Over $140 million invested so far by Metroplex

Leader of development agency says taxpayers get strong return
State Street in Schenectady, September 2018.
State Street in Schenectady, September 2018.

Metroplex has spent more than $140 million taxpayer dollars. 

But regardless of all it has accomplished, or helped others accomplish, some critics of economic incentives can’t get past the inherent paradox: Government increases the cost of doing business in New York by raising taxes so that it can offer economic subsidies that reduce the high cost of doing business in New York.

“We can’t unilaterally disarm” on principle and stop offering incentives, Metroplex Chairman Ray Gillen said. If Schenectady doesn’t offer incentives, other cities, counties and states will lure business away, he said.

Beyond that, he offered defenses for Metroplex’s incentives:

  • Not every project gets a subsidy. Many get only technical assistance, such as help navigating a regulatory process. Via Aquarium in Rotterdam was a high-profile example of one that got help but not funding.
  • Many projects receiving tax breaks are redevelopment of long-vacant or derelict sites that had been paying little or no property tax, sometimes for decades. 
  • The grants awarded for projects are often a very small portion of the overall cost.
  • The return on investment is fast and strong: Metroplex used its $8.8 million in sales tax money in 2017 to assist projects worth more than $150 million and projected to create 900 jobs.
  • Payments in lieu of taxes — the property tax breaks Metroplex awards developers — to Schenectady County municipalities totaled $15.7 million in 2017, nearly double the amount of sales tax revenue that Metroplex spent that year.

“We’re not giving money to companies. We’re investing in ourselves, in our own community,” Gillen said.

Gillen previously worked in economic development at the federal and state levels, and is a firm believer in public dollars leveraging much larger private investment. 

The state Authorities Budget Office has been a relentless critic of economic development agencies as a group, saying they have not demonstrated adequate return on investment. The watchdog has been critical of agencies individually, for reporting their financials incorrectly or not at all. But it doesn’t criticize an individual agency without a specific in-depth review — which it has not performed on Metroplex.

“I would classify Metroplex as probably one of the better-run authorities,” said Deputy Director Mike Farrar. It’s never been delinquent in its reporting and has submitted additional data when requested, he added.

The Authorities Budget Office in 2011 issued a report critical of redundant and uncoordinated agencies in Schenectady County, which is exactly what Gillen said had existed 10 years earlier and doesn’t exist now.

Was the criticism still warranted in 2011, seven years after Gillen took over? He gives a diplomatic non-answer.

More on Metroplex at 20: 

Authorities Budget Office Director Jeffrey Pearlman said the streamlining by Schenectady County is exactly what needs to happen elsewhere.

“We like those consolidated activities,” he said. “They’re a huge cost savings.”

Pearlman stopped short of calling Metroplex a model, noting that its funding stream and unique dual mission of economy and community are unique. But he said the streamlining is good.

“I think you can point to the reduction in Schenectady County,” he said. “That’s a unique trend in this state.”

Categories: Business, News, Schenectady County

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