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Leaders hope Amazon deal's collapse won't hurt region

Leaders hope Amazon deal's collapse won't hurt region

"I'm not at all discouraged about the region's ability to keep a foot on the gas pedal and keep moving forward," CEG President Andrew Kennedy
Leaders hope Amazon deal's collapse won't hurt region
Capital Region business officials believe upstate development efforts are sophisticated enough to avoid Amazon pitfalls.
Photographer: Stock images

CAPITAL REGION

The economic development professionals who try to convince businesses to come to or stay in the Capital Region are hopeful that Thursday's headline-grabbing flameout of the Amazon deal won't hamstring their efforts.

But it doesn't help, either, in an environment where New York's reputation for high taxes and government incompetence precedes it, and questions are arising across the country about corporate location incentive packages.

"I think the site selectors and companies and developers we work with realize upstate is a different product," said Ray Gillen, Schenectady County's director of planning and development and chairman of the Metroplex Development Authority. "So we don't see it making a difference."

But Dennis Brobston, president of the Saratoga Economic Development Corp., said Amazon's withdrawal from a $3 billion state-supported incentive deal that faced intense local opposition in Queens can't help but hurt the state's image in business circles.

"Any time you have a state issue, that reflects on the whole state," Brobston said. "Down there it was clear people were just drawing a line in the sand, and (New York state) looked foolish because it looked like people didn't have their act together. From our perspective, we're working with some clients from out of state now, and I expect to have them call, and say can they get (the offer) in writing."

Marty Vanags, president of the Saratoga County Prosperity Partnership, said there's a case to be made for the Capital Region -- especially its highly educated workforce -- if business leaders are willing to hear the story. But he said the Amazon situation will hurt.

"When I go somewhere and say I'm from New York, I have to make sure quickly they know I'm from upstate, because everyone thinks New York City," Vanags said. "Short-term, it's gong to make it harder, but not that much harder."

Montgomery County Executive Matthew L. Ossenfort -- where incentives have helped attract Target and Dollar General distribution centers, but where many communities remain in need of jobs -- was unafraid to lash out at fellow Democrats in Albany.

“The state Senate must answer to middle class New Yorkers for Amazon’s decision not to bring thousands of good-paying jobs and billions of dollars for New York to reinvest in transportation and other needs,” Ossenfort said in an emailed statement. “The political grandstanding of a select group of  state senators -- despite the overwhelming support for HQ2 in New York -- is one of the great economic blunders of our time that will have a lasting impact for generations to come.”

Organizations like Metroplex, the Saratoga County organizations and the Montgomery County Business Development Center are authorized to offer businesses looking to expand or relocate -- especially if they're coming from another state -- incentive packages that can include cash, tax credits for job creation, and property tax relief. It's a competition -- other states are also making offers, in a form of competition of which Amazon took full advantage in 2016 when it launched a much-publicized national solicitation that pitted cities and states against one another.

The Capital Region tried to get into the game in the original Amazon headquarters competition, submitting a proposal in October 2017 that would have created new office towers on both side of the Hudson River between downtown Albany and Rensselaer -- a bid that drew mocking notice from The Onion, the satirical online magazine.

That bid was put together by the Center for Economic Growth in Albany, where President Andrew Kennedy -- a former economic development aide to Gov. Andrew Cuomo -- said the exercise produced information and business support that has paid dividends in other projects, including an 800-employee Amazon warehouse planned for eastern Rensselaer County.

"I'm a firm believer that the Capital Region can and does operate separately from what happened in New York City," said Kennedy, pointing to an economy that includes General Electric, GlobalFoundries, Regenron Pharmaeuticals, SUNY-Polytech and a strong entrepreneur culture.

"As an economic developer, it's disappointing when an applicant like Amazon walks away," Kennedy said. "But I'm not at all discouraged about the region's ability to keep a foot on the gas pedal and keep moving forward."

He and others say the Capital Region has a lot to offer -- a crossroads of interstate highway routes within a few hours of New York City, Boston and Montreal, a well-educated work force, and a burgeoning high-tech sector. Typically, the incentives can be worth a few hundred thousand dollars, and only in rare cases top $1 million.

Until the Amazon deal was put on the table, the largest incentive deal New York had ever seen was the $1.2 billion incentive offer in 2006 that brought what is now the GlobalFoundries computer chip plant to Malta, in Saratoga County. After much initial uncertainty about whether the company would follow through, the plant was built and today employs more than 3,000 people, and has led to hundreds of jobs at other companies in its supply chain.

"When that was negotiated, the industry was at a place where they were getting incentive offers from Germany and from Texas and from Phoenix, and (the offers) were in the billion-dollar range," Brobston said. "If you wanted the semiconductor industry in New York state, you really had to do this."

At the time, the biggest concerns were about whether GlobalFoundries would ever follow through, which is finally did when ground was broken in 2009.

But today, the incentive deals themselves often face challenges.

On the same day that Amazon withdrew from Queens, GE announced it was scaling back on its plans for a new headquarters in Boston, and would be repaying $87 milllion in incentives to the state of Massachusetts. Questions about follow-through plague FoxxCon's plans for a Wisconsin electronics factory, which were celebrated by President Donald Trump in 2017 and received a $4.5 billion incentive package.

"The corporate-dominated site location system we've been saddled with since the 1930s needs to be dismantled. We have never received so many calls from elected officials and civic leaders about the need for federal, state and local solutions to the 'second war among the states,'" said Good Jobs First, one of the national organizations that sided with Amazon opponents.

Gillen said it's things other than incentives that drive business decision-making. 

"I think our product, upstate's location, its access to the Northeast and Mid-Atlantic, that's what we can offer," Gillen said. "Site selectors realize upstate is different from downstate. We think we can be very competitive."

Gillen said Schenectady County's access to large volumes of good water -- the Great Flats Aquifer -- is also a major selling point, which has helped bring Belgioioso Cheese and a marijuana growing facility to Glenville from out of state, and a bio-pharmaceutical factory to Rotterdam.

Assemblyman Phil Steck, D-Colonie, said he still believes the state should offer incentive packages for businesses to come to some upstate cities, but said New York City doesn't need incentives to attract employers.

"Google is in New York City and it's expanding, and they're doing it without any incentives," Steck said. "The companies that want to be in New York City are going to go there anyway. We need to attract businesses to the underserved communities upstate. I don't see this Amazon deal is really that helpful to the state of New York."

"I think our priority should be on helping businesses that are already here, and not offering all these large incentive packages to companies that don't really need them," said state Assemblywoman Mary Beth Walsh, R-Ballston, who reviewed incentive deals when she was a member of the Saratoga County Industrial Development Agency.

"If you're doling out taxpayer money, you need to be sure there's a sufficient benefit," Walsh said.

Reach Gazette reporter Stephen Williams at 518-395-3086, [email protected] or @gazettesteve on Twitter.

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