Capital Repertory Theatre is the only professional theater within 100 miles that operates under an Equity contract; such theaters make up a tiny fraction of professional theaters in the country. 

Grimm also pointed to the Times Union Center and the headlining tours and major athletic events it attracts as another positive quality-of-life example, while also being one of the area’s minor economic engines that produces revenue for the county. 

And it’s one place he’d like to see the county continue to capitalize on. “We sunk a ton of money in there,” Grimm said of the recent near $20-million upgrade to the 30-year-old county-owned arena. Every event held at the TU Center brings in sales-tax revenues and hotel-motel tax revenues for Albany County, he said.

But Albany County is not just competing against other Capital Region counties for a large portion of the economic pie, Grimm said; it’s also competing against other states.

And the state isn’t doing Albany County any favors, he said; New York is one of the highest-taxed and highest-regulated states in the country. And with its near-uninterrupted eight-decade rule of the state Senate coming to end in 2018, the Republican Party no longer has a check on power, Grimm said.

Grimm also takes issue with the state’s economic-development model, which he said has moved toward a corporate-welfare economic-development model — think: the over-promised and underperforming state-subsidized Buffalo Billion project — “Which I don’t think is positive,” Grimm said, but at the same time, it’s a bit of a “Catch-22 because you have to provide incentives.”

Gillen of the Schenectady Metroplex Development Authority says this type of economic-development model is a zero-sum game. Studies of taxpayer-subsidized economic-development incentives overwhelmingly show that state and local governments earn a very low rate of return on their investments.

In Grimm’s estimation, the best economic-development model is to ease the tax burden, have regulations that are sensible; a proactive approach to helping businesses grow rather than propping them up.