Thursday, January 8, 2009

Zoning Out

There are two ways to respond to Governor Paterson’s new cost-benefit requirements for the Empire Zone program. One would be to point out that the Governor is simply cutting funding for economic development under the guise of making the program more efficient and how this will be a tragic loss to Upstate’s struggling economies. Another way to respond, and this would be a lot easier, would be to simply not worry about it, because, at least for Schoharie County anyway, the Empire Zone program has been a big waste of time that has brought nothing but false hopes and some extra paper work.

Statewide, the Empire Zone program has been a mixed bag. It has undoubtedly helped to plug some of the holes on the sinking Titanic that is Upstate NY’s economy. On the other hand, it has also used taxpayers money to lure businesses to communities even though, in many cases, they would have located there anyway.

However, in Schoharie County, the program’s impact has been minimal at best. Sure there has been talk of various projects: a mystery manufacturer in shad point, a water park at Howe Caverns, and a multi-million dollar renovation of Sharon Springs’ old hotels. Some of this might eventually come to fruition, but I wouldn’t hold your breath.

One of the few success stories is along Route 7 near the high school where the Town of Richmondville seems to be on the verge of poaching two companies (Maranatha Fitness and Mill Services) from nearby Cobleskill.

Why has Schoharie County not benefited from its Empire Zones? In part, this is probably because Empire Zone benefits represent a drop in the bucket compared to the incentives that businesses have for leaving Upstate NY, which are many. Another reason is that local officials didn’t do a very good job at determining which land to include in the zones. Empire Zone benefits are a finite resource and are meant for targeted areas. However, in some cases, the Empire Zone-designated areas in Schoharie County included huge swaths of land owned by people with absolutely no interest in selling to developers. $100,000 in zone capital credits for community development projects can be a very beneficial tool for communities. However, Joe the farmer probably isn’t going to have much use for them, especially if he has absolutely no intentions of selling his land.

Perhaps it is time to realize that the Empire Zone is not the best way to solve our state’s economic development problems. All it does is pit communities against each other. In the end, instead of leading to net gains for the state it is likely to lead to net losses as these communities give up more and more concessions to attract companies. In the end, it is a race to the bottom.

This state of affairs can not be laid entirely at the doorstep of the Empire Zone program, although it has arguably exacerbated the problem. The best hope Upstate NY’s communities have right now is making bold and dramatic investments in our infrastructure. This is the only way we can hope to compete with the cheaper labor and weak regulatory environments found in other regions and other countries. A national trade policy that stops making it so easy for American companies to move overseas wouldn’t hurt either.


Anonymous said...

Good post, MAG.

Local officials haven't done a very good job at much of anything.

And let's agree that you not hold my breath and I won't hold yours.

Sean said...

"Local officials haven't done a very good job at much of anything."

Fair enough, but would anyone really expect a positive appraisal of anything from someone who actually nitpicks the use of a figure of speech like "I wouldn't hold your breath"?

As the saying goes. I wouldn't hold...oops, nevermind.

Anonymous said...

God, and the devil, are both in the details.
It behooves those who choose to advance published opinions to pay attention to said details.