Economic Development Blog

The U.S. Economic Development Administration (EDA) is all set to provide the Delaware County Industrial Development Agency (IDA) in New York with $3.8 million in disaster relief funding.

Amphenol Aerospace, Sidney, NY (photo – amphenol-aerospace.com)

The funding will be used to relocate interconnect product manufacturer Amphenol Aerospace to a new flood-proof site in Sidney, NY.

Amphenol is the county’s largest employer, and more than 1,000 jobs had been in danger of being washed away out of the Southern Tier after Tropical Storm Lee flooded Sidney in Sept 2011.

The grant will be used by the IDA for site preparation in Sidney at 171 Delaware Avenue. This new location is out of the flood plain. The announcement of the $3.8 million grant by the EDA was made by U.S. Senator Charles E. Schumer’s office.

Schumer said the disaster aid funding from the EDA will spur the Southern Tier’s economic development and save the Amphenol jobs from moving out of Sidney. “A lot of work went into securing this funding, but now the Delaware County residents can rest assured that its largest employer is there to stay,” added Schumer.

Richard Aiken, general manager of Amphenol Aerospace, said this grant was an integral part of the financing package Amphenol requires to relocate their plant to higher ground in Sidney.

Back in Nov 2011, NY Gov. Andrew M. Cuomo had announced a $20 million business retention package which reassured the company that state, local and federal officials would help the company recover and move to a flood-proof site.

That $20 million was also directed to the Delaware County IDA for site acquisition, construction and a gas pipeline to both the new site and the existing facility of Amphenol Aerospace. The company also got a levee built around the existing facility.

In March 2012, the New York Power Authority (NYPA) added to the incentives being offered to Amphenol to stay put in Sidney by providing the company with 2,300 kilowatts of low-cost power.

The total capital investment required for the new facility is about $35 million. This includes site acquisition, improvements and construction of 210,000 square feet of manufacturing space, along with another 60,000 square feet of office space.

Glenn Nealis, director of the Delaware County IDA, said that without this $3.8 million EDA grant, the IDA would not have been in a position to make the infrastructure investments required to keep Amphenol in Sidney.

Amphenol Aerospace makes interconnect products which are used in industrial markets, military applications and in commercial aerospace.

A couple of days ago, Alcoa Inc (NYSE:AA) announced that it was ready to go ahead with the next modernization phase of its operations in Massena, New York.

Alcoa (photo – Alcoa Inc./wikipedia)

The company said it would be spending $42 million on the former Reynolds plant in Massena it purchased in 2000, and will be shelling out another $10 million for the North Country Economic Development Fund (NCEDF).

This $10 million will be spent for economic development in counties in the North Country, along with the Akwesasne Mohawk Reservation. The $10 million fund will be administered by the NYPA in partnership with another entity named by the state.

These investments are part of a 2008 agreement the company entered into with the New York Power Authority (NYPA) for low-cost hydropower, in return for which Alcoa committed to spending $600 million on modernization.

The only problem is that Alcoa cannot go ahead with the expansion unless the U.S. Environmental Protection Agency (EPA) gives Alcoa its approval of a cleanup plan of the Grasse River. Alcoa and officials in New York have been pushing the EPA for years to give its Record of Decision (ROD).

The issue dates back decades, when Alcoa and the Reynolds plant along the banks of the St. Lawrence and Grasse rivers were still using polychlorinated biphenyls (PCBs) in their aluminum production process. PCBs were banned in 1979, but the fish in the Grasse River still show high levels of PCBs.

Alcoa was the only one involved after they purchased the Reynolds plant, and the company has been working with the EPA for years trying to get one of a dozen possible cleanup plans approved.

The actual PRAP (Proposed Remedial Action Plan) was released in Oct 2012, and a tentative date for approval has been set for April 2013. EPA’s initial estimate for the plan’s cost was at about $245 million.

Alcoa needs to get the final ROD and know the exact cost, which is going to have a direct bearing on the rest of their investments, including the $600 million modernization they agreed to.

U.S. Senator Charles E. Schumer (D-NY), who was instrumental in getting the EPA to release the PRAP for public comment, urged the EPA to act fast and complete the process in April, since the lack of finality was undermining Alcoa’s ability to make expansion plans.

“The light is clearly visible at the end of the tunnel, and it will beckon a brighter future for the North Country’s economy and its environment,” added Schumer.

Alcoa, which has its headquarters in New York and in Pittsburgh, Pennsylvania, operates in 31 countries and is the world’s third largest producer of aluminum. Their operations in Massena provide employment for 1,100 people, and contribute $340 million in spending, payroll and taxes to the local economy.

