Sunday, January 31, 2016

An "Award-Winning" Racket!

According to today's OD,
Companies throughout the Mohawk Valley are being rewarded for their positive impact on the local economy.  
(Don't 'cha love the positive spin the OD puts on things? You would think that the "MoVa" was positively booming!)
ReCharge NY, a program through the state Power Authority, awards low-cost power to state businesses and nonprofit organizations.
(In other words, this program "awards" special deals for special businesses . . . needed because NY State policies have required that cheap-to-produce Upstate-created hydropower must subsidize NYC-metro area electric rates . . . an area that insisted on closing one power facility just before it was turned on (the Shoreham, LI nuke plant), is insisting on closing another (the Indian Point nuke plant) and is closing down a myriad of fossil-fuel based plants.)
Some of this year’s big recipients include Revere Copper Products in Rome (6,600 kilowatts), Special Metals Corp. in New Hartford (4,900 kilowatts) and GUSC Energy in Rome (6,730 kilowatts).
GUSC should catch your eye.  GUSC Energy "is a wholly-owned subsidiary of Griffiss Utility Services Corporation (GUSC)." "Griffiss Utility Services Corporation (GUSC) distributes steam heat and electricity to the tenants of Griffiss Business and Technology Park in Rome, New York."

So GUSC Energy and GUSC (the parent corp.) are really "middlemen" in getting electricity from the producer to the end users, the captive tenants of the Griffiss Business and Technology Park, that the other recipients of ReCharge NY's largess do not have to go through.  GUSC Energy and GUSC are part of the "alphabet soup" of Mohawk Valley EDGE-related corporations operating with 'complete transparency' (an attempt at humor here) up at the "International" airport . . . and people running these 'middleman' organizations are obviously being paid.  

Have you heard people raving about the good deal they get on utilities at Griffiss Park?  I didn't think so.

Only in the Mohawk Valley would forcing people to go through a middleman to purchase their electricity be considered a "positive impact on the local economy."

Wednesday, January 27, 2016

Regional Hospital (or "Transformational Opportunity District"): Lacking an Environmental Review?

Yesterday it was noted here that the MVREDC, in its application for funding of various economic development projects, proposed the creation of a 34-acre "Downtown Utica Transformational Opportunity District." The application showed a large sprawling building covering portions of Lafayette, Cornelia, Carton, and Pine Streets and Sayer Alley; two parking garages; and other buildings. The site depicted is the same as that picked for the proposed Regional Hospital.

Environmental Conservation Law 8-0109(2) states:
2. All agencies (or applicant as hereinafter provided) shall prepare, or cause to be prepared by contract or otherwise an environmental impact statement on any action they propose or approve which may have a significant effect on the environment. . . . 

6 NYCRR 617.3 (a) states:
No agency involved in an action may undertake, fund or approve the action until it has complied with the provisions of SEQR. . . [Note: SEQR means State Environmental Quality Review]
6 NYCRR 617.4 "Type I actions" lists those actions that are more likely to require the preparation of an Environmental Impact Statement if they are to be directly undertaken, funded or approved by an agency. Among those are:
a project or action that involves the physical alteration of 10 acres
6 NYCRR 617.7 "Determining significance" lists illustrative criteria for determining whether an action may have a significant adverse impact on the environment. Among those are:
(iv) the creation of a material conflict with a community's current plans or goals as officially approved or adopted;

Here we have MVREDC applying for funding of a project (a) that will involve the physical alteration of more than 10 acres and (b), as previously noted here, that will be in material conflict with the Utica Master Plan -- " a community's current plans or goals as officially approved or adopted."

There is nothing in MVREDC's submission to indicate that an environmental review of the proposed "Downtown Utica Transformational Opportunity District" was ever performed. Since the State would be prohibited from funding such a project without the requisite environmental review, is that the reason why the funds for the hospital no longer seem to be available?

It would not be the first time that our region lost out because it ignored its environmental compliance obligations.

Tuesday, January 26, 2016

People With Vision!

A couple stories this past week reveal that our area has people with vision, able to take ideas and turn them into plans and renderings instantaneously!

