Metroplex, budget office at odds over economic development audit

PHOTOGRAPHER: Justin Mason

Officials from the Metroplex Development Authority and the state Authorities Budget Office don’t seem to agree on much when it comes to a recent audit of Schenectady County’s economic development entities.

Budget Office Executive Director David Kidera said Metroplex seemed to have difficulty justifying the existence of seven separate economic development entities in the small county and often seemed to have difficulty in providing concrete data to show their effectiveness. He said Metroplex, despite being the hub agency overseeing all the other economic development entities, hindered the audit by providing inaccurate, conflicting or incomplete records during the review last year.

“If Metroplex is the staffing and everything is cohesive, then they you would think they would be the source of accurate data,” he said.

Metroplex Chairman Ray Gillen gives a very different — and somewhat unflattering — account of the budget office’s work in Schenectady. He said the state agency had unfettered access to his office, spent months poring through records, and then produced a draft report that was so flawed that it criticized Metroplex for failing to redevelop the once-dilapidated Big N Plaza — a site that now contains the $38 million offices of the Golub Corporation.

“There was not a page that didn’t have an error,” Gillen said.

The budget office’s 24-page report, released last month, criticized the county for having an “inefficient allocation of resources” by using seven different economic entities. The report also suggests a single agency could have achieved the same successes touted by the county’s so-called unified economic development front.

“Under current law, the same economic development results could have been achieved with one authority to issue tax-exempt debt or provide other forms of tax incentives, and acquire property, and a second authority to fund civic facility and not-for-profit projects and offer grants and loans,” the report states. “Therefore, it is just as probable to conclude that the County would have realized the same level of success with a more streamlined economic development structure that relied on fewer and less redundant organizations.”

Metroplex oversees the industrial development agencies in the city of Schenectady, Schenectady County and Rotterdam.

All three agencies maintain a local board of directors but have Metroplex Executive Director Jayme Lahut as their top administrator.

The authority also carries out the administrative duties of the Schenectady County Community Business Center and the Schenectady County Capital Resource Corporation.

City Zoning Officer Steve Strichman oversees the Schenectady Local Development Corporation, making it the only one of the seven without administrative ties to Metroplex.

Recommendations

The audit made 15 non-binding recommendations for the seven agencies, including the suggestion to eliminate some of the entities that appear to have overlapping missions. The report also asked Metroplex to create a plan to implement a streamlined system that fosters better sharing of information among the remaining agencies.

In addition, the budget office recommended that Metroplex stop charging administrative fees to the organizations it oversees, reconsider the practice of providing economic development funds to other organizations for administrative or support activities, and discontinue the practice of subsidizing business improvement districts.

The audit cited the Rotterdam IDA for failing to comply with state law, which mandates that such agencies must carry bond debt. In absence of this debt, the report said the agency is required to dissolve and divest its holdings to the town.

The audit questioned Schenectady and Rotterdam’s practice of assigning municipal employees to work for public authorities during the municipal work days. And it suggested that either the Rotterdam IDA or the town recover stipends that were unlawfully paid to board members in the past.

Through Gillen, Metroplex immediately responded with an eight-page news release categorically rejecting the report. Gillen maintains that Metroplex complied with 12 of the 15 recommendations and disagreed with two others; the last recommendation — that all seven agencies adopt a common application form — is being taken into consideration.

“There were 15 recommendations and we don’t think any of them were substantive,” he said.

Gillen defended the seven economic development agencies in the county, claiming they allow greater insight into the projects that are important locally. He said the boards overseeing the various local entities don’t cost anything and they help Metroplex understand projects that are vital to the community.

“What we get out of these groups is citizen input on projects,” he said.

Lack of cohesion

The budget office’s Kedira regards the relationship among the seven agencies differently. He said the report shows a lack of cohesion among the county’s authorities and either an inability or unwillingness by Metroplex to submit a proper accounting of the economic development activity.

For instance, he said he never received an official response to the final audit, and faulted Gillen’s news release for contorting the content.

He questioned whether the board members of the agencies named in the report ever got a chance to review it and wondered why Metroplex was the only agency to respond.

“In theory, we haven’t heard from six of the authorities that we reviewed,” he said. “As far as I know, they have no problem with the report.”

Kedira also called into question some of the data provided by Metroplex, such as the assertion that it helped create 5,500 jobs in the county. He said his office could only find evidence of 1,900 jobs created by the county’s economic development team and some of the jobs included by the authority appear to be ones that previously existed

“Even the numbers they gave us didn’t equate to 5,500 jobs,” he said.

Metroplex also had difficulty showing how they financed projects or which ones were still active, according to Mike Farrar, the budget office’s deputy director for compliance and enforcement. He said getting information from Metroplex proved cumbersome throughout the review.

In one instance, Farrar said his staff requested the number of loans issued by the Schenectady Local Development Corporation to the county Community Business Center. Metroplex, the agency identifying itself as the point-of-contact for the audit, claimed it had no administrative authority over the corporation and couldn’t provide the figures, Farrar said.

In another instance, Farrar said Metroplex produced conflicting accounts on the number of active loans issued through the corporation. He said the numbers provided by the corporation and Metroplex were vastly different despite a written request that clearly spelled out the data his office was requesting.

“It’s an extended drawn-out process to get to the bottom line with them,” he said.

Gillen said the discrepancies were on the budget office’s end. He said the draft report produced last fall contained more than 100 errors, some that reflect the budget office’s blatant ignorance of the development that has occurred throughout the city and county.

“We didn’t twist anything around,” he said. “We corrected their errors, which were plentiful.”

Different counts

Gillen said the large discrepancy between the jobs Metroplex is credited with creating and the figure proffered by the ABO lies in a differing approach to counting the positions. He said existing positions are included in the employment figure because in many cases Metroplex assists companies in retaining jobs that would otherwise be moved out of Schenectady County.

In another part of the audit, Gillen said the budget office slammed Metroplex for paying $5,500 in architect fees for an Upper Union Street sign project that cost $17,700. In actuality, he said the fees were for a massive $88,000 renovation of the building that now serves as the headquarters for Hot Harry’s Burritos.

Perhaps the most egregious error in the draft report was the budget office’s failure to realize that the Big N Plaza had been demolished, cleared and now rebuilt as Price Chopper’s corporate headquarter.

Gillen acknowledged that the budget office corrected its initial criticism over the Big N, but said it serves as evidence that the auditors didn’t review their findings closely before releasing a draft.

Gillen disputed the assertion that Metroplex was anything but forthcoming with the information it provided. He said three staffers spent months rifling through records and produced a report that found no impropriety or illegal activity.

“They could look at anything,” he said. “We gave them full access.”

The audit isn’t likely to spur much action, considering that members of the Metroplex board are generally siding with Gillen. Neil Golub, one of the founding members of the authority, said the apparent lack of substance to the report reaffirms the great job Metroplex is doing in the county.

“As far as I’m concerned, Metroplex gets a clean bill of health,” he said. “They have done things properly and we should be very proud. Why these people stayed months and months and months in our offices is a puzzlement to me.”

Golub said the positive work Metroplex has done in the county is reflected by the continued progress the agency has made in cleaning up downtown Schenectady. He said the budget office’s report seems diminutive, when taken in context of the successes in the county.

“What [the ABO] found you could put in a thimble,” he said.

Robert Wall, Duanesburg’s representative on the Metroplex board, also approved of Gillen’s responses to the budget office. He said the findings of the report seem to be based on poor or inaccurate information.

“[Gillen’s] rebuttal pointed out many factual errors,” he said. “If the tenor of the report is based on factual errors, that could lead people to the wrong impression.”