The New York City Economic Development Corporation (NYCEDC) and NYC Mayor Michael R. Bloomberg announced the official launch of LINK (Leveraging Innovations and our Neighborhoods in the Knowledge Economy) – an effort to get low-income New Yorkers more involved in the booming knowledge economy.

NYC Mayor Bloomberg at LINK announcement (photo – Spencer T Tucker/ Mayor’s Office)

LINK currently has eight programs that will together impart skills to make low-income New Yorkers more employable, while supporting entrepreneurial activities in distressed communities to create more jobs that require little formal training.

“The goal here is to make stronger ties for low income New Yorkers to our growing tech economy – ties that would not otherwise emerge naturally but may flourish with the right attention and incentives,” said NYC Deputy Mayor for Health and Human Services Linda I. Gibbs.

Gibbs added that LINK reflected the commitment of the economic development and employment sectors to make sure that the “fruits of our economic resurgence” benefited all New Yorkers.

Agencies partnering on this initiative with NYCEDC include the Center for Economic Opportunity, Small Business Services, and the Human Resources Administration.

These agencies will be helping NYCEDC implement pilots of each of the eight LINK programs described below.

LEAP (Learn as you Earn Advancement Program) – This program offers soft-skills classroom training and connects certificate and Associate’s Degree holders to paid internships in five sectors.

LEAP Classes will be conducted by partners, including NADAP for healthcare IT in Manhattan, Year Up and EDSI in Brooklyn for entry-level IT and web-based work/business support respectively, and by the YMCA in Queens for early childhood education teaching assistant positions.

Immigrant Bridge Program – This one aims to help immigrants that have advanced degrees to pursue a higher-paying tech job. The program will support them with soft-skills training and provide personal loans for education and expenses during the job search process.

DigitalWork NYC – This program targets unemployed youth by showing them online entry-level opportunities for digital work such as transcription and image tagging. The program will focus on getting some work history into resumes with the aim of opening up a pathway for a career in the knowledge economy.

Jobs and Economic Mobility Track in NYC BigApps – This program is focused on creating mobile apps that can aid in finding jobs and supporting workers. The apps mentioned include one which helps locate hospitality jobs within a 30-minute subway ride, and another which locates daycare facilities.

The other four programs are a business innovation challenge, a vacant lot activation program, business incubators for low-income entrepreneurs, and Progress Networks – a program that will help small to medium-sized businesses in New York City form consortiums that can leverage scale to reduce costs and channel these savings into creating more jobs, training employees and providing better benefits.

You can read more about these LINK programs at nycedc.com.

Sunnyvale, CA-based Yahoo! Inc. (NASDAQ: YHOO) is planning an expansion of its east coast data center in the Town of Lockport, New York. The company may also be opening a new call center in the Buffalo-Niagara region.

Yahoo! (photo – nysenate.gov)

The expansion will create 15 new jobs, adding to the data center’s 77 existing jobs. The call center will reportedly create 100 new jobs.

The two projects together will involve millions of dollars in investments. Yahoo executives are set to meet with the Lockport IDA on Thursday morning at a special IDA board meeting called to discuss a tax abatement proposal.

The call center location will be close to the Niagara Power Project. The incentives package Yahoo is expecting includes hydropower from the New York Power Authority (NYPA) at a low cost. Empire State Development is additionally expected to approve tax credits worth $2 million.

The Lockport data center project was announced in 2009, and unveiled in Sept 2010. At that time, Yahoo touted it as the first of its “Yahoo! Computing Coop” (YCC) data center designs which made it one of the world’s most environment-friendly and energy efficient data centers.

The narrow YCC design that allows for natural airflow combined with the cool climate at the site location in Lockport vastly reduces the amount of power required to keep the data center cool.

At that time, Yahoo was awarded $9.9 million from the U.S. Dept. of Energy as a sustainability grant provided through New York State Electric & Gas (NYSEG). NYPA has so far approved 16 megawatts of low cost hydropower for the Lockport data center.

To secure the project in 2009, the Lockport IDA agreed to a 20-year PILOT (payment in lieu of taxes) arrangement for property taxes, with zero payment for the first ten years. Yahoo was also approved for mortgage tax abatement and a 20-year sales tax abatement.

All put together, the company was approved for incentives valued at around $268 million in return for a $171 million two-phase investment that would create 125 high-paying jobs with average annual wages of $65,000. They have completed phase one with a $150 million investment and created 77 jobs so far.

New York City Economic Development Corporation (NYCEDC) has announced the five winners of its “Take the H.E.L.M.” competition.

