County supervisors will exercise more control over the direction of economic development in Fulton County under a new agreement with the Fulton County Center for Regional Growth.
Starting Jan. 1, the county will provide the CRG with $75,000 for one year in return for the appointment of up to four supervisors to the CRG board and the requirement that the CRG file annual audited statements with the chairman of the Board of Supervisors.
In the works for months and disclosed Thursday at a news conference, the agreement is subject to approval by the full Board of Supervisors; it already has the support of key board committee leaders, however.
Chairman of the Board Michael F. Gendron said the agreement will “restart job creation” in Fulton County and provide greater financial accountability and public oversight of the CRG’s activities.
CRG Chairman Dustin Swanger said: “We think this private-public partnership is the way to go. It will move us forward.”
The CRG is one of the top economic development agencies in the county, along with the Fulton County Industrial Development Agency. It was formed last year to oversee the Fulton County Economic Development Corp. and the Crossroads Incubator Corp., two separate corporations with their own boards.
For years, the county had provided the EDC with a stipend in return for economic development marketing services. The CRG approached the county this year for a similar subsidy, and this request promoted several months of behind-the-scenes negotiations between top county and CRG officials. Their talks resulted in Thursday’s announcement of a “new business development marketing plan.”
The agreement will help provide some financial stability to the CRG as it attempts to settle legal and financial issues sparked by two executives who once headed the EDC and CIC, officials said.
According to legal documents, the boards of the EDC and CIC were unaware that EDC Executive Vice President Jeff Bray and CIC Executive Vice President Peter Sciocchetti awarded themselves about $900,000 each in the two-year period 2007-08. They also granted themselves bonuses of $104,000 for 2009.
After the bonuses became public, the EDC and CIC boards suspended the two men without pay and later fired them. The CRG is suing Bray and Sciocchetti to recover the money. The former executives deny any wrongdoing.
CRG and county officials also said Bray and Sciocchetti in 2007 “convinced the CIC to sell 11 industrial buildings to a real estate trust,” and that the sale of these “rent-producing assets left the CIC with significantly reduced rental income to support operations.” This fresh allegation was contained in a news release issued at Thursday’s news conference.
Gendron called the loss of the rental income “a blow that could not have come at a worse time to Fulton County,” saying it hampered programming to create jobs.
Swanger said the EDC has about 2 1/2 months of operating capital remaining for its staff and the CIC is in debt over mortgage payments related to its large real estate holdings, which it is trying to sell. He said the loss of rental income and actions by Bray and Sciocchetti are partly responsible for the EDC and CIC’s current financial conditions.
“In the past, [the EDC and CIC’s] plan was a model that worked very well. It was real estate development that paid for a lot of the economic development activities,” Swanger said.
CRG and county officials said they plan to dissolve both the EDC and CIC as corporate entities, leaving just the CRG to handle an existing revolving loan fund, develop a marketing plan with goals and objectives, apply for grants for operations, recruit businesses and market shovel-ready sites in existing or future business parks in the county.
Swanger said the CRG will not dissolve the EDC and CIC immediately. He said the CRG must first sell six properties the CIC holds, including Estee Commons, a 39-unit upscale apartment complex that was once Estee Middle School. The CRG is working with NBT Bank, a major holder of mortgages on the properties, to sell the buildings.
Swanger also said the EDC is engaged in a lawsuit with the state Authorities Budget Office and wants to see this legal issue resolved. He said the case could set a precedent over how the ABO will treat the CRG.
In 2010, the ABO ruled the EDC was a local development corporation created by the Fulton County government, serving as a public agency. As such, it must operate as a transparent public entity, according to the ABO. The EDC filed a lawsuit arguing the opposite. The matter remains in court, pending an appeal by the EDC against a decision in state Supreme Court that the EDC lawsuit proceed as an Article 78 hearing.
The EDC wants the matter resolved as a declaratory judgment. The Article 78 hearing would determine whether the ABO exceeded its mandate in issuing an opinion about the EDC’s status.
The CRG calls itself a private corporation that is not subject to state oversight. ABO Executive Director David Kidera disagrees. On Thursday, he said CRG’s agreement with the county is proof the CRG is a public agency. “This is a direct subsidy to an entity,” in spite of the agreement being labeled as a contract, he said.
Kidera said he doesn’t disagree there is a contract between the county and CRG, but said the contract does not disguise the fact that the county is providing direct financial support to the CRG and is putting supervisors on the board in an oversight position.
Swanger said the CRG’s contract with the county is similar to contracts the county has with other outside agencies, such as the Cornell Cooperative Extension.