By NICHOLAS L. DEAN

Special to the OBSERVER

Governor David Paterson's proposal to reform projects financed by industrial development agencies is a disastrous idea, according to Bill Daly, Chautauqua County IDA director.

"It's not even remotely IDA reform," Daly said Tuesday. "It's the destruction of the state of New York as a location for businesses to either expand or locate."

Characterized as a "giveaway to union leaders" by the Empire State Chapter of the Associated Builders and Contractors, the proposed reform would essentially undermine the incentives IDAs are able to offer businesses to attract them to or keep them in New York by adding costs to projects.

To attract businesses to the state, industrial development agencies can abate property taxes and do away with sales tax on construction materials in addition to offering other incentives. However, under Paterson's proposal, those businesses receiving IDA tax breaks would then have to pay "prevailing wages" for the construction project if the company doing the project employs at least 100 people. The company having the project done would also be forced to pay a new mandated hourly wage - in essence a new minimum wage, which in upstate would be $14.68 per hour.

The cost of prevailing wages and the mandated hourly "minimum" wage of $14.68, Daly explained, "would not only negate IDA incentives, but would in effect stop businesses from choosing New York as a place to locate or expand."

"It's beyond belief," Daly said of the proposal. "They're saying this is IDA reform for better jobs. How about for no jobs or the loss of jobs - especially in upstate? That's what you're going to have with this."

"Say someone has a $10 million project. We might get them $1 million worth of benefits," Daly continued. "If these IDA reforms were to come into play and a business took that $1 million worth of benefit, they would be adding $3 million onto that project's cost. That's an increase of 20 percent more they would be paying to do a project in the state of New York. Even worse, their minimum wage would be $14.68, which would skyrocket their payrolls for years into the future. I can guarantee you every state New York competes with for businesses will be thrilled if any of this becomes law."

Along with Associated Builders and Contractors, Daly said the Business Council and Unshackle Upstate are both opposed to the governor's proposal.

In proposing the reform, Paterson issued a "for discussion" draft of his proposal earlier this month and since that time, members of the New York state Economic Development Council have met with state lawmakers to explain the harmful impacts of passing such legislation.

"A leader, during a horrible worldwide recession, should never even consider floating this as a trial balloon," Daly said of the Governor's "for discussion" proposal. "Somebody who has jobs and the best interests of taxpayers of the state of New York in mind, would clearly state they will veto any legislation that has any part of it."

CIVIC FACILITIES

As an example of what's to come if the proposal is passed, Daly points to civic facilities projects previously done by industrial development agencies.

Prior to January 2008, before the state Assembly tried to incorporate elements of this "sham" IDA reform, long-proposed by Assemblyman Sam Hoyt, D-Buffalo, IDAs had used tax free civic facilities bonds to do projects for not-for-profits - the last of which locally was the dormitories at Jamestown Community College.

However, ever since the Assembly tried to implement those changes, such as requiring prevailing wage for such civic facilities projects, the Senate has not passed companion legislation, meaning no civic facilities bonds have been issued in New York for almost two years. Paterson's draft proposal will try and authorize new civic facilities legislation with prevailing wage and the new mandated wages added on. Daly asked, "What not-for-profit do we have her that can afford a mandated minimum wage of $14.68 if they do a project to upgrade their facilities and add new jobs to the local economy?"

According to Daly, the estimated amount of new construction waiting to be done in the state, but sitting on the shelf as a result of no civic facilities bonds, is $2 billion.

"Could you imagine that? Talk about a stimulus program," Daly said. "A total of $2 billion has been sitting on the shelf since 2008 because unions wanted to tack on this nonsense. There has been real IDA reform in the past and there is no problem with pure IDA reform, but this is not reform. This is the destruction of New York State. If it were to pass, there will be projects closing up all over the state."

APPRENTICESHIP LEGISLATION

In addition to requiring businesses accepting IDA benefits to pay prevailing wages and mandated hourly wages, Daly said there is the Hoyt legislation in the Assembly and legislation by Sen. Antoine Thompson, D-Buffalo, in the Senate that also calls for construction work to be done by people who have been apprenticeship trained.

"That would eliminate 85 to 90 percent of all the construction workers in Chautauqua County from working on projects with IDA incentives," Daly said. "You can make the argument that apprenticeship training is good, and it is, but because of the rules of the state's Department of Labor, those programs are almost exclusively done by unions. Our non-union companies train their employees too, but without the apprenticeship designation. This is really about the big downstate union bosses trying to force unions into every single aspect of life in the state of New York. That's what this is about-their control of Albany."

Statewide, if passed, the proposal would prevent firms employing 75 percent of New York's construction workforce from competing for IDA-financed economic development projects, according Rebecca Meinking, president of the Empire State Chapter of the Associated Builders and Contractors.

The reform proposal is "just the latest example of state government caving in to special interest demands from organized labor to unfairly rig the game in their favor," she said.

DEFEATING THE REFORM

According to Daly, the best way to defeat the proposals is by contacting state senators directly to let them know how the potential legislation would be harmful for working people.

County Executive Greg Edwards has already made calls to several of senators letting them know his opposition, and Senator Catherine Young, R-Olean, is a leader in the Senate against the proposals.

The key upstate Democratic senators to contact are - Senator William Stachowski 518-455-2426, Senator David Valesky 518-455-2838 and Senator Darrell Aubertine 518-455-2761.