Take the H.E.L.M. (photo – takethehelmnyc.com)

H.E.L.M. stands for “Hire + Expand in Lower Manhattan.”

The competition aims to promote Lower Manhattan as an attractive location for innovative startups and relocations of existing businesses in the tech and creative sectors.

Sponsored by the Lower Manhattan Development Corporation, Take the H.E.L.M. attracted in excess of 300 applications, out of which 19 finalists were chosen to come in person to Lower Manhattan and compete to be named as one of the top five winners.

These five winners (one each in five different categories – relocating, startups, tech, creative, and expanding) will each get $250,000 to assist in opening a new office or expanding one in Lower Manhattan.

The winners were chosen by a selection committee headed by former SEC Chairman Arthur Levitt. Committee members included, among others, NYCEDC President Seth W. Pinsky and NYU Professor Richard Florida, who is also a senior editor at The Atlantic.

Listed below are the five winners:-

Relocating (new to NYC) – Grapeshot – This Cambridge, United Kingdom-based software technology company uses “probabilistic search” algorithms to make real-time categorizations that help supply contextual content and ad recommendations.

Startups – STELLAService – This startup will be moving from the Flatiron District to Lower Manhattan. STELLAService helps online shoppers make informed decisions, and helps businesses monitor and benchmark their customers’ online shopping experience.

Expanding – Booker Software – Booker, which is already located in Lower Manhattan, offers a cloud-based management platform for businesses in the service sector.

Technology – Paperless Post – Allows users of their website to create and send custom cards, invitations and stationery.

Creative – The Flatiron School – Offers a 12-week full-time course for those who want to become a web developer. They also have a job placement program, and provide scholarships for minority and female students.

Apart from Grapeshot and Booker, the other three are New York-based firms that will be relocating from other parts of the City to Lower Manhattan.

“Lower Manhattan has already been so generous to Booker, helping us grow from 50 to nearly 200 people in just a year,” said Josh McCarter, CEO of Booker. “This award and prize from Take the H.E.L.M. makes us feel even more privileged to be headquartered in such a vibrant community that helps businesses prosper, and we are paying it forward by giving away our software to Lower Manhattan spas and salons for one year as a thank you to our neighbors.”

Booker tripled its workforce to 160 in 2012, and expanded its presence to a second floor in their current location overlooking the World Trade Center. Booker plans to add another 70 employees this year.

Applications for the second round of the Take the H.E.L.M. contest will be accepted later this year. Find out more at takethehelmnyc.com.

The New York State Authorities Budget Office (ABO), an independent office created to make public authorities more accountable and transparent, released a multi-year analysis of the state’s industrial development agency (IDA) financial assistance practices.

NY ABO (photo – abo.ny.gov)

The data made public includes the cumulative value of financial assistance and tax exemptions received by IDA projects each year from 2008 through 2011.

Highlights from the ABO data:-

- IDA projects realized more than $5.6 billion in total financial assistance from 2008-2011, of which $3 billion went to IDA projects located outside of New York City;

- Projects located in New York City received $2.6 billion in tax exemptions;

- Net exemptions from potential school taxes totaled $757 million over the four years;

- IDA projects were exempt from paying $276 million in state sales taxes and $262 million in local sales taxes.

After factoring in payments made by projects in lieu of taxes (PILOTS), the net value of the exemptions totaled almost $2.2 billion ($1.6 billion outside NYC).

“Economic development officials see these tax exemptions as effective and essential for spurring economic development. They view any restriction on the availability of financial assistance options as detrimental to job creation and economic development,” said David Kidera, director of the ABO.

Kidera noted that while the ABO had improved the accountability and transparency of IDAs, they have not focused on whether this financial assistance equation is working for every community.

“Hopefully, this data release starts the discussion and helps public officials and taxpayers objectively draw their own conclusions,” added Kidera.

The Town of Hempstead IDA provided $174 million in total tax exemptions, more than any other IDA outside of New York City. When adjusted for PILOT payments, the net value of the financial assistance made available by the Town of Hempstead IDA was $116 million.

The data also includes the jobs created by each new project in 2010 and 2011. In 2010, the Hempstead IDA has one new project listed which created 950 jobs and got $1.78 million in exemptions. In 2011, the Hempstead IDA had three new projects, one of which got a net exemption of $1.33 million and created zero jobs.

The Greene County IDA, the Yonkers IDA, and the Nassau County IDA were next in the net value of tax exemptions provided.

See the complete New York State IDA projects data set from the ABO – Download (.xls)