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Metroplex responds to the ABO’s report on economic development authorities in Schenectady County

December 22, 2011

As I posted earlier, the ABO released a report today on the proliferation of economic development authorities in Schenectady County, generally finding that they’re redundant, inefficient, and wasteful.

One of those authorities, Schenectady Metroplex, has issued a response to the ABO.

Metroplex notes at the outset that “the ABO’s report… found that we are in compliance with the rules and regulations governing State authorities. No misuse of funds was found by the ABO. No inappropriate activity of any kind was found. No illegal activities were found. No funds were missing. When the ABO reviewed other economic development groups in past audits, they found bonuses and other irregularities. No such findings were made with regard to any of the economic development groups in Schenectady County including Metroplex.”

Metroplex does agree that there are too many economic development authorities in Schenectady County, but it reminds us that “this consolidation will require direct action by the State…. At the local level, we have already done as much as we can to consolidate these operations.

Additionally, Metroplex notes that even though having three IDAs may be somewhat redundant, all three are run by the same staff. “The argument for retaining these organizations is the excellent work done by the volunteer boards of each organization. These are citizens, local business owners and labor leaders who want input on local projects. So long as the staff is administered on a centralized basis, the input and local knowledge provided by these local board members strengthen the efforts of the County’s economic development team.”

Metroplex also responded to the ABO’s 15 recommendations, stating that it’s already attempting to implement 12 of them:

  1. Reduce the number of organizations. We agree with this recommendation. Unfortunately, the report ignores the fact that ten economic development organizations in Schenectady County have been eliminated since 2004 along with 13 staff positions.
  2. Eliminate Rotterdam IDA. We disagree with the recommendation to eliminate the Rotterdam IDA. The report cites an obscure reference—Section 882 of the General Municipal Law enacted in 1969 to try and justify elimination of the Rotterdam IDAA based on the fact that the IDA no longer has bond debt. The ABO ignores section 854(15) of the General Municipal Law, which allows IDAs to utilize lease transactions in addition to bond debt. The ABO also ignores the fact that the local IDA has attracted over $65 million in new investment in Rotterdam since 2004, creating 530 new jobs, retaining 160 jobs, adding 736,000 square feet of commercial building space to the tax rolls with almost $2 million in new tax revenue to the Town, School District and County. We strongly disagree with the ABO’s attempt to dissolve the Rotterdam IDA. Unfortunately, the ABO has not responded to our letter dated November 28, 2011 asking for clarification on this issue. As a result, important economic development projects in Rotterdam, including more than $1 million in storm repairs related to Hurricane Irene, are being delayed.
  3. Common Application. The third recommendation is that the economic development agencies in Schenectady County use one common application form. Multiple forms are required only to meet reporting requirements imposed by the State and federal government. However, we will take under advisement ABO’s request that we look at using one form.
  4. Plan. The fourth recommendation is that an economic development plan for the County be developed. This plan is already in place. The plan is developed and updated each year in cooperation with each municipality in the County.
  5. More plans. The fifth recommendation is that Metroplex should update its five-year capital plan. This plan is in place. It is identical to the County plan as we have a unified approach to economic development.
  6. Admin costs. The sixth recommendation is that Metroplex funds should not be used for administrative and operating costs if the authority is contracting with other entities to perform a specific function. This recommendation addresses a problem that does not exist. Metroplex only funds direct contractual activities and only a very minimal amount is used for administrative purposes.
  7. Fees. The seventh recommendation is that Metroplex should not charge administrative fees to other economic development organizations. The fee would be $0 if the ABO required fewer reports to be filed by local economic development corporations. The fee covers the cost of ABO compliance only. In addition, fees have been reduced further in 2012 and this fact was shared with ABO staff but they chose to include this as a recommendation anyway.
  8. Contracting out. The eighth recommendation says we should not provide funds to other groups. Metroplex has the ability to contract with other organizations in its authorizing statute. This is done only when there is compelling cost savings to contract with another organization rather than self-perform the function. This is a “make or buy” decision that is best left to Metroplex not the ABO.
  9. BIDs. The ninth recommendation says Metroplex should no longer subsidize Business Improvement Districts (BIDs) to offset special assessments. This is not done now. Metroplex does not subsidize BIDs nor does it use funding to offset special assessments. Metroplex has successfully partnered with BIDs to implement economic development projects.
  10. Employees. The tenth recommendation is that neither the county nor city should assign employees to work for public authorities. This is a recommendation to correct a practice that does not exist.
  11. Rotterdam IDA. The eleventh recommendation is that the practice of paying stipends to Rotterdam IDA members be stopped. The stipends are no longer paid. Again, this is a recommendation to correct a policy that no longer exists.
  12. Financial assistance. The twelfth recommendation is that each authority should restrict the financial assistance it provides to projects… enumerated in its enabling legislation. This is already standard practice.
  13. Records. The thirteenth recommendation is that each authority should establish and adhere to procedures and controls to ensure that all economic development records are accurate, complete and maintained appropriately. This is already being done.
  14. Contracts. Authorities should only make payments for contractual services that are in accordance with the terms of a contract. No payments should exceed the amount unless the contract has been properly amended and adopted. This is already standard practice.
  15. Reports. Authority boards should make sure that all reports are filed with the ABO on a timely basis. This is already being done.

The response also includes corrections and critiques regarding the ABO’s findings on the issues of fewer groups, the Community Business Center, IDA grants, reporting, facade programs, the Broadway Commerce Park project, board members, staffing for the Rotterdam IDA, the Schenectady Local Development Corporation, staff funding allocations, Metroplex job data, revenues, and staff numbers.

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