Per the OD "Talk of a new town hall came up again at a recent Town Board meeting" in New Hartford.  But it was more than just talk.  The talk came complete with conceptual drawings of what the new town hall would look like and a description that it would be "about 28,000 square feet and located partially on town-owned land behind the New Hartford Public Library on Oxford Road."  New Hartford Online Blog has a video of the meeting where the plans were presented.  With the plans seeming to have come out of nowhere, one might wonder WHO authorized them?

Per the "No Hospital Downtown" website we find out that last fall's Mohawk Valley REDC submission to Gov. Cuomo's "Hunger Games" economic development contest (the one we just lost) on page 137 contained a graphic and description of a 34-acre "Downtown Utica Transformational Opportunity District" which showed a large sprawling building covering portions of Lafayette, Cornelia, Carton, and Pine Streets and Sayer Alley; two parking garages; and other buildings -- all located in an area with existing businesses and uses. The submission claims that
"... the City of Utica in concert with other government, business and community partners is looking to transform approximately 34 acres of a largely vacant, underutilized and functionally obsolete area in downtown Utica and transform this area into a technology oriented development that is linked with nano-bio opportunities emerging at SUNY Poly and Masonic Medical Research Laboratory, healthcare, offices, medical education, recreation and entertainment opportunities at the nearby auditorium, gateway site and nearby Harbor Point."
WHO on behalf of the "City of Utica" determined that these 34 acres were a "functionally obsolete area" and WHO on behalf of the "City of Utica" authorized a "transform"ation of it? WHO said it was OK to broach a proposal that requires closing streets? Utica's only official planning document, the Utica Master Plan, says nothing about these things.

Just WHO's vision do the New Hartford and Utica plans implement?

Sunday, January 17, 2016

Auditorium Authority "Competition" for the Whitesboro St. Property ...

Per the OD: The Aud authority offers $500,000 for Whitesboro St. property.  The article reports that Utica now has two bidders vying for the same property with bids separated by a mere $10,000. While this competition for a piece of property in Downtown Utica suggests that Utica has turned a corner, the picture is not that simple.  Something about that dollar amount rang a bell . . .

$500,000 . . . Wasn't that the amount that the Aud Authority received every year from the Mohawk Valley Water Authority -- an amount which came out of our water billsCould the Aud Authority be using some of the money that we pay for water to bid on this piece of property?  

Such is the crazy world of New York State Public Authorities and Utica/Oneida County politics. When the City of Utica spun off its water system to the "regional" MVWA (actually TWO entities: a finance authority and a water board), as part of the same deal the ownership and control of the Aud was also spun off to a public authority, the Upper Mohawk Valley Memorial Auditorium Authority. Because the City of Utica had previously been using revenue from the water system to offset losses at the Aud, the practice was institutionalized as part of the law that created the water authority.  What was once $500,000/year paid to the Aud out of water revenue is now $665,500/year. See MVWA Report at page 107.  If you look at the Aud Authority's most recent Budget Report filed with the Public Authorities Reporting Information System, you will note that after state subsidies and grants and proceeds from the issuance of debt are excluded, the revenue from the water system is the Aud Authority's primary source of income, such revenue being substantially more than three times what the Aud Authority actually earns from its operations. (A more in-depth look at the Aud Authority's budget is available on their website).

At this point, the loss of control by the people actually footing the bills -- the captive customers of the MVWA -- should be noted.  Unlike the City Council which once ran both the water system and the Aud, members of these authorities are not subject to voter approval but, rather, are chosen through political connections.  Of the 7-member Auditorium Authority board, three are appointed by the Oneida County Executive (CE) and four are appointed by the Oneida County Board of Legislators -- of which most rubber stamp the recommendations of the CE and almost half "have no skin in the game" because they represent areas that have no MVWA customers. Is it any wonder that the OD quotes the CE stating that "we would look at that entire area as a possible sports and entertainment district . . .”  Why is the CE looking at this? When was planning for the City of Utica turned over to Oneida County? Just like the proposed Downtown hospital that came out of a politically-inspired and funded nowhere, the city's Master Plan saw no need to designate this area as a possible sports and entertainment district.  But I digress . . . Back to the "competition" for that piece of property on Whitesboro St.

