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Fulton County EDC executives’ bonuses are questioned

Fulton County EDC executives’ bonuses are questioned

Fulton County officials are asking economic developers to explain how their top two executives were

Fulton County officials are asking economic developers to explain how their top two executives were each paid about $900,000 in total compensation in 2007 and half a million dollars in 2008.

Though the Fulton County Economic Development Corp. and its sister agency and real estate arm, Crossroads Incubator Corp., issued a news release this week attributing the compensation to incentive-based contracts, two current county officials and one former county official said they expect the agency to fully explain how EDC Executive Vice President Jeff Bray and CIC Executive Vice President Peter Sciocchetti were rewarded.

Northampton Supervisor Linda Kemper, chairwoman of the Fulton County Board of Supervisors’ Economic Development Committee, said the compensation levels will be on the agenda at her committee meeting on Tuesday.

“It just baffles me and shocks me that this was going on and nobody was aware of it,” said Kemper. On Tuesday, she said, “It will be a topic of discussion —and it should be — and we deserve an explanation.”

Kemper said she expects supervisors to continue discussing the issue this fall as they prepare the 2011 budget and debate whether EDC/CIC continues to need the $75,000 a year the county currently pays the agencies.

Kemper said criticism of the compensation levels should not reflect on what she said has been good work by both Bray and Sciocchetti in recruiting businesses to the area. “Jeff has done a good job, but not $700,000 worth,” she said, referring to his total compensation in 2007, when salaries from both agencies and a retirement plan payment totaled more than $900,000.

“I had absolutely no idea at all … I think it’s completely inappropriate and I think it’s excessive,” Kemper said.

Pay and benefit levels were revealed this week from the agency’s 990 federal tax forms, which can be viewed on at least two websites. The 2009 forms are not yet online.

In 2008, Bray was paid a total of $591,000 and Sciocchetti received $497,000.

The previous year, Sciocchetti received a total of about $871,000 including $377,742 in salary.

Donald F. Stanyon Jr., CIC board member and the board president in 2008, has declined comment on the 2008 compensation.

Current board President Joyce Royal has not returned phone calls, but two members on her board, who both spoke on condition they not be identified, said they were totally unaware of the pay and compensation levels.

One of those members, noting that Bray and Sciocchetti deserve credit for luring companies and jobs to the county, nonetheless expressed confidence the board will be “looking into those [compensation] agreements.”

County Executive Jon R. Stead said he also was surprised by the level of compensation.

And while he said he understands it is common in the economic development field to offer incentives, “I think the public and the government have the right to understand the framework” of the contracts.

If EDC/CIC officials fail to provide an explanation in the next several days, Stead said he expects his board will demand one.

“I’m hopeful there will be a full explanation,” he said. “It certainly is large,” Stead said, describing the compensation given the two officials.

County officials have never been apprised of the pay levels at EDC/CIC, Stead said, because they are private, nonprofit corporations.

But, he said, the assets now held by the two corporations were grown mostly from interest — and later rent — derived from state and federal economic development grants awarded to lure companies to the county’s industrial parks. Those parks were also developed with public grant money.

Former Gloversville Supervisor Anthony Buanno, who founded the board’s economic development committee in the 1980s and continued to serve on it until his retirement last year, said his committee asked the agency for years to provide details about salaries.

“Not one supervisor knew,” he said of the pay levels. “I’m fairly disgusted with what I’m hearing. I’m one of the people who should have known about this stuff and I don’t know anything … something should be done about it,” Buanno said.

EDC Chief Executive Officer Michael Reese was at a conference Friday and could not be reached.

Bray has pointed out that incentive-based contracts were developed after he arrived in 1991 at a time when EDC was operating $41,000 in the red.

Since then, he said, the agency has filled up two industrial parks, locating such operations as the Wal-Mart Distribution Center, Euphrates Cheese Co. and Fage, the yogurt manufacturer.

Bray said the bonus compensation in 2007-08 related in part to the 2007 sale of 12 CIC industrial plants to Boston real estate investment company STAG Capital Partners for $31.2 million.

The sale left CIC with 11 other buildings it has continued to manage.

At the time of the sale, EDC/CIC lawyer J. Paul Kolodziej said the sale would generate more than $2 million in profit for CIC.

Though EDC manages several public loan pools created from government grant money awarded for specific projects dating back to 1987 and the arrival of Spalding’s golf ball factory, it has also received some private sector money over the years.

When the agency was created in 1984 and its first executive director, Robert McNary, was hired for $35,000, the Chamber of Commerce conducted a capital campaign with its membership and raised $40,000. The Fulton County Board of Supervisors contributed another $42,000 that first year, allowing the agency to open an office on North Main Street in Gloversville.

Newspaper stories in The Daily Gazette archives discuss formulation of the agency’s 1986 budget when the county board again gave $42,000, the chamber $15,000 and the cities of Gloversville and Johnstown $8,000 and $5,000, respectively. The Fulton County Industrial Development Agency, an entity of county government, provided $2,000 for the 1986 budget, and EDC itself, then called the Community Development Agency, appropriated $15,000 from its revenue stream.

Gloversville ceased contributing several years ago, but Johnstown continues to pay the agency $15,000 a year.

While Kemper said she considers the county’s annual $75,000 payment support for operations, Stead said it is a fee for services.

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