Gov. Andrew Cuomo’s announcement appointing Mr. Ken Andrews to head the Empire State Development Corporation is not necessarily good news.
New York State, New York City, Nassau County along with many other cities and towns prospered and successfully grew prior to the explosive growth in the numbers of various city, county and state development corporations over past decades.
In many instances, projects supported by these government corporations have been heavily subsidized by taxpayers, commonly known as corporate welfare.
Between direct government funding, low-interest, below-market-rate loans and long-term tax exemptions — the bill to taxpayers in the end is greater than the so-called public benefits. There also a relationship between Pay-for-Play campaign contributions from developers to elected officials looking for favorable legislation, private property condemnation under eminent domain, building permits along with direct and hidden subsidies.
In some cases, town, county and state development corporations actually compete against each other attempting to outbid each other in offering potential investors the best deal. This translates to the highest subsidies at taxpayers expense.
Don’t forget the conflict of interest for senior staff from city, county or state regulatory and permitting agencies. Too many leave in the twilight of any mayoral, county executive or governor’s administration to become employees or consultants to the same developers they previously oversaw. Some developers try to purchase the support of local community groups by making so-called voluntary donations. They also make promises for capital improvements, which after the major project is completed don’t always appear.
Other commitments for creation of permanent new jobs and tax revenues frequently do not meet expectations.
If these projects are worthwhile, why can’t major developers use their own funds or obtain loans from banks, like medium and small businesses?
Real business people who believe in capitalism build their companies on their own. How sad that some don’t want to do it the old fashion way by sweat and hard work. They are looking for shortcuts in the form of huge subsidies at taxpayers expense and favors from elected officials.
Gov. Cuomo could create more jobs and economic growth by taking other actions.
Why not consider repeal of the Wicks law?
The Wicks law requires separate contractors for general construction, electrical, plumbing and heating. Coordination of work by these four prime contractors in many cases requires hiring a fifth construction management firm on the part of cities, counties and state to insure they all work together. Each of the four players can impact the others if they don’t meet critical milestones in any project. This is determined in a project’s construction critical path schedule.
The fifth independent management firm has to insure that all four other companies work closely together in a positive rather than adversarial way. All of the above frequently can add to any overall project cost. Construction contracts funded by New York State, Nassau County or the Town of North Hempstead along with other major cities, towns and counties frequently average from several million to several hundred million dollars.
New York City Mayor Bloomberg has been one of the few elected officials brave enough to call for total repeal of the Wicks law. Unions have consistently used their powerful political influence to kill off any real modifications or outright repeal. Abolishing the Wicks law could save taxpayers and government at all levels significant amounts of increasingly scarce funds which could be better spent elsewhere.
Larry Penner
Great Neck