The Aud Authority is unfair competition for potential private developers of the Whitesboro St. property.  
  •  Private developers will not be subsidized out of people's water bills.
  •  Private developers cannot issue tax-exempt bonds to raise money like the Aud Authority can.
  •  Private developers would have to pay property taxes or PILOTs.
  •  Private developers are unlikely to have the "inside track" with local decision-makers that the politically connected Aud board has.
For the same reasons, the Aud Authority and the entities associated with it are also unfair competition for nearby private businesses.

When Utica was in its heyday there were few publicly-owned entertainment venues.  Theaters, opera houses, etc., were privately owned. Large gatherings took place at the Armory on Culver Avenue -- a structure built for a military purpose. It was not until the late 1950s, when the Utica population was at its peak and industry was booming, that we thought we could afford to build the Aud for large events. . . And we did. But then the region went into decline.  Both Utica and Oneida County have each lost about 40,000 people from their peak populations.  We have also lost an air force base, most of our large industry, and the money that came from those operations.  While there is now hope for recovery, re-attainment of the population, wealth, and disposable income that we once had is many years off.   The public also now has the newly renovated and financially struggling Stanley to support.  Also, there is now competition for disposable income from Turning Stone (which operates free from many of the constraints applicable to private businesses). So while "hats are off" to the Aud management for making the beautiful new and nationally acclaimed changes to that venue, expansion of those facilities beyond the current footprint will likely come at the cost of private businesses that currently subsist on the region's limited disposable income. 

Lastly, an expansion of the Aud Authority's footprint is competition with City of Utica taxpayers.

Utica was gutted of hundreds of parcels of taxable property in the last half of the 20th Century by highway, government building, and urban renewal projects, supposedly to meet public needs.  That trend has continued into this century with 70+ parcels taken for the Arterial remake, parcels for the public bus terminal, and parcels for new county parking lots.  Waiting in the wings is another taking of up to 34 acres for the proposed Downtown hospital.  And now this sports/entertainment proposal?

How much tax exempt property should Utica taxpayers have to bear? 

Utica is already overburdened with almost a third of its properties tax-exempt, which leaves a tax rate for the remainder that discourages private investment in the city. Utica needs to "get to work" and put property back on the tax rolls to lower tax rates for everyone.  Exempting the Whitesboro St. property for more "bread and circuses" only makes it harder for Utica to do this, and undermines, rather than contributes to, Utica's long-term fiscal sustainability.

Wednesday, November 25, 2015

Politics Before Education . . .

Per the OD today the State Attorney General has claimed that students were denied entry to Proctor High School in violation of federal law.  It is interesting that the AG is bringing a suit against an entity that is both a creature of State law and under the control of the State Education Department. 

The question not asked is whether Utica City School District is in compliance with all of the rules and regulations of the State Education Department? 

If not, then the students are not getting the education to which they are entitled by law and an administrative proceeding should be brought before the SED to correct the problem. 

If UCSD has complied with all of SED's rules, then it must be presumed that the students are receiving the education to which they are entitled. 

If some federal standard indicates that the students are not receiving the education to which they are entitled, then the non-compliance with federal law is one that is permitted by SED's own rules. Since the AG and SED are both part of the State's executive branch, they are obliged to change the rules to ensure that all the state's school districts comply with federal law. 

Neither the AG nor the federal court have any expertise in education – which risks that any decision coming out of the federal court in this case may be educationally harmful to the students involved. 

The fact that the AG is willing to risk the educational well-being of these students by forgoing the State's own experts and proceeding directly to federal court strongly suggests that the law suit is motivated by politics rather than any interest in these immigrant students' education.   

Saturday, November 14, 2015

Choosing the Bush . . .

This week the Utica Common Council rejected a purchase offer and specific housing proposal (that was touted before the election as evidence of Utica being "on the rise") in favor of the mere possibility that a much larger amount of money will be spent on a sports complex on the land across the street from the Auditorium.  What a difference a month makes!

