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Cuomo Takes a Tip From His Dad

Lieut. Gov. Robert Duffy said the size of the role that bonds will play in New York Gov. Andrew Cuomo’s economic development program is uncertain and will include the creation of regional economic development councils.

The regional councils, which will coordinate resources and strategies between the myriad of existing state agencies, were embraced by Mario Cuomo more than 16 years before his son’s election.

Duffy, who will chair the 10 councils on behalf of Cuomo, met with upstate business leaders last week to get their input on the concept as policy details are still being crafted.

“Before they’re rolled out we’re asking questions, we’re asking what do you feel has to be a part of this?” Duffy said in an exclusive interview. That way, “when they are rolled out not only will it contain the conceptual framework of what the governor wants to accomplish, but it also will contain input that we’re soliciting ... from around New York State.”

The state’s primary economic development agency, the Empire State Development Corp., will play a key role. It’s being reorganized to fit into a regional planning model, Duffy said.

Former Gov. Eliot Spitzer effectively split the ESDC by appointing upstate and downstate chairmen. Former Gov. David Paterson subsequently reversed the practice.

The regional councils will compete for $200 million of grants through the ESDC for projects that create jobs. The corporation already doles out grant money under a range of programs and through member items enacted by legislators.

In calendar 2010, the ESDC approved 271 grants totaling $507.1 million for economic development projects under some two dozen programs, according to data provided by the agency. About half of that, $250 million, was for a single project, the redevelopment of the Aqueduct Racetrack in Queens.

Many of the grants are used to leverage private investment in projects. The state funds the grants through a mix of personal income-tax bond proceeds and other state funds.

In fiscal 2009-10 the state sold $1.53 billion of so-called PIT bonds for economic development through the ESDC and the Dormitory Authority of the State of New York, according to the state’s Budget Division.

The bonding or pay-as-you-go funding mechanism for the new competitive grants, as well as an undetermined amount of funding that will be available to all the councils, hasn’t been decided on yet, according to Duffy.

The councils will be “looking at ways that each area can maximize their strengths and maximize their assets, but it forces everyone to think regionally as opposed to all the adjoining counties competing against each other,” he said. “The goal is to get each region to prioritize their top choices for investment and the prioritization has to be focused on and emphasizing job growth.” 

An increase in economic development projects will require financing but it is “too early” to tell how bonds will play a role, Duffy said. “Any time you have growth in construction  … [there] will come bond opportunities.”

The regional approach is not new.

“We set up regional economic development councils to work with us and the [industrial development agencies] and to coordinate economic development efforts within the regions,” said Vincent Tese, executive chairman of Bond Street Holdings LLC.

Tese served as chairman and chief executive officer of the Urban Development Corp. — which was rebranded as the ESDC in the 1990s — and later as the state Director of Economic Development under former Gov. Mario Cuomo in the mid-1980s and early 1990s.

The approach involved the UDC and “the IDAs getting the local regions’ priorities and then enlisting the other state agencies — the Department of Transportation and some of the others to coordinate the efforts.”

Tese and Duffy used similar themes to describe the interaction between government agencies and authorities.

“The hard part is the execution getting all the various state agencies working together,” Tese said. “You have to coordinate all those efforts and they all have budgets and everybody has to try to prioritize their budgets based on what’s important.”

Duffy said the new regional councils will include leadership from across different state agencies, including the ESDC, the Department of Environmental Conservation, the Department of Labor, the Department of Transportation and the New York Power Authority.

“These are all areas that play a major role in economic development,” Duffy said. One goal is to “have leadership in state agencies there to help to facilitate these developments. In the current system it becomes almost balkanized — some agencies do not clearly communicate back and forth with each other.”

The ESDC already has 10 regional economic development offices that interact with other agencies and the private sector in defined regions.

“At this point we’re working from that template,” Duffy said. “There certainly could be some adjustments made but that’s the basic template we’re starting from in terms of looking at geographical regions.”

Brian McMahon, executive director of the New York State Economic Development Council, a trade group, said the council is anxious to see more details about how the councils would function.

“Conceptually we strongly support the move toward regional empowerment, which is really what the ultimate goal of these councils is,” he said, adding that he was hopeful the new direction will include close work with the IDAs.

“We think it’s critical that New York have a strong state and local partnership because those resources are what it takes to attract investment to our communities,” he said.

McMahon said he hoped the councils would improve the coordination of job-training programs and infrastructure initiatives.

“Regionalism is good to engage the local community and both the business community [and] the academic community with government in identifying assets and opportunities within the region, ” said Kathryn Wylde, president and chief executive officer of the Partnership for New York City, a business organization. “Then I think the state has to pull those local initiatives together in an overall strategic plan.”

Wylde contends the state has no plan for economic growth. “We have agencies, we have no plan,” she said.

Kenneth Adams, president of the Business Council of New York State, said this approach has the potential to succeed where previous approaches have failed.

“This is a more sophisticated approach than we’ve seen in the past because it recognizes that it’s not a simple upstate-downstate question,” Adams said.

“If the councils are well run and really engage local business owners and entrepreneurs and investors and lenders and other economic development officials at the local level, you start to develop localized approaches as opposed to a kind of top-down approach coming from an ESDC bureaucrat in Albany or New York City.”

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