State moves to seize Luther Forest tech park

PHOTOGRAPHER: Jason Subik

State officials say they’ve lost confidence in local management of the Luther Forest Technology Campus — home to the massive $4.6 billion GlobalFoundries computer chip factory project — and have taken steps to try to seize control.

Dennis Mullen, chairman of the Empire State Development Corp., said he has received a letter of concern from GlobalFoundries expressing concerns about schedule delays caused by the leadership of the Luther Forest Technology Campus Economic Development Corp., which operates the tech park.

“GlobalFoundries is the client, and the customer as well as myself feel things need to be done in a more expeditious manner,” he said Saturday. “We have an obligation to the taxpayers who have a tremendous amount of money invested in this project. There is also the expectation that there will be jobs, and if the project isn’t done on time, the jobs won’t be created.”

GlobalFoundries, which began construction last year, is expected to create 1,400 permanent jobs by 2012 and indirectly create thousands of support jobs. However, since selling 223 acres to GlobalFoundries last year, the tech park hasn’t landed any other tenants, with its officials focusing on completing road, water, sewer and electrical transmission infrastrucure.

It is the slow pace of some of that work that concerns GlobalFoundries, which will need full utilities to start its plant.

Nearly all of the $80 million invested in the 1,414-acre park in Malta and Stillwater since 2004 has come from state grants.

Mullen asked for the resignations of the board of directors of the Luther Forest Technology Campus Economic Development Corp. on Wednesday. When they hadn’t responded by Friday, he moved to foreclose on the campus.

“Since the board did not resign, my recourse is to send a letter of foreclosure on the notes that are due to us and, for all intents and purposes, get control that way,” he said. “The notes are worth $12 million. We are calling all the notes, which we have a legal right to do.”

Michael Relyea, tech park EDC president, said his board of directors will decide whether to fight the foreclosure after it discusses the potential effects with all of the groups that have supported the project thus far. He said the Saratoga County Industrial Development Agency, the Saratoga County Economic Development Corp., leaders from the towns of Malta and Stillwater and the Saratoga County Board of Supervisors will all be consulted.

“If we look around and the locals say we’d rather have this in the hands of a local nonprofit than in the hands of New York state, there may be the ability to raise funds to pay the mortgage,” he said. “The rules are different when the state owns a property. We need to understand what that would look like.”

Project critical

Mullen said he has an obligation to the taxpayers of New York to make sure the GlobalFoundries project is completed and he believes state control is the best way to make that happen. He said he intends to obtain control regardless of whether the Luther Forest Technology Campus EDC attempts to pay the money it owes.

“They have materially resisted some of the things that need to be done. They have missed time frames. If they had demonstrated the ability not to resist and get things done on time, this wouldn’t be happening,” he said. “Paying the notes is not the issue. Paying the notes is only one component. I don’t know how they are going to pay the notes. It’s state dollars that are going into this. They have no source of income, other than the state dollars. I will resist giving them more state dollars because I don’t feel they have the competency to get this done.”

The chip plant project is one of the largest economic development projects in the history of New York state. So far the state has committed $1.3 billion in economic development aid and has shown the willingness to commit more. In June when GlobalFoundries announced an expansion of its plan for the plant, which will be called Fab 8, the state provided another $15.8 million in incentives.

Mullen said the Luther Forest Technology Campus board of directors failed to meet an Aug. 6 deadline to bid out a road construction project for a thoroughfare needed for GlobalFoundries to establish a certificate of occupancy. He said testing of a power transmission line was also delayed because of the board’s inaction.

“If I had not interceded personally, it would not have been done. There’s a perfect example. Why should we have an intermediary managing a project if we’re going to have to do it anyway?” he said.

Relyea said his board has not agreed to the state’s terms for how to fund the road GlobalFoundries needs.

“The state provides the funding for the road and we facilitate it being built. There are terms in the contract that the state has requested and required, which Luther Forest is not in a position to accept,” he said.

Relyea also disputes Mullen’s characterization of the resolution of the power line delay. “He was involved in the conversations, but I wouldn’t say he helped make it happen faster,” he said.

Malta impact

Malta Supervisor Paul Sausville said he’s fearful state ownership of the technology park could affect property tax collection from GlobalFoundries.

“If the Empire State Development Corp. were to take it over, I presume it would become tax exempt. As the park develops, it not only provides jobs but it was supposed to help our tax base,” he said. “We as the host town have had tremendous responsibilities. We have built five and half miles of roads for that campus. We have constructed entrances into the tech park. We have been over there doing inspections for the building codes. It all would have been for nothing.”

In July, GlobalFoundries filed a lawsuit in Saratoga County Supreme Court seeking to lower the $160 million assessment Malta placed on its partially constructed computer chip plant. The suit has not yet been resolved.

Mullen said the property tax implications of the state takeover of the project have not been determined. “At this point, I’m not even concerned about the taxes. Right now, if this project isn’t done, complete, on time, there isn’t going to be anybody occupying to pay any taxes,” he said.