I guess a "bird in the hand" is NOT "worth two in the bush."

Ultimately this may turn out good for Utica.  Between the noise and traffic of sporting events to the south and railroad tracks with speedy freight trains to the north, the site seemed an unlikely one for "market rate" housing -- and more likely to turn into the subsidized housing that previously occupied the site. That was clearly on the minds of the council members. Chalk one up for some common sense!

That said, the manner in which this unfolded is bad for Utica.
Rick Gefell, Purcell Construction Corp. business development director, said he was “blindsided” by the decision. “We were disappointed,” he said. “We expressed a good-faith proposal and in the 11th hour somebody else came in. There’s not much we can do about it but I guess we just have to wait and see.” 
The site had been vacant for 10 years, a developer comes in from out of town, spends time and money putting together a proposal for "market rate housing" -- something in which the city had expressed interest and had studies to demonstrate an existing market -- only to discover that "somebody else," unbeknownst to the general public, planned to turn the area into a sports themed district -- a plan that has no discernible details other than "sports," "45 to 60 million dollars,"  and that it involved that site.  (Does anyone see a pattern here?) And that vague plan by "somebody else" became the basis for the Council to reject the developer's proposal.

Prospective developers are sent the wrong message: "Beware, in Utica, the city's planning is done by those with an 'inside track'" -- in this case, the sports proponents.

Now at least one of the developers vying for the site is going to leave Utica on a sour note, because their time was wasted. . . . and others (especially outsiders who might bring in some new ideas) will be discouraged.

This sort of  "insider trading" had been a staple of Utica for years:  no wonder why people avoided Utica for so long . . . and just as interest finally picks up . . . this happens.

Utica needs to get its act together.  The fact that a sports facility can compete with a housing complex for the same parcel of land is crazy -- and demonstrates the unfinished nature of Utica's Master Plan.

It's time to finish the work of the Master Plan, and create a specific enough vision that both developers and the public can understand. No more wasted efforts.  No more surprises.   

Maybe then Utica will receive the PRIVATE investment it both wants and deserves.

Tuesday, November 03, 2015

Dropping Shoes . . .

A couple shoes were dropped on Upstate NY yesterday: (1) The FitzPatrick Nuclear Power Plant in Oswego County will be closed in 2017 putting 600 people (many highly paid) out of work. (2) An ALCOA aluminium smelting operation will close in Massena taking almost 500 more jobs.  

The FitzPatrick shut down is motivated by "economics" -- in this case the low prices of natural gas.

According to USA today:

The Oswego plant, which has been in operation since 1975, loses about $60 million annually, and its financial viability is worsening lately because of cheaper electricity generated through natural gas, according to the company.

The Alcoa shut down is apparently also based on economics:
A source close to the situation said Alcoa has been losing about $1 million a week at the West smelter.
Official reaction to these announcements was both predicable and illustrative of New York's wrongheaded approach to business. 

 In the case of FitzPatrick . . .
"The state of New York will pursue every legal and regulatory avenue in an attempt to stop Entergy’s actions and its callous disregard for their skilled and loyal workforce," said Gov. Andrew Cuomo in a statement . . .
Demonize the company?  The plant is losing money!  The company needs to stop losing money! What is so difficult for the political class to understand? Entergy is shutting down a plant worth $Billions . . . the shutdown process itself will likely to take years and cost over a $Billion (based on the projected cost of shutting down the Vermont Yankee facility.)  I am sure this decision was made with much angst.  To accuse the company of disregarding its workforce is not only nonsense . . . it demonstrates the "anti-business" climate existing in New York State that cannot be masked by "Startup NY" or whatever other crony gimmick there is to entice a business get into bed with state government.

In the case of Alcoa, The Watertown Times quoted Massena Mayor Currier . . .
“The industrial model has changed in this country. It’s no longer there. We have to stop chasing that; it’s not going to happen,” he said. Instead, Mr. Currier said, the region should focus on areas such as tourism and recreation. “I’m a firm believer that the 1 gig broadband we have, combined with Massena Electric’s affordable, dependable power, is a great economic development tool for this community as we move forward,” he said.
Travel and tourism? or 1 gig broadband? The political class has all the answers but fails to grasp the simple: ALCOA loses money in Massena.

