The economic development organization that has helped bring scores of businesses to Saratoga County is suing the state Authorities Budget Office, contending it’s a private organization not subject to state oversight.
The Saratoga Economic Development Corp. says it is entirely privately operated, and revenue contracts it has with the Saratoga County Industrial Development Agency, Saratoga County, and two local IDAs create a “strictly contractual” relationship.
The lawsuit, filed Thursday in state Supreme Court for Albany County, disputes an October finding from the ABO that the SEDC is subject to state oversight, because “SEDC is sponsored by and affiliated with both Saratoga County and the Saratoga County Industrial Development Agency.”
The lawsuit contends that reporting requirements from the Authorities Budget Office would be “devastating to SEDC’s operations,” bringing new financial reporting and disclosure requirements it fears would undermine confidential business attraction negotiations.
“Most significantly, SEDC would lose its ability to have confidential negotiations with clients considering whether to start a business, relocate or expand their business,” states the lawsuit, brought on SEDC’s behalf by the Greenberg Traurig law firm of Albany.
“Compliance would be expensive and time-consuming, likely requiring SEDC to hire a full-time employee to address compliance issues and causing SEDC competitive harm,” the legal papers continued.
SEDC, a non-profit organization that was founded in 1978 by local business leaders and has an office in Saratoga Springs, has been a participant in a fraught battle over most of the last decade over who controls economic development planning and marketing in Saratoga County, which has among the most successful economic development records in the state.
SEDC had a marketing services contract worth as much as $400,000 per year with the county from 1978 to 2012 (about half its budget at the time), but broke with the county that year after its board rejected a request from the county Board of Supervisors that a supervisor be appointed to the SEDC board.
The Board of Supervisors subsequently founded a new economic development organization, the Saratoga County Prosperity Partnership, to market the county and try to attract new economic development activity. For years they directly competed with each other, but SEDC and the Prosperity Partnership in 2019 signed a written understanding to have a cooperative relationship. But further negotiations collapsed last year amid accusations of bad faith, leaving them in apparent competition again.
The Prosperity Partnership, having been created by county government, is unambiguously covered by ABO oversight.
Because of the since-abandoned agreement, the county contracted with SEDC for national marketing services again in 2020, and paid it $112,500. The 2021 county budget includes $150,000 allocated for SEDC, but the contract remains unexecuted, according to the lawsuit. The majority of SEDC’s revenue comes from corporate or private donations from its 400 business or individual members, it said.
Throughout the dispute with county leaders, however, SEDC has had a contract with the Saratoga County IDA in which it receives up to half the fees paid by successful business applicants, up to a maximum of $50,000 per application. SEDC would negotiate agreements to attract businesses to locate to or expand in the county and bring them to the IDA, which has the power to offer tax breaks and similar incentives to encourage the businesses to move forward with their plans.
The ABO was created by the state Legislature in 2006 in response to numerous reports across the state about authorities engaging in lavish spending, being used by local governments for off-the-books borrowing, and financial irregularities. In 2019 correspondence to SEDC, the ABO said the contractual relationship with the county appears to create the kind of relationship for which transparency and public accountability is required.
“The close working relationship exhibited between Saratoga County, the IDA and SEDC is exactly the type of relationship that the Legislature intended to be subject to the requirements of Public Authorities Law,” the ABO wrote in its Oct. 20 determination.
The ABO reasoning relied on an Appellate Division court decision from Oneida County that found the Griffiss Local Development Corp. — set up to bring redevelopment to the former Griffiss Air Force Base in Rome — was subject to state oversight.
In the lawsuit, SEDC contends the comparison is faulty because the Griffiss LDC had a closer relationship with Oneida County government, with the majority of its board members being public officials. None of SEDC’s board members are public officials.
“No local government or authority has any control or authority over SEDC, its board members or its staff,” SEDC states in the lawsuit.
Among the companies SEDC has helped attract to Saratoga County since 1978 are GlobalFoundries, Quad-Graphics, and the Ace Hardware and Target distribution centers, as well as roughly 300 smaller projects. SEDC says it has been responsible for creating 18,000 jobs, and bringing $17 billion in investment to the county. The GlobalFoundries computer chip plant in Malta and Stillwater has alone been a $13 billion investment.