Until New York State governs itself more like Texas, where businesses can make money, look for more shoes to drop.

Monday, October 26, 2015

A House of Cards . . .

According to the Rome Sentinel on 10/24/15:
The owner of a large hangar complex at Griffiss International Airport wants to substantially reduce its payments made to the county in lieu of property taxes, starting this year. The current schedule calls for $462,468 in each of the next three years. However, 394 Hangar Road Corp. now wants to pay the county $200,000 this year, $150,000 in 2016 and $100,000 in 2017 . . .
But if you have followed the goings on at Griffiss "International" Airport, you may have a sense of deja vu. About a year ago, per  a 10/16/14 Sentinel article, 394 Hangar Road Corp. requested from the Oneida County Industrial Development Agency (OCIDA) a $300,000 per year reduction in its PILOT payments, which were then about $750,000/year.
“Without a modification to the existing PILOT agreement, the building will not generate a positive cash-flow,” [said] a summary of the proposal.
Why was the building not generating a positive cash-flow?
The PILOT changes are being sought as annual refunds received by 394 Hangar Road through the state’s Empire Zone program are starting to decrease and will be zero after four years.
Since the Empire Zone funds were not available to governmental entities, and since the payments to the County go into operation of the airport, it sure looks like 394 Hangar Road Corp. was used to funnel state Empire Zone funds to cover Oneida County airport's operating expenses.  BTW, 394 Hangar Road Corp. is not just another private company.  It is a creature of Mohawk Valley EDGE,  with whom Oneida County contracts for economic development services .  .  .

The 2014 request was subsequently approved with the reduction effective for 2014, so if the current request is approved, the taxpayers would be on the hook to make up the difference of about $2,100,000 over 2014 - 2017. (Is it any wonder why the County has taken $2,500,000 this year from Oneida Nation gaming revenue for "tax stabilization?")

The Sentinel's current article indicates more clouds are on Griffiss "International's" horizon:
No matter what the IDA decides, PILOT payments from 394 Hangar Road will end after 2017. The county has the option of assuming ownership of the complex in 2018, a status that would make it exempt from taxes. And even if ownership remains with 394 Hangar Road, zero payments are required in 2018 and after. . . .

Additionally, the county is selling the former county airport in Whitestown to the state for $10 million later this year. The state has been leasing the older airfield with the annual rent being counted as revenue in the Griffiss budget since the airport moved from Whitestown to Griffiss in 2007. New York is paying $743,342 this year for the Whitestown location, which is home to the state Emergency Preparedness Center. That revenue stream ends when the sale is completed.
When all is said and done, as of 2018, between the $750,000/year in lost PILOT payments and another $750,000/year in lost rental from the old airport, the taxpayers will have to make up an additional $1.5 million per year in lost revenue on top of what they had been paying, as of 2013, to keep the airport running.  While the proceeds from the sale of the old airport may mask the airport's true financial picture for awhile, the discontinuance of both the PILOT and the rental income suggest that . . .

Griffiss "International" Airport's house of cards, built on payments from higher levels of government, is about to come tumbling down.

Saturday, October 24, 2015

Partners in Poverty . . .

Oneida County, with the highest sales tax north of New York City and one of the highest sales tax rates in the country, is giving money away! Yes, believe it or not, as overtaxed as we are in Oneida County, the County has given away almost $3,000,000 so far this year.  It is called "Partners in Prosperity Funding" with the money coming from gaming revenue from the Oneida Indian Nation Settlement Agreement.

All the giveaways become occasions for press releases and big announcements. The latest grant announcement was Thursday: $500,000 to the Vernon Verona Sherrill School District for an "Animal Science Center." From WUTQ . . .
The money will go toward the construction of a building that can house 6 different types of livestock.

The funding and new center will expand the already established agriculture program at VVS High School. “What this does is allows our students to have an animal science program,” said VVS Superintendent Martha Group. “It also allows them to partner with local agriculture farmers, production individuals, and companies. So what the students can do is take on a real life experience working in the agriculture and science field.”
Without a doubt, this project will help students going into agricultural fields.  It will also increase the stature of the already award-winning VVS School District. But why is the County funding this project, rather than the Vernon Verona Sherrill School District, because, ultimately, the Vernon Verona Sherrill School District will be responsible for maintaining it?

There are many projects listed as being funded by Oneida County through its "Partners in Prosperity Funding" program. Like the Animal Center project at VVS, they all have merit -- and all raise the same question:  Why County funding rather than funding raised directly by the entity being benefited?

As already noted, these giveaways total almost $3 million -- this figure EXCLUDES amounts for "Tax Stabilization" and pursuant to "Revenue Sharing Agreements" with certain local jurisdictions.

"Revenue Sharing" was excluded because the Oneida Nation does not pay taxes to the entities listed, and revenue sharing somewhat replaces those taxes.  In this regard, VVS SD, which is getting the $500,000 grant for the Animal Center, is also getting $643,415.00 in revenue sharing.  Which all the more makes one wonder why VVS-SD does not fund the Animal Center itself?

The $2,500,000 listed for "Tax Stabilization" is really a grant by the County to itself.  While the County lists this as "resulting in 0% raise to the tax levy in 2015" it could also be listed as "masking an increase in County spending.

In the end, the taxpayers (anyone and everyone who buys almost anything in Oneida County) are still being taken advantage of by their own county government.  Money that should go to sales tax relief is instead being used to buy votes among constituencies and to mask more spending.

Rather than "Partners in Prosperity" we are "Partners in Poverty." The County takes more from us than it needs -- driving more of us to leave -- and making those left behind poorer.

Friday, October 23, 2015

Risky Businesses . . .

Per the Rome Sentinel: County seeks bankruptcy court OK to evict Midair
Oneida County wants to take possession of the hangar at the county airfield that was under lease to Midair USA before it filed for bankruptcy protection last month. . .

On Sept. 9, Midair filed for Chapter 7 bankruptcy protection, meaning it is likely to liquidate all assets in order to repay secured creditors. The company said it had assets of between $1 million and $10 million, as well as debts between $1 million and $10 million.

It is unclear where Oneida County stands when it comes to recovering even some of the money it is owed by Midair. . .

At the time of the bankruptcy filing, the old debt [to Oneida County] had been reduced to about $587,000. An additional $43,200 was owed for unpaid rent since the new lease was approved and before the bankruptcy filing.
So at this point, Oneida County taxpayers likely have lost at least $600,000 in the County's dealings with MidAir.

Being in business is always risky, requiring expertise to minimize risk, and sufficient return to not only cover expenses and balance out losses when they occur, but to make being in business profitable in the long run.  Here, MidAir lost out and will go out of business.  When its major client, Russian airline Transaero ran into trouble, Transaero's troubles caused Mid-Air's troubles.

Mid-Air and Transaero are not the only businesses in this story.  Oneida County, by virtue of being a landlord, has gone into business as well.  And in a domino-like effect Transaero's troubles which caused Mid-Air's troubles now cause trouble for Oneida County --  with the County's loss ultimately falling on the taxpayers.

-> Why should Oneida County taxpayers be exposed to risks originating in Russia?
-> Why should Oneida County taxpayers be exposed to business risks in general?
-> Why should Oneida County even be in business?

Certain things are best done by government, others best done by private business, and yet others where it may not be clear who can best do a particular task -- with trial-and-error being the determiner.

If they are not fatal (as in the case of MidAir) set-backs can be a learning experience for the business owner.  Sometimes the experience leads an owner to decide it is better to not be in business.

Oneida County may be at that point.  Should the County continue in the leasing business, exposing its taxpayers to business risks,  or, instead, should it sell its assets and transfer the risks to the private sector?

Perhaps a larger question, given the steep drop in use of the County Airport since its move to the former Griffiss AFB from the more appropriately-sized Whitestown facility, is whether the County should continue in the airport business at all?

The County needs to decide whether the risks to the taxpayers of being in business outweigh the potential benefits.